By Kellie A. McElhaney ||
A Chinese proverb says, “Women hold up half the sky.”
President Obama recently nominated Janet Yellen to become the next Federal Reserve Board Chair and direct the nation’s monetary policy. Hillary Clinton made her first campaign stop in years in Northern Virgin to endorse Terry McAuliffe for governor as the “Ready for Hillary” campaign preps for a possible 2016 presidential run. And last month, 100 undergraduate students from UC Berkeley’s Haas School of Business attended a live webcast with Facebook COO Sheryl Sandberg to hear about how to start LeanIn circles, workshops, and conferences –the invitation-only event sold out in twenty minutes.
Engaging more women to lead –whether it’s making economic decisions, participating in the boardroom, or playing politics –benefits the way business is done on a global scale.
At the same time, women leaders remain lacking. For example, Twitter—an innovative tech company from the forward-thinking Bay Area- recently filed for IPO without a single female board member. Perhaps they are not reading the research linking women leaders with success?
Credit Suisse published a report in 2012 stating that their research shows that having more women on corporate boards increased both the share price- particularly in volatile markets- and the return on equity (ROE) of companies.
Norway, the first country to institute a 40% female quota on boards in 2003, now reports that the increased presence of women in leadership elevates boards and companies to be more successful. Consequently, Norwegian companies find themselves seeking more female executives, often beyond their own borders by necessity.
Women are also breaking the “glass ceiling” in France, Malaysia, Iceland, Italy, the Netherlands and Spain. The Thirty Percent Coalition reports that eight companies who previously had no female directors have added appointments of women. The coalition takes aim at companies with all-male boards in the S&P500 and Russell100, working to establish 30 percent female board members by the end of 2015. Since June 2012, 168 companies received letters urging them to consider gender diversity as a boardroom priority. Institutional investors representing over $1.2 trillion assets under management signed the letters. As a result, during the 2013 proxy season, shareholder resolutions on board diversity were filed with 25 companies, of which 18 have been withdrawn based on mutual agreements. Three proxies that did go to vote in 2013 received 51%, 28%, and 29% investor support, respectively.
Progress may be slow but we are heading in the right direction.
Another recent study by Zenger Folkman found that female leaders bested their male peers on traits like empathy, influence, and conflict management, and even have a slight edge when it comes to being self-aware. And 360 evaluations in which employees assess their managers revealed that women are rated higher in 12 of the 16 competencies attributed to outstanding leadership.
Those findings fuel the focus of my research: how women leaders create positive return beyond shareholder return. While we live in a world where shareholder return is still the primary metric of corporate success, initiatives around corporate social responsibility can also turn profits in the long run whether they be environmental, social and or based on governance (ESG).
In a study that I conducted, Women Create a Sustainable Future, I investigated the correlation between having even one women on a board and improved ESG performance among 1200 Fortune companies. I found correlation between all three. Environmental performance proved most statistically significant: reduction in packaging, increased investment in alternative energy, reduced CO2 emissions, and reduced water waste. Social performance came in second: investment in healthcare access for workers throughout the supply chain, improved health and nutrition profiles of product offerings, and better talent management. Finally, on governance issues, women on boards correlate to: less fraud, corruption and misreporting of numbers. In short, fewer CEOs charged with misconduct.
So, if appointing women to top tiers of leadership makes sense for shareholders, and the rest of the world’s stakeholders, what is the hold up?
Let’s expand the search criterion female candidates for leadership far beyond current perimeters.
Job descriptions for board members remain far too narrow, requiring that an eligible appointee be a current CEO elsewhere an investor, or someone who has had global P&L management experience. What about expertise and talent in management, brand, improving society and the environment – areas that are critical to corporate success and in which women excel?
While I used to oppose quotas, I now recognize that quotas work extremely successfully via Title IX in intercollegiate sports and access to higher education, and in countries like Norway. Quotas get women in the door. Once there, they will perform and rise on pure competency.
And most importantly, men are part of this movement and conversation for gender equality in corporate leadership. Men, already in positions of power and leadership, can greatly move the needle. If women are leaning in, men should be speaking out.
Progress begins with awareness. Business success demands resources. As Hillary Clinton said, “Women are the most underutilized resource on this planet.”
Kellie McElhaney is an adjunct assistant professor and faculty director of the Center for Responsible Business at UC Berkeley’s Haas School of Business