There’s a Girl in the Boy’s Board Room: Gender Parity Advocacy Rooted in Pro-Business Language
Written by Sheila Bapat for RH Reality Check.
Last week, European Union Justice Minister Viviane Reding proposed requiring 40 percent female representation on all European Union (EU) public company boards by 2020 (state-owned companies must meet the requirement by 2018). This is a strong-arm tactic to address gender disparity on corporate boards, which is common worldwide: European corporate boards have roughly 12 percent women, and globally women make up about 10 percent of corporate board members. If the European Commission approves Reding’s proposal, the EU will join the ranks of Norway, India and several other governments that already have similar quotas for women’s representation on corporate boards.
The United States is not among these governments; in fact, Reding’s proposal is proof of the stark disparity in policy aggressiveness on gender parity issues in the United States versus other countries. In the United States, there are no policies in place with teeth to actually increase women’s leadership in business–and there aren’t really any policy proposals in the pipeline, either.
Even though women’s representation on corporate boards hovers at barely 16 percent in the United States, it is unlikely that government-mandated gender parity quotas could ever be politically palatable here. More importantly, it is unclear whether government-mandated quotas are a sound policy solution for increasing women’s influence and changing how institutions act. European countries have shown some detrimental results from the quotas they have instituted, as documented by the World Bank’s recent report “Gender Quotas and Female Leadership.” The report found that some male leaders of corporate firms respond strategically to government quotas in order to dilute their impact, and that some countries with quotas have been slow to achieve compliance. Quotas have long been unappealing to many Americans, even, for example, in the context of college admissions–U.S. feminists know that pushing for gender quotas could be politically disastrous.
Instead, groups like the 30 Percent Coalition, an advocacy organization that hopes to achieve 30 percent women’s representation on U.S. corporate boards by 2015, push for voluntary gender parity through appealing to the American capitalist. They focus on persuading corporate leadership as well as policymakers that more women on boards is good business. They talk about the economic and cultural value of increasing the number of women on corporate boards to at least 30 percent, as well as the ability of companies to attract and retain talent if they diversify, as exemplified by a letter the 30 Percent Coalition recently sent to 41 companies in the S&P 500 that do not have any women on their boards. The advocacy language is necessarily focused on what is best for the company and its shareholders–not as much on justice and basic fairness.
The problem is, even this pro-business strategy in the United States is moving the needle at a snail’s pace. Corporations have been slow to react on their own–famously Facebook finally appointed one woman to its board earlier this year, Sheryl Sandberg, the same women who serves as the company’s Chief Operating Officer. Some companies claim they cannot find enough qualified women directors, but Charlotte Laurent-Ottomane, Project Manager of the 30 Percent Coalition, says there is no shortage of women who could serve. GMI Ratings have created a database of potential board candidates, known as the Diverse Director Datasource, to try to address the qualified candidate question.
While some political leaders have embraced the gender parity cause and signed on to the 30 Percent Coalition’s letter to corporations, the only actual federal policy with respect to corporate governance diversity can be found in Securities and Exchange Commission (SEC) regulations. In 2010, the SEC adopted a new regulation requiring boards to disclose their diversity efforts.
This regulation does not actually require diversity. It only requires that public companies disclose what, if any, efforts have been taken toward achieving diversity. (And we thought “with all deliberate speed” was ineffectual.)
“The SEC regulation created excitement at the time it was adopted,” said Laurent-Ottomane. “But did it make a difference? No, it did not.”
Even the disclosure requirement is not policed, according to Laurent-Ottomane. And the regulation calls only for “diversity” and not gender diversity specifically. The 30 Percent Coalition and other groups lobbied the SEC to adopt the regulation, but Laurent-Ottomane now feels it has not accomplished anything.
“Our goal is to hit 30 percent women on corporate boards by 2015,” Laurent-Ottomane said. “But since companies are not required to do this, it’s going to be a hard target to hit.”
The 30 percent target is rooted in theories about critical mass (not to be confused with the cycling event). “Critical mass” refers to appointing enough women to a board of directors (or any leadership body) so as to impact the culture and substantive decisions of that board. Assuming a board comprised of about ten members, just one female board member may not necessarily make a difference, but two is better than one, and three is significantly better than two.
According to the 30 Percent Coalition’s research, hitting 30 percent female representation on boards affects governance in several ways. The content of boardroom discussion is more likely to include the perspectives of the multiple stakeholders that are affected by company performance, including employees, customers, and the community at large. A recent study about the substantive difference in opinion among female versus male economists underscores the importance of gender diversity in decision making bodies.
More women also tend to make the boardroom open and collaborative, which helps management hear the board’s concerns. In the sectors that have been most resistant to including women in board leadership like oil and gas, advocates push hard on the idea that companies who fail to appoint more women to their boards fail to see all the risks in their decision making.
Again, the advocacy language is focused on what is best for the company–rather than basic equity principles and the economic justice impact of diversifying corporate leadership. It’s a languid, frustrating route to gender parity–but so far, that’s the American way.