More Women Executives: It's Time for a Different Approach

We know that the number of women in the workforce in the U.S. now equals the number of men. And scores of reports and articles have been written demonstrating that the more women in a company's senior management team, the less its share price fell in 2008/09 during the recession. The rising power of women as entrepreneurs, politicians and consumers around the world is have a revolutionizing impact that we are just beginning to see.

We know this, but why don't these facts make a difference? According to the The Corporate Gender Gap Report 2010 by the World Economic, "While a certain set of companies in Scandinavia, the U.S. and the U.K. are indeed leaders in integrating women, the idea that most corporations have become gender-balanced or women-friendly is still a myth."

Maybe we are trying to influence change with the wrong people.

A colleague of mine, Lynn Harris, a management consultant and author of Unwritten Rules: What Women Need To Know About Leading In Today's Organizations, intrigued me with a different approach. She suggested that instead of pushing senior executives to change their ideas around who should be a leader, the conversation should be with the shareholders. If having more women in leadership roles means more money and stability for companies, then shareholders should be demanding changes or taking their money elsewhere.

Here is an excerpt from the letter Lynn sent to me.

Open Letter To Shareholders: Why are we leaving money on the table?

By Lynn Harris

Dear Fellow Shareholder,

I have good news, and bad news.

First, the bad news: Today's boards of directors largely ignore a serious business issue that reduces share price and costs us money. Worse, they've known about the issue for years, and they've done little to solve it.

The good news: We can fix it.

What's the issue?
Research indicates that a higher proportion of women in senior leadership positions positively influences corporate performance.

In the absence of a single controlling shareholder, boards of directors are legally responsible to choose management teams and chief officers, oversee their performance and generally act prudently to increase share value. If gender-balanced leadership is good for business, then directors should be recruiting more women to the senior positions, ensuring that CEOs have good gender-balanced senior management teams.

But are they? The short answer is no.

What lies behind board directors' inaction? Perhaps if they believe in the power of gender-balance, they themselves might have to step down? The 2009 Catalyst Census of Fortune 500 Women Board Directors revealed that less than one fifth of companies have three or more women on their boards, and more than 40 percent have no women directors whatsoever.

Are these directors acting in our best interest?

It's Time To Stand Up And Be Counted
If you are unhappy about leaving money on the table or if you would simply like to see the organizations in which you invest perform better, it's time to use your shareholder power to accelerate change.

Institutional investors are taking a stand. The California State Teacher's Retirement System (CalSTRS), which has US$125 billion in investment assets, now files shareholder proposals to achieve greater diversity in the boardroom. Calvert Asset Management Company Inc., a leading provider of sustainable and responsible investing has engaged hundreds of companies on board diversity. In 2009, Swiss-based Naissance Capital launched the Women's Leadership Fund, because it believes it can earn higher returns by investing in companies that demonstrate 'best practice' with regard to gender diversity. Amongst other criteria, the fund invests in companies with a greater than 20 percent average of women in key roles and a favorable gender policy and track record.

It's up to us to broaden these actions. Ask questions. Find out how many women board members and senior leaders there are in the companies in your investment portfolio. If it's less than 30 percent, ask why. More importantly, demand to know what the board intends to do about gender imbalance.

Share this article with your business contacts. Turn up at shareholder meetings. Write letters to boards. It's high time to stop leaving money on the table and to drag our board directors and senior managers out of the Stone Age and into the 21st century.

I encourage you to read Lynn's entire Open Letter to Shareholders. It makes a strong case for gender-balanced leadership at the top of the companies in which shareholders invest. If you like it, you can forward it to the shareholders you know (and remember--if you invest in a pension you are a shareholder).

Let's join forces with a different approach to help create more balanced leadership in organizations and improved performance as a result.

Marcia Reynolds, PsyD is an executives coach who also teaches leadership classes around the world. She is the author of Wander Woman: How High-Achieving Women Find Contentment and Direction, an Amazon bestseller in management and leadership books for women.

 

 

 

Follow Marcia Reynolds on Twitter: www.twitter.com/MarciaReynolds

Comments

[lynnharris]

10:03 PM on 06/30/2010

it's correct to say that the link between better corporate performanc­e and more women at the top of the organizati­on is a correlatio­n rather than causal - it's impossible to prove causality with so many possible factors in play. However, we now have a number of studies showing a strong correlatio­n and so I think we have grounds to say that, for whatever reason, it looks like more gender balance at the top of organizati­ons is good for business.

[h0tr0d]

06:44 AM on 07/02/2010

It takes a certain ideology to take that leap.

[Pippen]

07:45 AM on 06/30/2010

It would be more informativ­e to segregate quadrants of business industries and then regraph the influence of diversity in fiscal success for companies. Some people think business is business whether it's fashion, oil, steel or finance but I would like to see that supported with some fact based data before embracing that philosophy­.

Women can contribute at the same level as men no question but I'm not seeing that long term harmony of personnel cycles are the same. It strikes me that businesses who have a higher number of executive women have less stabilizat­ion within their personnel turnover rates. Personnel turnover contribute­s to bottom line more than anyone wants to admit because nobody wants to manage people they just want to Tzar over the decisions as though its an isolated path. It's not, its like soup, if you piss in it nobody wants it no matter how good the carrots came out.

[h0tr0d]

05:44 AM on 06/29/2010

I have yet to see any data that supports the theory that more women in senior management means more money. Is there correlatio­n ?....yes. But if you look at the companies that are leaders in this area, they are all....by and large successful companies that were successful before they became diverse. Someday someone may release a study that shows diversity actually creates wealth, but in the mean time, the only data on this subject seems to show diversity is an expense that previously successful companies can afford.

[Marcia Reynolds]

08:59 AM on 06/29/2010

Actually, there has been quite a few studies done over time to show the financial performanc­e of companies with diverse management teams compared to those of only men. I did not mention them here because they are in my post What Women Want...at Work and in the full letter Lynn Harris wrote. For example, in a study spanning the last 19 years, Pepperdine University found that the Fortune 500 companies with the best record of promoting women outperform­ed their competitor­s by anywhere from 41 to 116 percent. McKinsey also did a global study that showed significan­t difference in the financial performanc­e of companies that have women in least a third of their senior management positions. Women leaders mean good business.

[h0tr0d]

07:03 AM on 06/30/2010

I am aware of these studies, however they only show correlatio­n....not causation.

[Karen Kalisek]

11:34 PM on 06/28/2010

This is a great letter to not only stimulate the bottom line of corporatio­ns, but the economy, too. Couple this possibilit­y with the fact, as stated by Claire Behar, Senior Partner and Director, New Business Developmen­t, Fleishman-­Hillard New York, "Over the next decade, women (50 and older) will control two thirds of consumer wealth in the United States and be the beneficiar­ies of the largest transferen­ce of wealth in our country's history. Estimates range from $12 to $40 trillion. Many Boomer women will experience a double inheritanc­e windfall, from both parents and husband." Women pose a possible solution to problems with the economy and have, or will have, the financial status to bring about needed changes.