Written by: Gregory C. Scott
President & Chief Executive Officer
Community Action Partnership of Orange County
AABLI alumnus, Class #4
Women are dramatically outnumbered on the boards of the nation’s biggest companies. In 2018, California passed a law (California Senate Bill 826) trying to change that. The law, SB 826, requires at least one woman on boards that have four members or less, two women on boards of five people and three women on boards of six or more.
For many years, the presence of women in the boardroom was…wait, there was no presence. The decisions of corporations or organizations were controlled by the privileged men sitting around the board tables. The idea of women having a seat at those tables was just that: an idea without substance.
Times are changing. The notion of gender diversity in the boardroom and, more generally, within organizations has gained considerable traction and is no longer a debate. Theoretical research, social change movements and corporate strategy have proven that the voices of women carry weight, solve problems and increase revenue. Formerly dismissed as a social issue requiring no real action, gender diversity on boards is increasingly perceived as a value-driver in corporate strategy and governance.
Board diversity, including race and gender, has progressively become part of investment practice across all sectors of decision making. Not only are fair employment practice and equal pay for women part of the conversation, but board diversity also is a big part of the social investment in all sectors. In many ways, board diversity is required by primary stakeholders such as investors, partners, customers or employees. This level of stakeholder preference should encourage firms looking to improve brand loyalty and employee engagement.
Studies show that businesses with more female directors on their boards distribute higher dividend payouts to stakeholders. And diverse groups, it has been shown, arrive at better decisions than single gender groups. A diverse group will always put more options on the table than any homogeneous group.
In my experience as a CEO with a board of directors, I have found a gender-diverse board can bring to the boardroom table a broad spectrum of perspectives and ideas that otherwise might not be considered. Women are the heart and soul of our mission, and therefore, the heart and soul of our revenue generation. Many studies confirm that companies with high representation of women board members have on average achieved significantly higher financial performance.
Representation does matter. Employees like to see in power people who represent them, and who look like them. Female board members also serve as positive role models, opening the door for their leadership and advancement—in the boardroom and in all the corridors of power.
Some believe that the ruling in California has opened a door for more states to follow their lead.
I think the push for more women board members will become a trend around the world. The pattern will impact the private sector, the independent sector and government in a very positive way.
Interested in women having a voice at the table? Consider the following tips:
- Frequently, boards require prior board experience and never give women a chance based on their rules. Having expertise in an area of need is far more critical than previous board experience.
- Consider a larger pool of professional women when filling board seats. Looking at two female candidates and claiming due diligence is disingenuous.
- Be intentional about a leadership development program for women within your organization. This will groom more women for leadership positions, and eventually for boards of directors.
- Incorporate into the DNA of your organization an ethic of corporate responsibility and strong values that will hold everyone accountable to diversity and inclusion and attract high-caliber board members of all genders.
- Finally, take the risk! Do something no one else is doing and watch your results and profits increase.
This blog is not written by aabli.org or The African American Board Leadership Institute. The author is solely responsible for the content.