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Dux Femina Facti – Kogod Now
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Kogod Now / Faculty Research  / Dux Femina Facti
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Dux Femina Facti

“Working well as a team member…We hardly even notice she’s a girl anymore,” remarked a reviewer of Victoria Harker’s performance at the end of her first year on the board of directors at a publicly traded company.

Harker, MBA ’90, is executive vice president and chief financial officer for global power company AES Corporation, and one of two women on the boards of Xylem, a global water technology provider, and Darden Restaurants Inc., the parent company of restaurants such as Capital Grille and Olive Garden. She does not fit the profile of a typical board member; most are white males.

Harker and the reviewer’s comments exemplify a recurring theme on boards of publicly traded companies: there are few female board members, and where they do exist, they tend to make up only one or two of the 12 seats at the table. As a result, they may be invisible, pointed out, or stereotyped as representing all women.

“There are adequate numbers of women and minorities in organizations, but they’re just not represented in upper echelons,” said Assistant Professor Caren Goldberg, whose research focuses on gender and diversity in human resources. “If you look at where they are, most are at the lowest two rungs of the ladder.”

Yet female board members have been shown to have a positive impact on company performance. Women make up nearly half the labor force—about 47 percent in 2009—meaning that companies who do not employ female board members may forfeit their comparative advantage. When there are more diverse voices in the boardroom, then more of the stakeholders’ broad perspectives are represented, decision making improves, and the board is more open and collaborative.

Scholars, politicians, and business people alike have begun to realize the benefit of having women on corporate boards. So why do women hold only 15.7 percent of board seats at Fortune 500 companies, according to Catalyst’s 2010 Census? And what can be done to ensure that more female executives earn those top spots?

Women in the Boardroom

Female board membership infographicTo get a glimpse into the situation in the Washington metropolitan area, the professional group Women in Technology commissioned a study from Kogod on female board membership in Washington, DC, and Virginia.

Graduate students Susanne Barakat, MA/MBA ’12, and Julie Bloecher, MBA ’11, looked at 172 publicly traded companies headquartered in the District and Virginia that are listed on the major stock exchanges (AMEX, NY, and NASDAQ).

Their 2010 report, conducted with the help of Information Technology Executive-in-Residence Jill Klein, did not reveal a rosy picture.

Women hold only 101 (7.7 percent) of the 1,318 board seats at 160 Virginia-based publicly traded companies.

In Washington, women hold 14 (12.9 percent) of 109 board seats at 12 District-based public companies.

“DC can look pretty good because it’s strictly an urban space, and urban America tends to be a little bit more forward-thinking,” Klein said, cautioning that the small number of DC companies means a small sample size. “Virginia is probably much more representative of what we see across the country. I don’t think DC and Virginia are necessarily out of sync with the rest of the country in terms of having few women on corporate boards…it’s sort of a national plague.”

Fortune 500 companies often have more female members, said Vicki Warker, chair of WIT’s corporate board committee, who commissioned the report when WIT started thinking about creating a program on board membership.

“I think we were all a little shocked that the numbers were that low,” Warker said. “But when you think about it, the numbers that are typically reported are for the Fortune 500 companies, which tend to have a higher profile, and I think they understand it could be a PR disaster for them to have no women on their board. The study that we did covered all publicly traded companies headquartered in DC and Virginia; they’re smaller companies and probably less high-profile than the Fortune 500 companies.”

A Critical Mass

Klein also stressed the importance of obtaining a “critical mass” of three or more women, which allows more diverse opinions to be heard and represented on the board.

If there is a solitary female member, she may not be willing to participate or speak up as an outsider. “When you achieve the critical mass, then there’s a little bit more comfort for the women on the board to participate as equals with the men,” Bloecher explained.

More women also means women are less likely to be stereotyped and seen as the “token” female who represents the opinions of all women.

“It’s not just getting women on the board, it’s getting a critical mass so their voice is not lost or misrepresented,” Klein said. “One woman can’t speak for all women. Nor can three women, but you start to get a better consensus on things that women are thinking about.”

Nearly all of the Virginia- and DC-based companies—97 percent—failed to achieve a critical mass.

Adding Value

Female board members by industry infographicAlthough there has not been a large amount of academic research conducted on gender diversity among corporate boards, and existing studies are certainly not cast-iron, scholars have come to a few conclusions about the benefits women bring to boards.

Bloecher and Barakat’s report pointed out a few of the benefits that result when a board reaches a critical mass of women:

  • • Discussions are more likely to include the perspective of multiple stakeholders, from employees to customers to suppliers to the community at large, who all affect—and are affected by—company performance.
  • • With more women, the board is much less likely to ignore or brush aside difficult issues and problems, leading to better decision making.
  • • A diverse boardroom is also more dynamic, open, and collaborative, helping managers listen to the board’s concerns and take them to heart without being defensive.

It also comes down to simple comparative advantage: boards have few women. Women make up nearly half the workforce. By focusing on only one half of that workforce, boards lose out on hiring possible talent.

“If appointing women to boards results in positive financial benefits, the fact that Virginia and DC companies report lower than Fortune 500 averages in female board membership suggests that local companies may be forfeiting their comparative advantage,” states the WIT report.

While the initial transition to diversity may be uncomfortable for some and members’ attitudes will need to adjust, research has shown that the advantages of diversity will outweigh the downsides within about two months, Goldberg said.

“Beyond that time, diversity tends to pay dividends in terms of performance and productivity,” she explained.

Detracting Value

One research study that Goldberg coauthored determined that not only are there positives to having women in a company’s top spots, but there also are negatives to not having them there.

The study, published in the journal Human Relations in 2010, examined gender composition and perceived reward and social outcomes. Researchers asked participants to answer questions about their workplaces’ perceived fairness, discrimination, organizational support, exclusion, and gender harassment. Though the sample comprised male and female medical doctors in Sweden, the findings could apply to a wider population.

Goldberg and her colleagues, Alison Konrad at the University of Western Ontario in Canada and Kathleen Cannings of Uppsala University in Sweden, found that

  • • women who worked in medical units with a larger percentage of men reported more gender harassment;
  • • women who had a male supervisor reported less organizational support; and
  • • women who worked in an organization with a male head reported more gender discrimination.

“Gender of the top organizational leader is likely to have both material and symbolic effect on the organization’s climate for gender diversity,” the authors write, giving the example of President Barack Obama and racism. Many Americans saw Obama’s election as a sign that the United States may be moving past racism. Similarly, employees and shareholders could perceive that a company with top-level female managers, like women board members, does not engage in gender discrimination.

So Why are There so Few Female Board Members?

If female board members bring both symbolic and actual value to a company, why do so few boards achieve the critical mass of female membership?

Historically, women entered the workforce later then men, and mostly not until the 1960s, when the 1963 Equal Pay Act required men and women who perform equal work to receive equal compensation, and when Title VII of the 1964 Civil Rights Act prevented employment discrimination based on sex, race, religion, or national origin. In 1972, the Equal Rights Amendment passed out of Congress but is still three states short of the requirement for ratification to become part of the US Constitution.

But that decades-long head start does not fully explain why men still dominate corporate boards.

“It’s been really glacial progress adding women to boards,” Harker said. “I’ve watched the selection process take place as a board member, and my perception would be that, because a lot of boards are not that diverse to begin with—which is to say largely white males—they tend to tee up those that they know and have worked with in the past, which by definition becomes a replicating model.

“There is a tendency to nominate within the search process those they are most familiar with, which is their own background and experience.”

So board members look for potential members who are like them, creating a cycle of men who select men who select men: a “good ol’ boys” club of sorts.

Goldberg describes it as a catch-22: There are fewer senior-level women in the workplace, therefore certain positions are not seen as not appropriate for women, and thus women are not given those positions.

Men are also more likely to network with other men, bonding over, say, beer and football and perhaps leaving out their equally qualified female colleagues.

Others argue that it is not a problem of board members not choosing women, but of women not choosing boards.

Many women put their careers on hold for a decade or more while they raise children.

“That’s clearly going to keep people out of the running for corporate boards,” Klein said. “The reality is that you have to raise families, so you’re going to have to make some of those really hard choices.”

Klein, who is also the adviser for the Kogod Women in Business student organization, said the women in the group often discuss the challenges they will face in the first five years of their careers, including starting a family.

Goldberg agrees.

“We, as the United States, lag behind dozens and dozens and dozens of countries in terms of family-friendly policies. Even countries that are clearly less economically developed than the United States offer a great deal more to new parents than the US does,” she said.

Possible Remedies

The solutions for getting more women onto corporate boards are far from simple.

More family-friendly policies, including more leave and flexible hours for women and men, may allow women to continue their careers, move up in the corporate world, and grab a few of those coveted board seats.

But also key is providing training and networking for top-level women so they can one day become prospective board candidates.

“Men have always felt comfortable enough to network with other men and make contacts, and it should be the same for women,” Bloecher said.

The WIT report led to the creation of The Leadership Foundry in January 2011, a networking and mentoring program for a handful of senior-level female executives who are interested in joining a board of directors.

“It’s probably as much about increasing the conversation as it is about producing more women who are ready for board membership. Frankly, there are a lot of women who are ready, and companies are just not aware that there are women who are ready,” said Vicki Warker, a civil engineer by training.

But while training, networking opportunities, and family-friendly policies may ensure that more women are adequately prepared for board membership, they do not address the fact that people still often select people similar to them—men selecting men—for board membership.

In 2005, Norway mandated that all corporate boards be at least 40 percent women. A dozen other European countries have followed suit, and, in 2010, Britain’s prime minister David Cameron called on companies to appoint more women directors.

Proponents of Norway’s legislation, including the female head of its Centre for Corporate Diversity, say the new female board members are more highly educated, more international, and younger than their male colleagues.

Critics say such laws promote “window dressing” as corporations add female board members who are less qualified in order to meet quotas.

Harker expressed similar concerns.

“I’m not always sure that they end up with the best slate of qualified board members. They may be checking the box in order to say, ‘We have XYZ number of women,’” she said.

Instead, she encouraged diversity as an internal focus for boards and an external demand from investors.

“As investors have taken more of a lead in terms of demanding things like transparency in corporate governance, for example, the composition of the board should be something shareholders are asking for,” Harker said. “More transparency around a board’s plans for adding diversity, just like they [disclose] age, tenure, and that list of things shareholders or individuals ask for.”

Shareholders could ask for diversity among board members, soliciting a board’s yearly plan for how to include more diverse voices, for example.

“On our side of the pond, we’re looking at these European laws with great interest,” Klein said. “We may have to legislate it, but I’m hoping we’re smart enough to look at what other countries are imposing and saying, ‘We can get there without legislating it.’”

Goldberg agrees that incentives—whether playing up the benefits women bring to boards or providing incentives to boards that hire women—are key to promoting diversity, but that similar legislation in the United States might serve a purpose.

“I do think legislation helps in the long term,” Goldberg said. “If you look at what happens in the short term, it creates tokens out of women and minorities who perceive, either rightly or wrongly, that they were only put into a position because of their gender or race. But I think that, in the long term, that sort of exposure is needed for people to feel more comfortable working with women or minorities in top-level positions.”

Goldberg believes legislation can help break that cycle, although it may take time for a new cycle, one that values diversity of all kinds, to be instated.

In the meantime, Harker takes the two female board members and the female members of her team from her own company, AES, out to lunch sometimes, creating an informal network and showcasing the up-and-coming women.

“That’s what the good ol’ boys do, after all,” she said.

She now laughs about the gender-biased review she received.

“Hopefully I’m bringing value whether I’m wearing pantyhose or not.”


*From Virgil’s Aeneid: Dux Femina Facti, or “A woman was leader of the exploit.” A rare example in Latin verse of a feminine noun paired with a masculine verb.

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