The topic of the value of getting more women in the top echelons of corporate leadership has garnered a great deal of coverage as of late. Credit Suisse published a report in 2012 stating that their research shows that having more women on corporate boards increased both the share price — particularly in volatile markets — and the return on equity (ROE) of companies. Norway, the first country to have instituted a quota of 40% on boards in 2003, now says that this presence of women in leadership has made boards and companies more professional and more global, as they had to search outside of the borders of Norway for women to serve. To date, France, Malaysia, Iceland, Italy, the Netherlands and Spain have followed suit to break this glass ceiling.
Last week, the Thirty Percent Coalition reported the small but encouraging fact that eight companies who previously had no female directors have now appointed women. The goal of this coalition is to pursue companies with no female directors who are in the S&P500 and Russell100, with an ultimate desire of thirty percent board of directors’ seats being held by women by the end of 2015. The Coalition notes that 168 companies received letters beginning in June 2012 and continuing into 2013, urging them to consider gender diversity as a boardroom priority. These letters were signed by institutional investors representing over $1.2 trillion assets under management. During the 2013 proxy season, shareholder resolutions on board diversity were filed with 25 companies, of which 18 have been withdrawn based on mutual agreements. Three proxies that did go to vote in 2013 received 51%, 28% and 29% support, respectively. It is slow progress for sure, but progress nonetheless. Yet lest we get too positive and give up the battle too soon, note that Twitter, which is expected to file for its IPO this week, is doing so with zero women on their board. Maybe they haven't read the research?
Another recent study found that female leaders bested their male peers on traits such as empathy, influence and conflict management, and even have a slight edge when it comes to self-awareness. And 360 evaluations discovered that women are rated higher in 12 of the 16 competencies that go into outstanding leadership.
This complements the focus of my research, which focuses on positive return beyond shareholder return. While clearly we live in a world where shareholder return is still the primary metric of corporate success, we know in this community that there is more. We know that companies also need to be returning positively on environmental, social and governance (ESG). In a study that I conducted, Women Create a Sustainable Future, I investigated the correlation between having even one women on a board and improved ESG performance among 1200 Fortune companies. Indeed I found correlation between all three. Most statistically significant was environmental performance: reduction in packaging, increased investment in alternative energy, reduced CO2 emissions, and reduced water waste. Second most statistically correlated was social performance: investment in healthcare access for workers throughout the supply chain, improved health and nutrition profiles of product offerings, and better talent management. And finally, there proved to be a correlation as well with governance: less fraud, corruption and misreporting of numbers. In short, fewer CEOs being carted off in handcuffs, period.
So, if appointing women to top tiers of leadership makes sense for shareholders and the rest of the world’s stakeholders, what is the hold-up? I have a few suggestions herein. We currently view the job description for board members far too narrowly by positing that an eligible appointee has to be or have been a CEO or investor. We need to far expand this search criterion: Why not experts in talent management, brand, and improving society and the environment? While I used to be vehemently anti-quota, I have watched quotas work extremely successfully via Title IX in intercollegiate sports and access to higher education, and in countries such as Norway. I think quotas are necessary simply to get women to the first door on entry, and once we are there, we will pass through subsequent doors based on competency. Perhaps most importantly is the complete lack of awareness of the snail-paced slow progress of women into leadership, as well as the business case for supporting this progress. To that end, please share this article with everyone you know. We must keep this conversation and data front and center. As Hilary Clinton said, “Women are the most underutilized resource on this planet.” Enough said.