In his Sept. 24 blog, Richard Branson makes a rational argument for more women in the boardroom. I agree.
Studies abound that show more women on corporate boards produces better financial results with competitive advantages. I noted in my recent blogs about The SAIS Global Conference on Women in the Boardroom and The NYSE Moving the Needle Event, that boards with three or more women on average have the following:
- 53 percent higher return on Equity
- 42 percent higher return on Sales
- 66 percent higher return on Invested Capital
So why is it that only 16 percent of The Fortune 500 board seats are held by women?
Old habits die hard. For decades board members were chosen among the friends and colleagues of the CEO and others on the board. Since boards were comprised almost exclusively by men and in particular by other CEOs it is not surprising to find so few women.
Even with the changes in board selections moving to the nominating committees, progress on adding more talented women to the boards is moving at glacier speed.
In the past few months there have been a number of high profile meetings held by The New York Stock Exchange/Euronext, The Women's Forum, and the SAIS Conference to dig into the question: What should we do to put balance into the equation?
Several suggestions have been put forth including (1) the creation of registries that profile women and minority candidates. These are people are nominated by their CEOs and nominating committee members (2) requiring companies to set diversity targets and having to report in their Annual Reports their progress, and (3) setting national standards for achieving these goals.
Setting quotas as several European nations have done in the wake of Norway's 40 percent quota set in 2003, has been considered but to date has been more often rejected. Surprisingly, Branson acknowledged that he is not a fan of government involvement in private enterprise, but in this case it might be needed.
Recently European commissioner Viviane Reding called for countries in the EU to set a 40 percent quota. This will undoubtedly raise hackles in some nations but I would say this was the only route open to her from her position as European Commissioner for Justice, Fundamental Rights and Citizenship. So welcome or not, Reding has called game on.
What will be the outcome of all the discussion remains to be seen. However, I believe the hunt for talent is now rising to the boardroom. If companies want to be in the top quintile of sector performance, they need to get smart about bringing in top women performers. Their futures are at stake.