Fashion and WardrobeBad Corporate News Finds Few Women on Board
The outpouring of bad U.S. corporate news has produced a news gallery of mainly male faces. There"s a matching shortage of women on corporate boards, although Rupert Murdoch did tap opera singer Natalie Bancroft for News Corporation last year.
Headlines with the word bailout or economic crisis don"t cast any glory, but they do show who"s mainly in charge of U.S. big business.
And the answer is men.
Rick Wagoner heads up General Motors, the Detroit giant on the brink of bankruptcy. Edward Liddy is top executive at American International Group, which found itself at the epicenter of the home loan crisis. Bernard L. Madoff is the manager of a fictional fund dazzling and shaking onlookers by the sheer magnitude--$50 billion--of its losses.
Beneath the news surface, that same male domination is found on corporate boards, which are required to keep companies on the right track.
Look, for instance, at the automakers now in the limelight as they struggle for public help. Women comprise less than 17 percent of directors.
Women"s presence on the corporate boards of the Fortune 500--an annual ranking by the magazine of the country"s leading companies--inched up in the first four years of this decade.
But over the past three years that progress stagnated, with the composition of women in those influential and high-status posts reaching 14 percent and apparently refusing to budge, according to surveys conducted by Catalyst, the New York nonprofit research organization that focuses on women in business.
"The numbers are very low, but what I think is even more significant is that the increases have become trifling," says Sheila Wellington, clinical professor of management at New York University"s Stern School of Business, and former president of Catalyst.
Wellington says that, as in the early 1990s, many companies began taking the view that "women"s advancement is a done deal; it"s taken care of."
She points to the danger of tokenism. Many companies, she says, consider their boards diverse when they appoint a woman or two. For that reason it"s important to continue disseminating hard data about representation.
Wellington, who teaches a class on women in business leadership, also says the low level of women on boards reflects a general defection of women from the corporate work force, leaving far fewer at senior levels.
Women Scarce in C-Suite
Catalyst reports that while 46 percent of the U.S. work force is female, under 15 percent of Fortune 500 corporate officers are. Just 2.4 percent of the CEOs of those companies are women, including PepsiCo"s Indra Nooyi and Kraft"s Irene Rosenfeld.
During Wellington"s 10 years at Catalyst, the organization asked women who left the workplace what would have made them stay.
"Invariably what we found was that these women say they would like the playing field to be level. They would like to be able to have flexible work arrangements," recalls Wellington. "The problem is, even if these exist, it"s career suicide to take them. The immediate assumption is that your commitment to your career is minimal."
The existing male leadership of boards--and men"s tendency to recruit each other--is often raised as an explanation for the scarcity of women.
"Senior people who do the inviting in publicly traded companies are frequently men. They invite people they know and are familiar or comfortable with," says Joan Shapiro Green, vice president of the New York-based Financial Women"s Association. "It just goes around and around."
Roxanne Douglas, president of the Board of Directors Network, an Atlanta-based group that advocates more female executive and board representation, agrees. "Women are customers, employees and shareholders of these companies, so it"s only logical that they would be well represented on their boards."
Female Boards, Female Hires
In July, a Catalyst study found that companies with women among their boards of directors are more likely to hire women for senior positions.
Alison Maitland, co-author of the 2008 book "Why Women Mean Business," says resistance or inertia from male-dominated companies and boards contribute to women"s scarcity in high business posts. Lack of visibility of female leaders, little access to men"s networks and not having operational experience also are factors.
Maitland also says search firms, increasingly used to recruit board members, are reluctant to "look beyond their safe circles," but Madeleine Condit, senior client partner at search firm Korn-Ferry International, disputes that.
"The days of saying that larger search firms primarily offer up men on boards are long gone," says Condit. She says her firm offers up talent drawn from all over, regardless of gender.
"With all the scrutiny and regulation out there, boards aren"t specifically looking for women. They"re looking for the best candidates. In fact, it"s illegal to look for board members based on gender or ethnicity and firms never come to us asking for women board members."
Bonnie Gwin, a partner at Chicago-based search firm Heidrick and Struggles, says women"s numbers on boards can be restricted by stringent requirements, such as experience as a chief executive officer.
But she says the strict CEO criteria for being on many boards is slowly relaxing. "Many boards are now broadening their minds. They"re thinking about other skills like those in marketing, human resources and chief information officers."
All-Male Boards Abound
In 2007, executive search firm Spencer Stuart found that 9 percent of Standard and Poor"s 500 companies--an index of 500 large firms whose stocks are actively traded--had all-male corporate boards.
This included Apple, the Cupertino, Calif., computing company, and News Corporation, the New York-based media conglomerate owned by Rupert Murdoch. Apple has since recruited Andrea Jung, the CEO of Avon Products, and News Corp. has recruited 27-year-old opera singer Natalie Bancroft.
Alice Korngold, a consultant who works with nonprofits to improve their boards and who also prepares executives to serve on nonprofit boards, says companies may succeed with all-male boards but they could do even better with a diverse directorship.
"Any organization limits its potential by limiting its vision by having limited perspectives. It"s just common sense," Korngold says.
Norway in December 2003 passed a law requiring that 40 percent of the boards of publicly traded companies be filled by women before Jan. 1, 2008. Marit Hoel, head of Norway"s Center for Corporate Diversity, was quoted as saying that all major companies have complied. Six years ago just 6 percent of those companies" board members were female.
Jim Kristie, editor of Directors and Boards, a trade publication about corporate governance, blanches at the idea of the United States taking any similar steps.
"It goes against our free market capitalism system to legislate something like that," he says. "I think there would be a shareholder revolt and you could end up with all sorts of unintended consequences. Boards should be free to choose the best people to serve."
Pamela Packard, former president of the Financial Women"s Association, says shareholders can press for board diversity. In March of 2000, Packard led a campaign during proxy season, encouraging shareholders to send letters to their companies about boosting women"s presence on boards.
Korngold cautions such a move can politicize the way a board functions and make it impossible for members to focus on their work. She says the media could do a better job publicizing the composition of governing boards so that consumers and shareholders alike can make informed shopping and investing decisions.
Saabira Chaudhuri is the associate editor for Fast Company.com.
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