diversity

Still No Progress: Is It Apathy?

This week ION released its 7th Annual Status Report of Women Directors and Executive Officers of Public Companies in Fourteen Regions of the United States. For the third consecutive year the percentage of women directors in public companies in the 14 regions studied has stayed static at 11%; the lowest percentage was in Tennessee at 8.3%; the highest was in New York at 18.4%.

The report shows that while large companies (those in the Fortune 500) do better with gender diversity in their board rooms, smaller companies – the majority of businesses that make up our local economies – are not getting the message.

Why has there been no progress? We think the reason is apathy. Alan Macdonald, executive director of the Massachusetts Business Roundtable, said in a meeting with 2020 Women on Boards this week, that in theory, putting qualified women on corporate boards is not something people can argue with. It makes sense.

Putting the theory into practice has been difficult. The 14 business organizations that make up the ION network have worked tirelessly on this issue. They are a valuable resource for companies that are ready to take the step toward board diversity. Ask an ION member organization for help identifying qualified women and you’ll get 14 organizations working their networks. The charges for this service are minimal.

It’s time for corporate stakeholders (employees, shareholders, and consumers) to voice their concern about the lack of diversity on corporate boards. When companies start getting the message that their constituents are unhappy, they will begin to make changes.

What can you do? Vote your proxy. Email the companies that you do business with. Tell them that you care about the composition of the leadership in the company and urge them to diversify their boards.

The Q Question: Should the U.S. Adopt Quotas to increase board diversity?

A big question being considered by those who study corporate governance is should the U.S. adopt a quota system to increase the number of women directors, like they the quota initiatives in Europe?  In 2008 Norway imposed penalties for public and state-owned enterprises that failed to have at least 40% of their board seats filled by women. Spain plans for a similar quota in 2015.

The question was discussed recently at a research symposium hosted by The Athena Center for Leadership Studies and Ethics at Columbia University.  Over 100 participants discussed the topic ‘Should there be bolder policies for diversity at the top?’

Amy Dittmar, Associate Professor at the Ross School of Business at the University of Michigan presented her findings on the impact of firm valuation of mandated female board representation in Norway. The study found that the value of Norwegian firms dropped when adding women to the boards, not because of gender, but because the additional board members lacked experience. Other studies on this social experiment indicate that quota systems may improve diversity numbers, but are not developing stronger boards.

Most of the professors and executives at the conference agreed that quota systems won’t work in the United States. Mona Lena Krook, Assistant Professor of Political Science and Women, Gender, and Sexuality Studies at the University of Washington in St. Louis presented lessons from politics in regard to quotas for women on corporate boards. She suggested five non-quota strategies for increasing female board representation:

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