Gender quotas not the answer
It was a decision felt in corporate boardrooms around the world: Germany, Europe’s biggest economy, will mandate gender quotas to give more women seats at the table.
Will, and should, the United States be next? The answer seems like it should be a resounding yes when you look at the glacial pace of change.
Despite affirmative action, the rise of women to executive suites, and studies that show diverse boards are better for bottom lines, women make up only about 19 percent of the boards of the biggest US public companies.
Compare that to 35.5 percent in Norway, where a decade ago the country passed a law requiring that women make up 40 percent of corporate boards. Germany’s new law calls for 30 percent of board seats to go to female directors.
Dig deeper into America’s track record and the numbers are more sobering. About 160 of our largest firms have all-male boards. We’re not immune in Massachusetts, where nearly two dozen of our big public companies still lack female directors.
Yes, Neanderthal thinking lives even here in the land of liberals. Perhaps that’s why our state has become a breeding ground for advocacy groups pushing for female directors, from the Boston Club to 2020 Women on Boards to the Thirty Percent Coalition.
Talk to these activists, and they’re united in their response to gender quotas: They won’t work in the United States.
Here’s why: Corporate America doesn’t like government telling them who to put on their boards, and women don’t want to become directors because someone is checking a box.
Besides, Washington can’t even agree on how to balance the budget, let alone hold a meaningful debate about gender equity.
But there are levers we haven’t pulled — or can pull harder on. Let’s start on Beacon Hill.
Treasurer Steve Grossman got the ball rolling during his term when he pushed for a “zero tolerance for zero diversity” policy. The message to companies: If you want a piece of Massachusetts’ $60 billion-plus pension fund, you better have a woman or a minority on your board. His successor, Deb Goldberg, wants to take that one step further by setting percentage guidelines for women and people of color on boards. If you don’t have a diverse board, the pension fund will vote against the company’s proposed slate of directors.
“Social change comes from grass-roots actions,” she said. “The idea is to keep the drumbeat going.”
At the State House, Karen Spilka, chairwoman of the powerful Senate Ways and Means committee, and Patricia Haddad, the third-ranking member of the House, are making noise with a resolution proposed in January.
They set a 2018 goal for Massachusetts companies that have boards with nine members or more to have a minimum of three female directors; smaller boards should have a minimum of two women. Firms should also have policies to increase gender diversity among their leadership and measure their progress annually.
The nonbinding resolution has no legal force, but the act of going through the Legislature will draw attention to how women are making strides in the workplace but hit their heads against the glass ceiling in the boardroom. Already, nearly 50 legislators have signed on.
“I don’t think this is a conscious effort to exclude women,” said Haddad of the dearth of female directors. “A guy on the board just says, ‘I know a guy.’ ”
Haddad wants to see more executives get out of their comfort zones when they’re filling board openings.
“You should be asking, ‘Is there a good woman?’ ” she said. “I think that will start to change things.”
For Nancy Nager, a leader of the Boston Club, a group of female executives who help place women on boards, change happens when investors start to vote with their checkbooks.
“In this country, money talks,” said Nager, chief executive of the Newton health care company SBSC Inc. “Money is much more powerful than quotas.”
To that end, the Thirty Percent Coalition, cofounded by local lawyer Toni Wolfman, has been organizing institutional investors to write letters and propose shareholder resolutions to promote diversity on boards. There’s power when the managers of $3 trillion say they don’t like something.
“How do you send a message to the boardroom?” asks Tim Smith of Boston-based Walden Asset Management and cochairman of the coalition’s investors committee. “You do it using a combination of private persuasion and public pressure.”
Other buttons to push: the Securities and Exchange Commission. The regulator could change the makeup of boardrooms by requiring public companies to report on the gender and race of their directors, and by getting firms to explain their diversity policies.
Venture capitalists — who have their own issues letting women into their world — also play a role. Imagine what would happen if this male-dominated community started requiring startups to have women on their boards.
Add all of this up — and Corporate America can change without quotas, but we can’t let up.