Wanted: 3,732 Women to Govern Corporate America
(By Jeff Green, Hannah Recht and Mathieu Benhamou) 3/21/2019 Bloomberg.com)
If the headline wasn’t enough to get my attention, the statistics from Bloomberg made me do a double-take:
As a woman leader in the world of finance, it was no secret to me that women are underrepresented on boards of directors. But where did +3,732 come from?
It turns out that last October California law SB-826 Corporations: boards of directors (2017-2018), (sponsored by the National Association of Women Business Owners), was signed by Governor Jerry Brown. The law requires publicly traded companies to have at least one woman on their board of directors. KQED public radio reports that of the 445 publicly traded companies in California, 25% have no women on their boards.
The statistics above are a benchmark based on the gender representation of companies making up the Russell 3000 stock index; the index is comprised of the 3,000 largest U.S.-traded stocks. If the California law was applied to the boards of these 3,000 companies, 3,732 are the number of women that would need to be added by 2020 to comply with California’s law. Since most Russell 3000 companies are incorporated in Delaware, the legislation would have to be adopted in Delaware for to cover this many companies.
Should companies wait until the legislation requires balanced gender representation on boards? They can wait, but it will be similar to maintaining data and information on a system that was implemented in the 1990s that few IT professional even know how to program – neither decision makes a lot of sense. Note the most recent search for the President of the University of South Carolina came to a screeching halt when none of the finalists were women. There were women interviewed and at least one of the semi-finalists took themselves out of the running for the position. There are several unanswered questions about this situation, like did the search committee conduct the search to reach out to all qualified applicants, were the questions to the applicants generally the same? There is no doubt the University of South Carolina spent time, money and energy seeking a President and was unable to accomplish this satisfactorily. The cost is difficult to quantify, but there is certainly a cost related to this situation.
Is it that difficult for well-meaning companies to find women leaders to serve on boards or serve as C-Suite executives? I truly believe it is for several reasons.
Forbes magazine reported on Amazon’s appointment of two well-known leaders, Indra Nooyi and Roz Brewer earlier this year to serve on their board. Because a small pool of U.S. leaders is consistently tapped for board positions, they do not have the time to serve on the multiple Boards to which they are invited.
The Forbes article goes on to suggest that one of the reasons women don’t make the cut is the qualifications being sought.In general, the qualifications being sought include:
- Must be a sitting CEO or senior executive in a Fortune 500 company.
- Must be a financial expert.
- Must understand cyber-risk and security.
- Must understand innovation. Those are just some of the criteria stated out loud.
Implicitly, the board candidate also:
- Must not have an agenda (feminist).
- Must not be too old.
- Must not be disruptive.
Another factor to consider is our networks.
If male leaders primarily are cultivating networks with other male leaders and women leaders primarily are cultivating networks of other women leaders, who else would they recommend when a board position opens? With only one-fifth of US board directors being women, it could take until my daughter’s children have children for female board representation to reflect the workforce.
A Board of Directors is elected to represent shareholders. Who is speaking for the 26% of U.S. women invested in the stock market? Why should you care if the boards of Corporate America are diversified based on gender or other factors? Here are a few of those reasons:
- Your potential customers will view a diversified board as making better strategic decisions when the customer is represented.
- Talented, highly qualified employees value the actions of their employer and will be monitoring social media and the news, as stories of board diversity are reported; as potential employees, they will embark on their job search with such information in hand.
- Satisfied customers and a skilled workforce can lead to successful earnings and annual reports – and ultimately – happy shareholders.
Honestly, one of the most difficult things to overcome with women moving up to the C-suite and taking on Board appointments is the sacrifice required to maintain that type of position. More men than women are willing to make that sacrifice. When I think about this, it leads me to think we should examine the requirements for C-level executives and leaders, regardless of their gender. If you have a transparent conversation with a spouse or a child of anyone who holds one of these positions in the USA, they will admit it is difficult on them and the family. I have had demanding professional positions most of my career and I have had to constantly make difficult decisions on how to allocate my time.
If having gender representation on boards of directors that reflects today’s workforce is important to you, what else can you do to promote your belief?
20% By 2020 Women on Boards is a national campaign to increase the percentage of women on U.S. company boards to 20% or greater by the year 2020. Established in 2010, it is a 501c3 organization co-founded in 2010 by Stephanie Sonnabend and Malli Gero.
Their website lists several actions you can take, from establishing a local campaign committee to easy actions you can take to have a voice. Visit their website for more information.
In summary, company leaders are going to have to focus on this issue if they want the company to continue to make money, which most do. Legislative and social pressure is just too great. It is a multi-dimensional issue that is going to require messy conversations and creative solutions to overcome. We should all think about this issue and make a choice regarding how we are going to work toward a resolution – perhaps mentor a young professional; perhaps you, as a current board member, begin to ask how many hours are the C-suite leaders working and try to move to realistic expectations; and if you are serving on a search committee for one of these positions, a well defined process is an absolute must.
If my post hasn’t convinced you just how passionate we are about this topic, let me add that I include this issue in these upcoming speaking engagements. I’ve included the links to each event so that you can consider attending.
6/19/19 Jax Chamber Professional Women’s Council Luncheon, Walking the Work-Life Balance Tightrope. The first 10 people that forward their ticket receipt to this event will receive a free copy of my book and reimbursement for the ticket.
7/22/19 Women Business Owners Dinner Meeting, Guest Speaker, Insanity or Financial Infrastructure – Your Choice.
10/22/19 Women Who Count National Accounting & Finance Conference, Keynote Speaker, Money Knows No Gender and Neither Should Your Business Value.