Gender diversity has been quite the hot topic in Silicon Valley. After Sheryl Sandberg’s book “Lean In”, there appears to be a steady stream of talks, conferences and news stories about this topic. At our company, Equilar, we are building a product that allows a company to assess their Board of Directors. One of the factors is gender diversity. Even with all this attention only 19% of Board members in US companies are women.
Aaron Dhir’s book
Recently I attended a talk at the Stanford Law School entitled “Where are the Women: Strategies for Increasing Board Diversity“. The conversation included the Aaron A Dihr, the author of the book “Challenging Boardroom Homogeneity” and Deborah Rhode, a professor at the Stanford Law School. These are the notes and thought that me and one of my colleagues took away from the discussion.
Spoiler Alert: Trying to force gender diversity is extremely difficult. Similar to socio-economic movements like racial equality, it’ll take decades to radically change. In fact, it may take a new generation of workers to fully implement true equality.
At the current rate of adoption on corporate boards in the USA, it will take about 70 years to achieve a 50/50 split. hardly encouraging.
The Way in Norway:
One on of the interesting anecdotes was the state of corporate law in Norway, where companies are required to have 40% female board members or risk dissolution. Aaron used Norway as a case study in many of his discussion. Could forcing gender diversity by law enact change? In the early days of the law’s passage there were companies desperately trying to get women, any women, onto their boards. This gave rise to a few not so nice terms like “Trophy Directors aka Trophy Wives” and “Golden Skirts”. Even then, the women hired were those that would most likely vote with the rest of the board. So diversity didn’t really change the vote, but it did re-distribute power. Over time, the women started to engage more and challenge the status quo. Sixteen countries now have a quota, but the USA lags still.
Stanford Law School hosts a talk about gender diversity
Interesting Anecdotes and Jokes:
Deborah indicated that women are thought to be more adverse to risk. If Lehman Brothers had been Lehman Sisters, they might still be around today!
Much research has been done, but has not proven that diverse boards will perform better financially. This has been one of the key problems facing this movement.
There are only 2.8% women in the Fortune 500 boards. Why? Some reason offered are:
- Not enough qualified candidates
- Women are just not as interested
- Interested but not being selected.
Culturally we expect men to be better leaders. There’s an unconscious bias to look in socially similar networks. These happen to be closed networks. We need to look outside the traditional CEO/CFO titles for candidates.
The funny thing is that in a recent survey, 79% of respondents say that past CEO’s are not good board members because CEO are used to pushing to get their way. They are not as open-minded.
In a survey of the Fortune 500, less than 50% even talk about diversity in their proxies. When they did, they talked about diversity in experiences and not gender. Surprisingly one of the most well known and progressive companies, Amazon, openly says that they do not think about gender diversity at all. This surprised Dr. Rhode.
What can we do?
We as a society expect more of the BOD since the 2008 meltdown. Diversity will be a slow trickle down effect. If shareholders can force diversity disclosures on the ballot and the SEC can demand disclosure, that would be a beginning.
Another idea is to have tenure limits to force board refreshes at a set interval. As we pass through a few generations of BOD members, new thinking will emerge.
As we look for members for a BOD, look outside the traditional past CEO/CFO roles. Look to lawyers, accountants, academics and people who have been on non-profit boards. This will grow the available pool and will invariably include more women.
Look to examples of success in diversity. Surprisingly the NFL and Military are great leaders in this area. They have more than tripled the % of women coaches and generals in the past 10 years.
Not surprisingly, one of the goals of our upcoming product offering is to unveil relationships and broaden the pool of candidates for board members. During our Summit in June, all will be revealed!