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By Yin Wilczek
Tamara Box, Managing Partner, Europe and Middle East for international law firm Reed Smith LLP, talks to Bloomberg Law about a subject she’s passionate about: gender balanced boards. Box is a founding member of the 30% Club Steering Committee. The group, comprising board chairmen and CEOs, aims to increase the number of women on FTSE-100 boards and in the executive pipeline.
Bloomberg Law: Why do you feel so strongly about diversity in the boardroom?
Tamara Box: We live in exciting times. Businesses are growing, changing, developing in new ways, seeking new markets, and expanding into global entities. Those who stagnate will be left behind as innovators will dominate the future of our economy.
What does it take to be an innovative company? Difference. Those who can differentiate themselves by being something different or doing something differently will be the leaders of tomorrow. By harnessing the power of diversity, we can generate those different ideas and take our companies and organizations into a brighter future. After all, the very definition of diversity is “difference.”
We know that businesses that have a critical mass of women in leadership positions have better financial results and greater staff satisfaction than those led exclusively by men. Empirical evidence reveals many reasons why this is true—from women being more likely to question, research, and analyze situations before making decisions to women offering novel solutions because their experiential background allows them to see problems and challenges through a different lens.
The chairmen and CEO members of the 30% Club are on board with the idea of improving their business bottom line, and they recognize that utilizing the talents of the entire population, not just 49 percent of it, offers a path to greater success. As they have increased their representation of women on their boards, they have also taken on the task of increasing the diversity of all leadership roles.
While the 30% Club is focused on gender, we also recognize that all forms of diversity are good for business. At the end of the day, what we are looking for is innovative thinking—and that comes in all shapes, colors, languages, social classes, and educational backgrounds, just to name a few. We need all of them.
Bloomberg Law: According to the 30% Club, women now make up about 27 percent of FTSE-100 boards. However, there are other indications that the pace of change has been glacial. In the U.S., for example, executive recruiter Heidrick & Struggles found that women lost ground on new board seats for the first time in eight years in 2016, taking just under 28 percent of the 421 open board seats in Fortune 500 companies. How do you feel about the pace of change?
Box: The nonprofit group Catalyst last month reported that women hold 10.6 percent—or 643—of the total 6,081 board seats on Fortune 500 companies, an increase of 18 percent since 1994. Sure, that’s progress, but it’s unbelievably slow. As my mother says, “Snails and arthritic turtles move faster.” Heidrick & Struggles, in the report you cite, estimated that we wouldn’t reach gender parity for new appointments until 2032, and EY estimated that actual board gender parity won’t be achieved until 2095.
However, currently 84 percent—419—of Fortune 500 companies have at least one woman board director, up from 417 companies last year. I hold out hope that those companies who have dipped their toe in the gender parity pool will see enough benefit to want to take the complete plunge.
Bloomberg Law: What do you see as the main challenges today for recruiting women to boards?
Box: There is no shortage of qualified and capable women who are willing to take on board roles. The challenge is in overcoming the unconscious bias that prevents our seeing women as appropriate candidates for those roles.
A couple of years ago a research study analyzed Google ads for career coaching services for jobs paying $200,000 plus. Even the Google search engine discriminated against women, as it displayed the ads 1,852 times to the male group and only 318 times to the female group. Before you say that the search engine was just responding to the browsing history of the individuals, let me also say that the fake users who were targeted were all given new profiles that were identical—gender was the only distinguishing factor.
Given that we know that both men and women—and now computer search engines—are reluctant to consider women for top leadership positions, we have to consciously put women in those roles so that future generations can start to see women CEOs, board chairs, and managing directors as “normal.” The women are out there, and they are board-ready. They may not look like their predecessors, but they are just as capable of being leaders.
Bloomberg Law: In your opinion, how will the Harvey Weinstein and other ongoing sexual harassment scandals impact board and C-suite diversity?
Box: If anything, the Weinstein scandal adds more urgency to the boardroom and C-suite diversity initiative. Here is graphic proof that an unequal society fosters a toxic environment that is detrimental to not only individuals but also corporations. When we recognize that men and women are equal and accord them the positions in leadership and power that are appropriate for their education/expertise/capability, we will reduce—if not eliminate—the incentive for sexual harassment.
Bloomberg Law: You’ve lived and worked in Asia, Europe, and the U.S. Which region do you see making the most progress on women representation in boards in the near future?
Box: Every region across the globe has its own biases that cause stagnation in thinking. We have female representation in political leadership in just about every country in the world, but some—like the U.S.—have failed to get women through the top barrier. Among big law firms in the U.S., the equity partnerships are still only about 19 percent female, even though women are earning more of the law degrees than men. So to me it is disappointing that the U.S.—world leader in so many ways—has stubbornly resisted gender parity.
In Europe, some countries have created a hard mandate designed to establish greater female representation on corporate boards. Others, like the U.K., have relied on a “soft mandate,” encouraging companies to reach a target by threatening a hard mandate if they fail. Both have been successful to a degree, but too much external pressure could produce backlash, thus threatening future acceptance of gender equality.
Like Europe, Asia has some countries with a hard mandate, others with a target, and still others that simply refuse to admit that change is possible, due to ingrained cultural mores. In 2013, when Shinzo Abe became prime minister of Japan, women in that country held just 1.8 percent of the executive positions. Instituting a “womenomics” program, the PM set a goal of having women occupy 30 percent of all management positions by 2020. Four years later, the current share of women executives at listed Japanese companies is still under 4 percent, and the government has reduced its target from 30 percent to 10 percent. Believing that a “culture shift” is necessary, Japan is now trying to exert peer pressure on its corporations to encourage greater acceptance of women.
Sadly, no one region has all the answers. There isn’t a cookie-cutter program that we could all adopt that would get us instantly to gender parity. But we can learn from the experience of other countries in helping us discern which activities and initiatives contribute most effectively to the accomplishment of our goal.
Bloomberg Law: There are ongoing initiatives on board diversity. In the U.S., for example, the New York City Public Pension Funds recently called on more than 150 U.S. companies to reveal the racial and gender composition of their boards of directors. What kinds of initiatives do you see as the most useful in terms of jump-starting women board representation? Will it come from the government, or will it be through a push from private industry?
Box: Ronald Reagan reportedly said the nine most terrifying words in the English language are, “I’m from the government and I’m here to help.” While it is true that legal mandates carry more weight than soft coercion, I still find it hard to believe that a gargantuan, overburdened bureaucracy could accelerate the pace of gender parity more effectively than private industry.
Business studies reveal that corporations are like individuals in that the fear of getting caught may drive compliance in certain ethical areas. Thus when companies are required to reveal their diversity statistics, they become more conscious of them, if for no other reason than to avoid the “naming and shaming” that might result from public exposure. A government mandate simply to publish their statistics could force corporate CEOs out of their cocoons to examine the role of leadership in achieving gender parity. For some, it may be the necessary push to get them to understand that diversity is neither an “HR issue” nor a “women’s issue,” but a business issue.
However, economics can drive change faster than laws. Boards want their companies to be successful in the long term. Investors want to invest in businesses that will be profitable and sustainable. Clients want to work with enterprises who share their values. Customers want to buy from those who contribute to the health and wealth of the nation. Our colleagues, peers, and competitors have the ability to hold private industry to account immediately and effectively; it’s called the power of the purse. We all need to use it.
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