Where Are the Women Board Members?

Big U.S. companies lag badly when it comes to getting females on the board of directors

    View All  

Where Are the Women Board Members?

corp board Where Are the Women Board Members?There’s no doubt that American women wield impressive purchasing power and have taken great strides in business and financial sectors. Just yesterday, Yahoo (NASDAQ:YHOO) named former Google (NASDAQ:GOOG) executive Marissa Mayer as its CEO and also appointed her to the board of directors.

In the U.S., females make about 75% of all buying decisions, own 40% of privately owned businesses, hold 51% of the country’s private wealth, account for 50% of all U.S. stock ownership and constitute nearly 60% of college grads.

Citigroup Where Are the Women Board Members?
Citigroup: Too Big to Grow?

It’s also been estimated that in the U.S., women control about $7 trillion in consumer and business spending. To add a dose of perspective to that figure, Japan’s entire economy is about $5.5 trillion.

Such staggering stats add to the shock factor regarding the next set of numbers: Women held only about 16.1% of board seats on Fortune 500 companies in 2011, according to a Catalyst study. The same report concluded that less than one-fifth of companies had 25% or more women board directors, and approximately one in 10 had no women at all on their boards. Clearly, Yahoo’s high-profile move with Mayer on Monday is the still the exception.

Research also shows that the U.S. trails Europe regarding female representation on large corporate boards. Although most European boards are predominately male, some countries have begun taking aggressive measures. The U.K.’s 30% Club is a prominent example.

The 30% Club was founded in 2010 by Helena Morrissey, CEO of Newton Investment Management, with the objective of bringing more women onto U.K. corporate boards. The group’s goal is to have 30% female representation on the boards of each of the 100 largest companies in the FTSE Index. To reach its goal, 145 more females need to be appointed to FTSE 100 boards. A few weeks ago, the 30% Club celebrated obtaining the support of more than 50 chairmen.

The possibility of established quotas — an initiative led by European Commission Vice President Viviane Reding could pass later this year — has acted as a spark for European companies to proactively seek more women to fill board positions. “No one wants to wait for regulations to do the right thing,” Jan Babiak, who serves on the finance and audit committees of Walgreen‘s (NYSE:WAG) board, said in an interview with InvestorPlace. Babiak also chairs the audit committee for Logica, a FTSE 250 company headquartered in the U.K.

“Companies want to make decisions on their own terms,” Babiak said, “so the threat of a government mandates could help bring more qualified women to U.S. corporate board rooms.”

Babiak, who holds dual U.S. and EU/U.K. citizenship, believes that Reding’s initiative — along with an influential study conducted by Lord Davies of Abersoch that examined the benefits more diverse boards bring to companies — helped spur many U.K. chairmen to support organizations like the 30% Club.

Beyond Quotas

Having greater female representation on more of the boards of America’s most influential companies is about more than numbers. It’s about more than doing what looks good through the lens of political correctness. It’s about doing the right thing. And not just about what’s right in the terms of gender equality, but what’s right in terms of a company’s bottom line.

Research shows that companies with more female board members perform better financially than companies led by less diverse boards. For Babiak, that logic is common sense.

“It’s human nature for people to gravitate toward others who are like them, and there is something to be said for the old saying ‘great minds think alike.’ But if you put together a group of 10 people who think alike, you’re going to end up with nine redundancies,” Babiak said.

Patricia Russo, the lead director for General Motors (NYSE:GM), is chairman of the carmaker’s compensation and benefits committee. She’s also a member of Alcoa‘s (NYSE:AA) governance and nominating committee, and its executive committee. Additionally she serves on the boards of Hewlett-Packard (NYSE:HPQ), KKR (NYSE:KKR) and Merck (NYSE:MRK). Russo stresses the importance of including more diversity, including gender diversity, in large public companies.

“Companies are dealing with tough, complex issues these days in an increasingly global, increasingly competitive environment,” Russo said in an interview with InvestorPlace. “Having people around the table with different experiences, who have different questions, enables a more robust, enriched perspective. And when you have that, you are better able to make good decisions.”


Article printed from InvestorPlace Media, http://investorplace.com/2012/07/where-are-the-women-board-members/.

©2014 InvestorPlace Media, LLC

Comments are currently unavailable. Please check back soon.