Gender parity on the nation’s boards expected in 2048
Gender parity in the nation’s boardrooms was projected to happen in 2055, but a recent report pushed up the timeline by seven years.
While it’s not going to take longer than estimated last year, it will still be a long time coming, according to the latest Equilar Gender Diversity Index released Wednesday.
In the fourth quarter of 2017, just 16.5% of board seats at Russell 3000 companies were taken by women, an uptick from the 16.2% reported in the previous quarter, reported Equilar, a board solutions firm.
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Why will it take so long?
“There's really a couple of ways to look at this—where we've come from or where we're going,” says Dan Marcec, a spokesman for Equilar.
“In terms of where we're coming from, it's taking on a long time because we're talking about moving the needle on upwards of 25,000 director seats that have been a vast majority men forever. A monolithic movement doesn't happen overnight. Just four years ago, only 13.2% of Russell 3000 board seats belonged to women, and now that's 16.5%. Assuming we didn't start from zero in the year 2001, we have seen meaningful acceleration, but it's fair to say that's not fast enough.
“On the other hand, there's reason to be optimistic in terms of where we're going. For example, in the second half of 2017, there were 882 open board seats at Russell 3000 companies, and 275 of them went to women—or 31.2%. That's nearly double the percentage of women that currently sit on boards."
Marcec pointed to a recent movement by major investors, including BlackRock, State Street and Vanguard, to pressure companies to add more women to boards as a potential accelerator of the gender-equity pace.
Indeed, large investors see it as a bottom line benefit.
“There is compelling evidence that boards with a critical mass of women have outperformed those that are less diverse,” wrote F. William McNabb III, chairman of the board of Vanguard in a letter to directors of public companies. “Diverse boards also more effectively demonstrate governance best practices that we believe lead to long-term shareholder value,”
Vanguard is one of many institutional investors demanding change. “Our stance on this issue is therefore an economic imperative, not an ideological choice,” McNabb added.
Following through on the promise made with the installation of “The Fearless Girl” statue last year, State Street Global Advisors (SSGA) sent a strong message to companies with little gender diversity.
The investment powerhouse voted against the reelection of members of board committees tasked with recruiting new board members at 400 companies in the United States and beyond.
The Fearless Girl, a bronze statue of a girl facing the iconic Wall Street bull in the heart of Manhattan’s financial district, was erected earlier this year by SSGA as a call to action for getting more women on corporate boards.
But in a sobering turn of events, that showed how deep gender bias may run, news emerged that State Street was hit with gender bias claims.
State Street Corp. agreed to pay the government $5 million for alleged gender pay discrimination dating back to 2010, according to a review by the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) .
“State Street paid females employed in SVP, MD, and VP positions less per year than similarly situated male employees.”
Whether wage discrimination was indeed a factor, the message behind the “Fearless Girl” movement, and efforts such as SSGA’s push to get more gender diversity on boards, are sorely needed.
“This is not an issue that should need regulation, this is an issue that needs common sense,” maintains Karen Kessler, a crisis management expert who is the Chair of the Executive Business Cabinet of Rutgers Business School’s Institute for Ethical Leadership and has served on boards. “And if board leadership doesn’t move faster, the investment community may decide their fate.”
When it comes to gender parity on boards, the United States, she continues, is not in a leadership role. “Scandinavian countries, Germany, Australia, Italy and others outpace the U.S. statistics.”
Blair Jones, a managing partner with Semler Brossy Consulting Group and a member of the Equilar Diversity Network Advisory Council, says companies need to remain vigilant. "What gets measured and talked about gets done, so boards need to keep the conversation alive."
Other key findings from the Equilar index include:
- The percentage of Russell 3000 boards that are all male dropped to 20.8% from 22.5% a year earlier.
- Boards of larger companies tend to have more women—for example, women sit in 22.5% of Fortune 500 board seats.
- At the end of 2017, 32 boards had reached gender parity, up from 27 a quarter earlier.