Jumpstarting Board Diversity in Corporate America

by ION Secretary Jilaine Hummel Bauer

I recently represented ION at the Third Annual Johns Hopkins SAIS Global Conference on Women in the BoardroomParticipants from around the world presented updates on progress being made to increase the number of women on boards across geographies, shared what is and isn’t working, and identified possible strategies to jumpstart progress in the U.S. – which, quite candidly, has been underwhelming.

While I learned something from everyone, the most insight came from the United Kingdom and Australia, given the similarities in our corporate cultures and laws. Notably, both countries have made significant progress within the past couple years and it has not been through the use of quota mandates.

The first day was a closed roundtable discussion attended by CEOs, business organization executives, institutional investors, academics, governmental agencies and organizations like ION. The roundtable was followed by a dinner hosted by Ambassador Ritva Koukku-Ronde from Finland, the first country to mention board gender in its corporate governance code. The second day was open to the public and began with remarks by SEC Commissioner Elisse Walter, followed by a series of panel discussions. (View video.)  Here are three key takeaways:

  1. Possibilities. Despite the lack of significant progress, a critical mass of women in U.S. corporate boardrooms is both possible and feasible. According to The Conference Board, using an average attrition rate of approximately 10% within S&P 500 Companies from 2003 – 2010, if 50% of board vacancies created solely by attrition were filled with women beginning this year, without doing anything to board size, tenure or age – U.S. companies could have 30% women on their boards by 2016.
  2. Business Imperative. Two new studies by the Committee for Economic Development and the American Chamber of Commerce found that gender balance on corporate boards is imperative if the U.S. wants to remain competitive. We cannot continue to ignore half of our labor pool. Other countries in both emerging and developed markets have already figured this out. These studies by two important business organizations should help Corporate America think more seriously about making gender diversity part of the solution to business problems and challenges.
  3. Strategies and Tactics. The narrative that continued to build throughout the conference was that there is no single solution. Success is most often tied to a systemic event or energy source, together with a flexible and multi-prong approach.  Ideas worth further examination include:
  • Identifying and working with CEOs and board chairs who are agents for change, such as those represented by the 30% Club (UK), Male Champions of Change (AU) and the Global Alliance of Corporate Leaders (Europe)
  • Using corporate governance codes such as the Davies Report (UK) as vehicles of change
  • Revising listing standards to require publicly traded companies to be  more explicit about their board diversity policies
  • Working to inform and educate the SEC and other federal agencies about gender diversity standards and practices as they implement Section 342 of Dodd Frank, which authorizes examining diversity practices of the business organizations they regulate

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