I read today that the Fortune 500, the annual ranking of America's largest 500 companies, currently features only 12 companies led by female CEOs. That same publication's recent '40 under 40' list featured only five women. Depressingly almost all of the most prominent companies that I interact with every day, including Facebook and Twitter, have no women board members.
The underrepresentation of females in the highest echelons of the corporate world permeates almost every industry and is particularly evident in white collar professions. In the United States, where women represent nearly a third of the legal industry, only about 19 percent of partners at the nation’s law firms are female, according to an August study by the Institute for Inclusion in the Legal Profession.
European boardrooms are only marginally more diverse. Recently released statistics from Europa show that on average only 33 percent of managerial positions in Europe are filled by women. Despite the fact that female students outnumber males in business, administration and law, the proportion of women directors in top quoted companies is only three per cent across the EU and only one in ten company board members is a women. There are no female governors of any national central banks in the EU.
In case you haven't have enough of statistics, I'll add that American women still earn eighty cents to the dollar compared to men, according Bureau of Labor Statistics' Women at Work report. In Europe there is still a 15 percent pay gap between women and men and just 30 percent of European entrepreneurs are female.
These figures are difficult to understand given that women earn almost 60 percent of university degrees in America and Europe and make up approximately half of the workforce in most developed nations, at 49 percent in the US in 2009. In addition, several studies have found that board diversity is linked to better financial performance. There is evidence that more diverse boards have better governance. Analysis by McKinsey and Deutsche Bank has opined that companies with more women on their boards make fewer errors because women do not favour unconsidered risk taking, resulting in better retention of money. Despite all of these truths, women are simply not ascending the career ladder in the same way that men do.
Given the strong female presence in the workforce and the highest leagues of education, and the gaining of almost universal equal rights protections, why does this underrepresentation of women at the highest corporate levels persist? Commentators provide a never ending list of suggestions. Most of these inevitably locate the root of the problem in motherhood.
Despite the clear trend for women to postpone having children until their thirties and later, having a family is often quoted as the single most detrimental factor for corporate women. Have you ever heard a man being asked how he juggles work and family? No? This is because having children is not recognised as particularly harmful to a man's career. Despite the two partners involved in childbirth and the fact that the only definite consequence of childbearing for a woman is to remove her very temporarily from the workforce, having children is considered to radically change only a woman's time constraints and values. The role of men as carers versus breadwinners is another argument, and though relevant it's too involved for me to focus on today, but it can't be denied that women take on a solely childrearing role far more readily than men do and in general do not give birth and then wish to hand over their children to focus solely on their careers.
Yet even if we recognise that women do for a period prioritise raising their children, in practice this means merely a five to ten year period where a woman is marginally less available for professional undertakings. Not wholly unavailable; just more constrained. Such constraints do not explain or justify the halting of a woman's career progression. Surely it is the rigid corporate culture that demand excessive hours and an all or nothing approach that rejects inflexible employees that is responsible.
Having children is not the only contributor to the underrepresentation of females in top corporate jobs. Senior corporate executives are often referred to as operating in an 'old boys club' environment. The consultation process for the Davies report (discussed in the next paragraph), which received 2,654 responses from mostly women, revealed two main barriers for women seeking corporate ascension. The first revolved around work-life balance, the second around 'the male cultural environment'. The influence of 'informal networks' on board appointments in addition to opaque selection criteria were a significant barrier to women, the report found. Discriminatory mentoring, an undervaluation of female skills both by women themselves as well as their peers and a lack of role models were also highlighted as contributing factors.
Women also face more indefinable hindrances relating to their value in terms of youth and beauty. Unlike men, women are judged not only on what they say and do but on how they look – perfectly evidenced by Silvio Berlusconi’s crass dismissal of Angela Merkel, Prime Minister of the biggest economy in Europe, as 'an unf**kable fat ass.' Women are also criticised for showing traditionally male traits, like aggression, when such behaviour is often necessary for success in a corporate environment.
What can be done to address this inequity? Positive regulatory action is the first step. Public policy in the Nordic countries, in particular, makes it easier for parents to reconcile employment with family care. In 2003 Norway introduced a quota for all listed companies requiring that 40 percent of their board seats be filled by women. Supporters of this measure claim that the quota has directly effected financial gains for these firms, although a study by the University of Michigan is not quite so glowing. It holds that the financial performance of Norwegian companies suffered at least in the short term because of the presence of younger, less experienced board members. Other concerns were raised within Norway and outside relating to the supply/demand inequality created by the quota system. The result, critics said, was that some of the more capable female directors were being asked to sit on a range of boards, far too many to have the time to be able to add real value to every company. Regardless of the results, the fact remains that this quota achieved what it set out to do; ensure equal representation of men and women in company leadership.
With discontent growing in the UK over what many see as excessive remuneration paid to largely male executives, the British government has been pushing itself as a supporter of women in business. Prime Minister David Cameron recently spoke of his desire to get rid of the 'usual sort of rotating list of men patting each other's backs and increasing the level of remuneration. I want to see more women in Britain's boardrooms, which I think would have a thoroughly good influence.' In practice his willingness to make the kind of decisions that would directly improve women's chances, as in Norway, is doubtful. The most progressive UK move taken so far has been Lord Davies' recommendation that UK companies listed in the FTSE 100 should aim for at least a third of their board to be female. However a progress report just published by Cranfield School of Management shows that during the review period only 21 women were appointed to board positions out of a possible 93. This represents 22.5 percent of all new appointments, some way short of the 33 percent recommended in the Davies report.
Government action is a must, not a maybe. 'If we persist with current rates of change, it would take about 70 years for women to achieve parity' on U.S. corporate boards, according to Stanford law professor Deborah Rhode. As long as the boardroom is still a male preserve, women will continue to earn less and male characteristics will dominate the way big corporations do business. Virginia Rometto took the helm at IBM on the 1st of January, the same day that e-Bay founder Meg Whitman took over at Hewlett Packard. That these women are the first female CEOs of the largest technology companies in the world is at least a step in the right direction.
