Lessons in Shattering the Glass Ceiling
Attention recently turned to corporate boards in Europe again after a report commissioned by the British government said women should comprise at least a quarter of the boards of the largest British companies by 2015. The report stopped short of the mandate that’s existed in Norway since 2005. There 40% of corporate boards are required to be women by law.
The United States trails both countries, indeed most of Europe, according to a study released by Deloitte in January . In the United States women comprise only 12% of the boards of the largest companies, although these statistics vary slightly upward if the S&P 500 or S&P 1500 is used rather than the Fortune 500.
Now, a finance professor at the Kellogg School of Management at Northwestern University, David Matsa steps forward to say a higher representation of women on company’s board of directors directly increases women’s share of and access to higher level positions within a company.
Surveying the S&P 1500 from 1997-2009 he and his co-author, Amalia Miller of the University of Virigina (currently on leave to the Rand Corporation), found women’s share of board seats increased by 7.2 percentage points (94% increase from the initial levels) and their share of top executive positions increased by 2.8 percentage points (an 86% increase). The share of companies with female CEOs increased more than sixfold to 5.7% of companies.
Further Dr. Matsa found as a board’s gender composition evolved to include an increased number of women, the likelihood that these boards would select female managers also increased.
“When women are seated at the highest levels in corporate America, they are in a unique position to serve as mentors to those below them and to create more opportunities for female leadership and management roles,” said Dr. Matsa.
A 2007 study by Catalyst, a non-profit that works to advance women in the workplace, showed that return on equity, return on sales and return on invested capital are all higher when the percentage of women on boards increases. So what’s keeping women off corporate boards?
Research by Frank Dobbin a sociologist at Harvard University currently on leave may provide some clues. Apparently Dr. Dobbin’s research found that immediately after women take their seat on a corporate board, stock price drops. And he says, it may be institutional investors looking to keep stock prices high are creating a bias against women. Are these institutional investors sacrificing the economic vitality of an organization for a short term bump in stock price?
Over the next few days we’ll explore what corporate boards analyse when they screen prospective board members and examine several grassroots efforts to increase the number of women on corporate boards.
Tags: Amalia Miller, corporate boards, female executives, Frank Matsa, glass ceiling, leadership, management, mentoring, networking, stock prices
