Facebook Protest Highlights Lack of Women on Corporate Boards
Last week, activists from women’s rights group We Are UltraViolet gathered outside Facebook’s Manhattan headquarters to deliver a petition signed by 53,000 people.
Their demand? That Facebook add a woman to their all-male board of directors before going public in a couple of weeks.
Currently, 58% of Facebook’s user base is female while 0% of its board of directors is, and UltraViolet won’t stand for the disparity. “Facebook has grown on the backs of women, over 50% of users are women and the vast majority of sharing and fan activity is being done by women, which is directly tied to the company’s revenue,” UltraViolet co-founder Nita Chaudhary told Mashable.
But it’s not all about discontent, or even about fairness.
In fact, adding women to top levels of influence, whether the executive team or the board of directors, can have positive repercussions for any company. How? Read on.
Does Having Women Equal Bigger Profits?
Nearly a decade ago, Catalyst, an American nonprofit research and advisory organization working to advance women in business, conducted research around gender diversity in the workplace and corporate financial performance. After analyzing measures of profitability and shareholder return from 353 Fortune 500 companies, the organization concluded in its report:
“The group of companies with the highest representation of women on their top management teams experienced better financial performance than the group of companies with the lowest women’s representation.”
And this isn’t the only report to show such benefits: Business consulting firms such as McKinsey & Company echo these findings.
Here’s a discussion question: If research consistently shows that having women in top management is associated with profitability, why do women currently hold only 16.1% of American board seats and the same percentage of seats in Fortune 500 companies?
(For a visual breakdown of women in business, see this infographic.)
Why the E.U. Is Beating America
These sort of results transcend national boundaries. Currently, the leader in equality-as-determined-by board seats is Norway, which gives 40.1% of its seats to women. For comparison, only 13.7% of board seats in large companies in the E.U. overall are held by women. (That’s compared to a low of .1% in Saudi Arabia.)
And Justice Commissioner of the European Union Viviane Reding has taken it upon herself to make sure that more countries aim for that 40% … and beyond. After Reding requested that companies in the European Union voluntarily meet her goals that 30% of every corporate board be female by 2015 and 40% by 2020, they signed on to comply.
Well, 24 of them have so far, anyway.
Because of this slow progress, Reding is now pushing for legislation that will legally bind EU countries to a certain quota of women on corporate boards. (Fun fact: Norway has this legislation already.)
Reding herself is quoted as saying, ““Personally, I don’t like quotas. But I like what the quotas do. Quotas open the way to equality and they break through the glass ceiling.” And perhaps a quota is what’s needed, because a lone woman appointed out of goodwill won’t do it: A study from The Wellesley Center for Women found that three women on a board is a critical mass, a point where their contributions make a difference in the company as a whole.
Consultations ending May 28th will determine exactly which type of European companies would be susceptible to the quota and whether there would be any exceptions.
Where Does the U.S. Stand?
Requiring companies to adhere to a gender diversity quota would be a new move, but one echoed in the 2010 edict from the American Securities and Exchange Commission requiring companies to submit their diversity statistics. A few companies are doing one better, by releasing this information publicly.
And by a few, we mean Goldman Sachs, MetLife and … nobody else. While 72% of American executives admit to a correlation between female leadership and financial success, only 28% consider it to be a top priority.
“It’s really interesting—the more ‘lackadaisical’ approach about having women on boards here than in Europe,” Selena Rezvani, author of “The Next Generation of Women Leaders,” told the Journal. “There is a lack of urgency here.”
So we’re at an impasse. The figures show that companies could benefit from having more women, and executives see the truth in the numbers, but they’re not taking action. What will it take to bridge that disconnect?
As Ultraviolet suggests, popular and very visible companies such as Facebook could show leadership on the issue. Facebook already has a female figurehead in Sheryl Sandberg, but will it appoint her to the board? Will it bring in new talent? If the company is cautious about having too many insiders on the board, there certainly is no shortage of other women they could tap, including former Secretary of State Condoleezza Rice, Hewlett-Packard CEO Meg Whitman, Harvard President Drew Gilpin Faust and others.
And if that doesn’t work, let’s first see if the European quotas pan out. We’ll let you know.
Image Credit: Eva Pereira, via Forbes