I recently co-presented with a friend of mine at a Women in Tech meeting. A woman in the audience asked what we thought about legal mandates requiring female board members for corporations. My co-presenter was vehemently opposed. I think she actually used the word “hate”. I couldn’t blame her. I used to have similar concerns with female mandates. But then the data changed my mind. To quote Gloria Steinem at a recent Silicon Valley event: “The truth will set you free, but first it is going to piss you off”.
So here are the facts:
Women are significant. We make up:
- Half the US population
- 46% of the workforce
- 57% of undergraduate student
Women are important consumers.
- Women control / influence 85% of household spending
- 70% of online purchases are controlled by women
- 55% of social media users are women
Women in leadership ensure success.
- Companies with women in top management achieve 35% higher ROE on average.
- Venture backed companies with female founders are more likely to go public.
- Companies with female board members routinely outperform those with no women on the board.
In spite of all this data…
Women only hold 14% of board seats at S&P Composite 1500 Companies.
The number of new S&P Female Board members has declined 9% over the last 5 years
So if women are such a dominant part of the workforce, control spending, and companies perform better with women at the helm, why are there so few female board members? Here are a few expert opinions:
According to Catalyst Research: “the under-representation of women on corporate boards is not about a lack of supply”.
According to HBS Professor Groysberg: “if you’re a woman seeking a board seat, you have to be overqualified, and on top of that it’s really hard to get in”.
So if you believe the experts that the supply exists, but we have cultural norms that force discrimination, what can be done?
Let’s look at some of the solutions around the world:
- Norway: enforces a mandated quota of 40% female board members.
- Finland: established a policy in which companies without female board members would have to provide an explanation.
- Sweden: provides governmental incentives to promote women.
Many naysayers think mandates will force unqualified women onto corporate boards and sour everyone on female board members. I disagree. I believe change will not happen in a meaningful way until we, as a society, force change.
What do you think is the right solution?
*Sources: Harvard Business Review, Credit Suisse Research Institute, Ernst & Young, Heidrick & Struggles, Women Corporate Directors Organization, Spencer Stuart, Dow Jones, Venture Source