06/28/2010 03:21 pm ET Updated Nov 17, 2011

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.