Women in the Boardroom

When you think of a board of director, who do you first think of?

by Sarah Wagoner

When you think of a board of directors, what do you first think of? Do you picture a long table surrounded by tall men in business suits? What types of voices do you imagine? Do you think of a stern, deep voice? How many of those voices are diverse? One? Two? How many of those voices are women?

Women entered the workforce in the late 19th century, usually as maids, teachers, or factory workers. Over time, they’ve enriched many industries, providing innovations that we sometimes take for granted today. But only in the last decade have we seen an increase in women in executive boards. Why has it taken so long? Why is their inclusion so important and how can we continue to improve our accommodation of women on executive boards?

Although women were in the workforce by the 20th century, they were still expected to become stay-at-home mothers. This expectation waivered during times of war when the men were away and production of goods had slowed. To assist with the war efforts, many women took manufacturing jobs. They temporarily became the primary breadwinners for their families and made up a large percentage of the labor force. While women held management positions during this time, it was still rare for women to have executive positions.

The possibility of these positions faded away once men returned from war. However, during the 60s with the Women’s Liberation Movement, another wave of women entered the workforce. “By the 1970s, a dramatic change in women’s work lives was under way. In the period after World War II, many women had not expected that they would spend as much of their adult lives working as turned out to be the case. By contrast, in the 1970s young women more commonly expected that they would spend a substantial portion of their lives in the labor force, and they prepared for it, increasing their educational attainment and taking courses and college majors that better equipped them for careers as opposed to just jobs.”

The Equal Rights Amendment, which passed in 1972, guaranteed all citizens equal rights regardless of sex. After the 70s, the amount of women in management and executive positions gradually increased.

“By the early 1990s, the labor force participation rate of prime working-age women—those between the ages of 25 and 54—reached just over 74 percent, compared with roughly 93 percent for prime working-age men. By then, the share of women going into the traditional fields of teaching, nursing, social work, and clerical work declined, and more women were becoming doctors, lawyers, managers, and professors. As women increased their education and joined industries and occupations formerly dominated by men, the gap in earnings between women and men began to close significantly.” ~ Janet Yellen

According to the Harvard Business Review, “Of new management positions, 2.6 million were occupied by women and 1.9 million occupied by men. In other words, women make up the majority of new management jobs created from 1980 to 2010.” (Scarborough)

Progress: Appointments of women to boards hit record high

In 2017, Fortune 500 companies filled 358 vacant or newly created board seats with independent directors. Few leadership positions are more consequential: Fortune 500 boards oversee companies that together account for two-thirds of the US GDP, with $12.8 trillion in revenues, $1.0 trillion in profits, $21.6 trillion in market value, and 28.2 million employees worldwide. That is why for the ninth consecutive year we have captured the key attributes of new appointees—their demographics, experience, and functional roles, among other factors; mapped how those attributes flowed onto boards in each industry; and identified trends in their continuing evolution.

The following are some of key findings from “BOARD MONITOR 2018: APPOINTMENTS OF WOMEN TO BOARDS HIT RECORD HIGH” by from Heidrick & Struggles.

  • A little more than 38%—137 board seats—went to women in 2017. This marks the highest proportion of women appointed to boards in the nine-year history of Board Monitor and is the biggest year-on-year increase we have ever recorded—a jump of more than 10 percentage points. While in 2016 women lost some ground and it appeared that they would not reach parity with male director appointments until 2027, now we project that women will first reach parity with men with the new class of directors in 2025.
  • Despite the great increase in female appointments in 2017, progress for women remains incremental. The percentage of women on Fortune 500 boards rose only to 22.2%, up just 1.2 percentage points from the figure of 21% the previous year. Because the percentage of women overall on boards increased only slightly, it appears that most of these new female appointees were replacing women who had left their boards.
  • In the aggregate in 2017, African-Americans, Hispanics, Asians, and Asian-Americans constituted about 23% of new board appointees, the highest proportion since the inception of Board Monitor, coming on the heels of the previous high of 22% in 2016.
  • The share of new board appointments that went to African-Americans rose from 9% in 2016 to 11% in 2017, the largest increase ever.
  • The share of new board appointments that went to Hispanics remained at 6%, the high it first reached in 2016.
  • The share of new board appointments that went to Asians and Asian-Americans remained at 6%, the same as in 2016.
  • One Native American was appointed in 2017, the first in the nine-year history of Board Monitor.
  • Almost 36% of new board appointees in 2017 had no previous board experience, up from 25% without any in 2016.
  • The percentage of seats held by newly appointed directors overall has generally been trending upward, with 7.5% newly appointed directors in 2017.
  • Current and former CEOs accounted for 47% of director appointments in 2017, down from 50% in 2016, 54.4% in 2015, and well below the high of nearly 55% in 2013, suggesting that boards are beginning to look beyond their traditional first choice of CEOs to fill vacant seats.
  • Some 72% of newly appointed directors in 2017 had international experience, an increase of 11 percentage points over the previous year.
  • As in the previous two years, financial services know-how was the most widely distributed career experience among newly appointed directors, representing almost 24% of their collective mix of career experiences.

In a 2014 study of global boards, it was found that 75% of boards had less than 25% of women represented on the board. But the same study found that the inverse became true in 2020, with 75% of boards having a representation percentage of 22%. The statistics are changing rapidly. This is also seen in the increase of female directors from 2019 to 2020. In 2019, 26.1% of American women were board directors. In 2020, 28.2% were board directors. The United Kingdom has a similar trajectory with 31.7% of women board directors in 2019 and 34.3% in 2020. But why is it important that women be included on boards?

Do Women on Board Make an Impact?

Hiring women to board positions has both cultural and fiscal benefits. It brings in female perspectives that are utilized in marketing campaigns, which help broaden a company’s audience. A 2015 study by McKinsey & Company found that companies with gender diversity “are 15 percent more likely to have financial returns above their respective national industry median” (Hunt, Layton, and Prince). In the same study, it was shown that companies with racial and ethnic diversity are 35% more likely to have above-average financial returns. Companies with both ethnic and gender diversity had a 25% increase in likelihood of greater success. Not only is inclusion ethical, but financially sensible.

From the Research: When Women Are on Boards, Male CEOs Are Less Overconfident
by Jie Chen, Woon Sau Leung, Wei Song, and Marc Goergen

“Several studies suggest that having women on the board results in companies making better acquisition and investment decisions and in less aggressive risk-taking, yielding benefits for shareholders. But what’s less clear is: why does having women in the boardroom lead to such improvements for the firm? New research suggests one potential reason: having female board members helps temper the overconfidence of (mostly) male CEOs, improving overall decision making for the company.”

“Second, our findings suggest female board representation can be especially beneficial in helping firms weather crises. Overall, our research supports the view that having women on boards improves strategic decision making and benefits firms.”

Stats From KPMG Research:

Optimal decision making: Inclusive and gender balanced boards are able to bring diverse perspectives to the table, understand stakeholder (customers, staff morale, etc.) preferences better, ensure greater due diligence, and as a result make better decisions. Likewise, gender diverse boards are more equipped to understand stakeholder preferences.

Improved corporate governance: Boards with women members are more likely to focus on nonfinancial performance indicators such as customer
satisfaction and corporate social responsibility, and are better able to monitor board accountability and authority, leading to improved corporate governance.

Risk Oversight: Gender diverse boards see successes in their critical role of risk oversight and other legal responsibilities and have less cases of controversial business practices such as fraud, corruption, bribery, and shareholder battles.

Making a Legal Case

Senate Bill 826, signed into law in 2018, requires that public, California-based companies have at least one woman on their board of directors. When the law was initially signed, only a quarter of California-based companies had women on their boards of directors. Now half of those companies meet the requirements. The remaining 46% who haven’t hired women were required to do so by the end of 2021. They were fined $100,000 for the first offense and will be fined $300,000 for further failures to comply.

However, despite its positive outcomes, this law has also led to controversy. In 2020, Crest sued the California Secretary of State, Alex Padilla, arguing that he was misusing taxpayer money in order to enforce Senate Bill 826. Crest also contended that it was an unconstitutional gender-based requirement. Padilla countered the lawsuit by stating that Crest lacked a solid argument for the case, but this statement was overruled by a Superior Court judge. Alex Padilla’s office is required to answer the complaint, which has yet to happen. The plaintiffs from the first case have filed a second lawsuit on the same grounds, but about AB 979, a law that states an executive board from a public corporation must have at least one director from an “underrepresented community”. This requires a director that self-identifies as non-white, non-caucasian, or LGBTQ. Both of these cases argue that taxpayers should have a say in what their money is spent on.

The court cases are complicated and could take years to settle, especially with the broader language involved in AB 979. But one thing is clear; if executive boards want to progress and expand businesses, they need inclusion. Business success relies on diversity of thought because customer bases are wide and varied, and all communities have spending power. In order to be able to communicate with them, their perspectives must be understood by proper representation. Because females make up roughly half of these communities, (and the overall population), it is vital that the corporate world makes changes that allow women to have a stronger voice.

A Man’s Perspective For Blending Men and Women in the Workplace

by Michael Barrick

HERO BALL: We, men, like to play hero ball. We place enormous pressure on ourselves to handle responsibilities as individuals.

Masculine-stereotyped agency is a “self-focus”, where one strives for competence (mastery motivation) and asserts status, power and respect.

Feminine-stereotyped communion, which is an “other-focus”, where one displays warm (e.g. friendly) and moral (e.g. helping) behavior to belong with and care for others. We can learn from our female counterparts and be more communal.

FAILURE & EGO: “Failure is not an option.” Men learn this adage from an early age. As a result, boys are taught that performance is essential – in sports, in school, and later at work. We must score points, score with girls, make a lot of money, and win against the other guy.

Research tells us that men need to feel competent more than they need support. And when we don’t win, we are faced with the most dreaded of all conditions: shame.

VULNERABILITY: Since childhood, many men are taught vulnerability equals weakness and therefore men are not supposed to be vulnerable. It can also be difficult to be vulnerable as there might be a fear of feeling embarrassed or being hurt by someone’s response.

Change Order: Blend individualism with collectivism where responsibilities and trust are more equally shared but where one’s performance can stand out.

Change Order: See our missteps not as the end of the world but as an opportunity to think through problems creatively and figure out how to be stronger leaders.

Change Order: Vulnerability is a strength. To be a strong and healthy individual, vulnerability must take place with the people that you have built trust with. In doing so, one strengthens relationships, improves mental health, and improves the quality of life.

Just like a great marriage can lift a man to his greater self, men should leverage female perspectives in the boardroom. Your board will have an optimal blend of decision-making skills for improved corporate governance and corporate social responsibility.

Works Cited
Covert, Bryce. “The Secret to Getting More Women on Boards: The $100,000 Threat.” Politico,
The Secret to Getting More Women on Corporate Boards: The $100,000 Threat –
POLITICO. Accessed 1 March 2022.
Hunt, Vivian, Layton, Dennis, Prince, Sara. “Why diversity matters.” McKinsey & Company,
Why diversity matters | McKinsey. Accessed 1 March 2022.
Posner, Cydney. “Crest v. Padilla redux–AB 979, California’s board diversity law for
“underrepresented communities,” faces taxpayer challenge.” Cooley PubCo, Crest v.
Padilla redux—AB 979, California’s board diversity law for “underrepresented
communities,” faces taxpayer challenge – Cooley PubCo. Accessed 1 March 2022.
Scarborough, William. “What the Data Says About Women in Management Between 1980 and
2010.” Harvard Business Review, What the Data Says About Women in Management
Between 1980 and 2010 (hbr.org). Accessed 28 Feb. 2022.