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Legislators in California passed a bill recently that would require publicly-traded companies headquartered in the state to place at least one woman on their board by the end of 2019. Though Governor Jerry Brown has not signed it into law as of this writing, it is a big step in the right direction. "One-fourth of California's publicly traded companies (Including Skechers and TiVo) still do not have a single woman on their board, despite numerous independent studies that show companies with women on their board are more profitable and productive," California state Senator Hannah-Beth Jackson told the Wall Street Journal. "With women comprising over half the population and making over 70% of purchasing decisions, their insight is critical to discussions and decisions that affect corporate culture, actions and profitability."
If the bill is signed into law by California governor Jerry Brown, it would be the first state to take such a step. The California legislation would require companies with five directors to add two women by the end of 2021, and companies with six or more directors to add at least three more women by the end of the same year.
Unlike some European countries, the United States doesn't mandate female representation on company boards. A majority of companies in the S&P 500 have at least one woman on their boards, but only 25% have more than two, according to a study from PwC. We can do better than that. There are many highly qualified women out there who would be terrific board members. We should give them that opportunity.
I’ve been a board member on a NYSE company since 2003. It’s a privilege to serve and I have learned a great deal along the way. I serve alongside Dr. Judith Craven and we comprise a group of nine. This extensive experience led me to write a book about board service a few years ago. In writing it I learned a great deal about the value of having women on corporate boards and how the dynamic changes when they are there.
For example, I came across a revealing piece of research published by Anita Woolley and Thomas W. Malone in the June 2011, Harvard Business Review, entitled “Defend your Research: What makes a team smarter? More Women.”
The authors reported, “There’s little correlation between a groups’s collective IQ and its individual members. But if the team includes more women, the collective IQ rises.” The authors and their assistants had given standard tests to subjects between 18 and 60 years old. Each team was asked to solve one complex problem along with completing such tasks as brainstorming, visual puzzles and decision-making exercises. Teams were given intelligence scores based on their performance. Though the teams that had higher IQ’s didn’t earn much higher scores, those that had more women did.
As Dr. Craven so aptly writes, “A woman’s natural aptitude for intuition, diplomacy and values-based decision making are critical to leadership.” Bottom line: There’s a solid business reason to have diversity of all kinds on corporate boards.
Research is clear that female representation on boards is key for women's advancement in corporate America. Women on boards are more likely to consider female leaders for the C-suite and choose more diverse candidates for the board itself.
That warms my heart. But it should warm the hearts of corporate managers, stockholders and chairpersons across the land. It makes good business sense. If our primary job as corporate leaders is to drive the company forward and lead it into a profitable future, then choosing women for more boards is a no brainer.
