Photographer: Brendon O'Hagan/Bloomberg

Women on Boards

Updated on

In many countries, women are well established in professions like medicine, law and banking. They’ve advanced to the top of prominent companies, including General Motors, GlaxoSmithKline, Pepsico and IBM. Yet a gap remains when it comes to corporate boards. Men hold about 80 percent of all board seats for companies in the S&P 500 stock index. Growth in female representation on those boards has slowed. European countries have instituted formal mandates, sometimes backed by fines, to narrow a similar corporate-board gender gap. Then there’s Asia, where women held only 12 percent of seats in 2016.

The Situation

Legal directives raised female representation on corporate boards in large, publicly listed companies in the European Union to 23.3 percent in 2016 from 11.9 percent in 2010. In the U.S., the pace at which women were added to Fortune 500 boards slowed to about 2 percent yearly after a decade of 5 percent annual growth ended in 2005. In the U.K. and Finland, public shaming by advocacy groups has stirred some shareholders to urge change. Elsewhere, in the absence of legal or activist pressure, the makeup of boards has hardly changed. The U.S. tech sector, notable for the rise of Sheryl Sandberg at Facebook Inc. and Ginni Rometty at IBM Corp., is lagging: One-quarter of Silicon Valley companies had no female directors when surveyed in 2016.

The Background

The first female directors were elected in the U.S. as early as 1900, while the average year companies in the Fortune 250 put a woman on a board was 1985, according to a Stanford University survey. In 2003, Norway became the first country to legislate gender balance on corporate boards. By 2008, no board there with more than nine members could have fewer than 40 percent of its seats filled by either sex. Norway reached the 40 percent threshold in 2007, yet this had little effect on the gap in pay between men and women, or on the number of women in key leadership positions. Countries with some form of quotas include Germany, France, Italy, the Netherlands, Spain, India, Malaysia and Israel. Where legal mandates haven’t been enacted, researchers note that shareholders generally have been indifferent to the gender composition of their companies’ boards. In the U.S., some shareholders have successfully pressed companies to add more women to their boards and top management. In the U.K., the 30% Club, founded in 2010 by corporate executives who favor gender equality but oppose laws mandating it, is pressing for change. Progress has been two steps forward, one step back: The proportion of women on the boards of companies in the FTSE 100 stock index has risen to 27 percent from 12.5 percent, but that level has barely changed in 18 months. And while every company in the FTSE 100 had a female director in 2014, as of mid-May 2017, one company did not.   

The Argument

Some organizations, including the EU, make an economic argument for the integration of women in leadership. They say gender diversity reflects a world where females make 70 percent of  purchasing choices and that it results in better decision making. A Credit Suisse study showed that companies with at least one woman board member saw an average return on equity of 14.1 percent from 2005 to 2015. Where boards were all-male, average returns were 11.2 percent. Other research found that company performance isn’t closely correlated with directors’ gender, and that awarding “golden skirts” for the sake of parity may compromise a board’s quality. (One academic analysis found that Norway experienced a drop in the value of its companies’ shares after its gender-equality mandate was enacted.) Advocates say women shouldn’t have to prove their impact to the bottom line to justify a seat at the table. In this view, including them is just the right thing to do.

The Reference Shelf

  • The advocacy group Catalyst makes a case for gender diversity on boards.
  • An NPR interview with Facebook Chief Operating Officer Sheryl Sandberg about her book, “Lean In.”
  • A 2016 report by Fenwick and West LLP on gender diversity in Silicon Valley.
  • The 2016 European Commission’s women on boards fact sheet.
  • The International Finance Corporation interviewed top male directors in 2011 on the issue as part of a global corporate governance forum.
  • A Credit Suisse report from 2015 on gender diversity and corporate performance.

Nina Glinski contributed to the original version of this article.

    First published Aug. 11, 2014

    To contact the writer of this QuickTake:
    Laura Colby in New York at

    To contact the editor responsible for this QuickTake:
    Paula Dwyer at

    Quotes from this Article
    Before it's here, it's on the Bloomberg Terminal.