A super majority sounds like a big deal, doesn't it? For example, a super majority of two-thirds is what is needed for Congress to override a legislative veto by the President. As decision-making authority goes, that two-thirds requisite is a high bar to reach. And as a result, the situation doesn't happen very often. Of the more than 2,500 bills vetoed in the history of the United States, Congress has overridden the President less than five percent of time.
An even larger super majority already exists in the U.S. economy and it manifests itself in households across the country. But this super majority doesn't wield the power you might expect.
More than 75 percent of women are the primary shopper for their household. Some studies put the figure even higher at 85 percent. With more than 115 million households in the U.S., that is a lot of purchasing decisions and a lot of purchasing power. We are not just talking about purchasing groceries, clothes and healthcare services; women are making the decisions on big-ticket items such as homes, cars and vacations. Market estimates put the purchasing power of women in America at somewhere between $5 and $15 trillion. That's real money no matter which number you believe. One could easily argue that women are the driving force - the Super Power - behind the consumer economy.
But that power isn't reflected in corporate boardrooms. Women represent only 5.2 percent of CEO positions and 16.9 percent of board seats on Fortune 500 companies. This is an interesting juxtaposition to unpack.
The Committee for Economic Development issued a thought-provoking report in 2012 titled, "Fulfilling the Promise: How More Women on Corporate Boards Would Make America and American Companies More Competitive." Based on the work of a subcommittee, it urged business leaders to focus on gender equity at all levels, but particularly at the board level. Rather than dwell on the oft-raised question of whether women on boards signifies better financial performance for organizations, the report focused on the competitiveness agenda. Specifically, the business case to be made for greater gender diversity on boards based on "the competition for talent and the need for boards to be more attuned to consumers, suppliers and other stakeholders."
From a common sense perspective, having more women in senior management and on boards is a competitive necessity. Think about it. If women make the majority of purchase decisions, then gender-diversity in the C-suite, as well as on boards, would help make companies more responsive to the market because they understand the demographic. After all, they are the demographic!
Let me focus on corporate boards for a moment. There is a growing body of research in this space that supports a strong correlation between female representation on boards and financial performance, but does not prove causality. The question is, of course, would the businesses studied have delivered the same results irrespective of their board composition? Having said that, based on the facts, the strength of the correlation is hard to ignore. Additionally, the research does support the hypothesis that women on boards contribute to stronger corporate governance. And, of course, there is the competitiveness agenda - clearly a compelling rationale for more women on boards.
Numerous studies also document the positive correlation between gender-diverse senior management teams and overall organizational performance.
Women hold the super majority on the purse strings and that should, at the very least, translate into gender parity in senior management and on boards. Recognizing the power of the purse and the women who carry them should be a priority for companies if they are going to tap their respective market's full potential. Corporate America would be smart to follow the money.