The current Presidential campaign often echoes with this invocation to the nation – that we need to break that last, hardest glass ceiling of all.
(Courtesy of Life of Pix)
Yet in boardrooms around the country, the glass ceiling seems as impenetrable as ever.
While women are independent business owners and CEOs, it is on boards where women are lagging the furthest behind comparably talented men. In the past 10 years, the number of women in boardrooms has only increased by 5% in our country's largest companies, to 20%; leaving men to hold a whopping 80% of these leadership positions. The numbers are even worse worldwide. Globally, women only comprise 12% of positions on boards. Believe it or not, in 55% of companies valued at over $1 billion in Europe and the US, women are nowhere to be found on boards at all — yes, there are zero women on the boards of most of the biggest companies in the developed world. And yet, 60% of the world’s graduates are women.
As Representative Carolyn Maloney (D) puts it: “Even if women were nominated to every other open slot on corporate boards, we would not see gender parity on corporate boards for 40 years – that is simply unacceptable. Action is required and businesses in every sector should be leading this charge.”
It's what inspired Maloney to propose the “Gender Diversity in Corporate Leadership Act of 2016,” which is aimed at narrowing the gap between qualified women and women in positions of actual power. The bill requires companies to disclose strategies and policies towards gender diversity as well as their percentages of gender balance on current boards. It also compels companies to comply with strategies to be developed by the SEC to increase the number of women on boards or else to explain to the SEC and the public why they will not do so.
Rep. Maloney’s bill. (Disclosure: Wolf is part-owner of the company that created the bill-viewing technology.)
The bill purposely focuses on public disclosure and compelled transparency instead of quotas — an approach that is unpopular in the business world and some say discriminatory in its own right.
“It’s hard to be in favor of forcing the issue," says Sallie Krawchek, CEO and founder of Ellevest. "Most people I know want the intellectual argument to win the day. But after awhile, if that isn’t happening, greater action should be taken. And shareholders should applaud greater transparency, discussion and information around these issues."
History shows public pressure can get results. EY, a consulting firm, reports in 2013 that when investors demanded a gender diversity policy from the companies in which they were considering investing, boards agreed 75% of the time to comply with the potential investors’ demands. And given how successful shareholder activism has been in the past with such issues as environmentalism, and in divestment in apartheid South Africa, there is a strong case to be made that demands from investors in general for gender balance on company boards can help to break the glass ceiling.
There is also evidence investors not only want more women on boards. Many new and flourishing women-centered investor groups — such as 500 Women and Golden Seeds — are seeking out women-led businesses in order to direct their investment dollars.
It's working.
“One of the metrics that we look at in deciding which companies to invest is the percent of women on their boards (also the percent of women in senior management). The investment thesis behind it is that companies with greater board diversity (in this case, gender diversity) will perform better than those with less diverse teams," explains Krawchek, who is part owner of Pax Ellevate Global Women’s Index Fund. "We have just passed our two-year mark since launching the fund….and it’s outperforming the market.”
According to The Washington Post, when Credit Suisse compared returns on equity and dividend payouts among companies with fewer than 5% women in the top positions, with companies in which over 10% of those top jobs were held by women, it found that doubling the number of women at the top, led to a 27% higher return on equity and a 42% higher ratio of dividend payouts.
Even if you don’t have any personal interest in gender balance, you can still love those returns.
After all, having a diverse board room means having a decision-making team with a wider range of backgrounds and perspectives — less group think. And women are making financial decisions in the consumer market 80% percent of the time. It makes sense that a board filled with women has a better chance of tapping into this overwhelming percentage of the market than does a board dominated solely by men.
The push to diversify corporate boards by gender has sparked other innovations, as well. For example, the Boardlist, an organization that aims to put more women in tech boardrooms, recently announced that it is launching a new product that will search for qualified women to fill boardroom positions to combat the common refrain among those responsible for board diversification that there just aren’t enough qualified women to fill the seats in question.
Says Maloney: “I'm hopeful that we will see real change soon.”
Additional research provided by Haley Snyder.
