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Arianna Huffington was right: Diversity breeds diversity.
When the media mogul welcomed another woman to Uber Technologies Inc.’s otherwise all-male board during a recent meeting, she pointed to data on how a woman’s presence on a board makes it more likely to add other women. Then a male director interrupted her with a sexist comment.
That director, TPG Capital co-founder David Bonderman, later resigned. Research Deloitte put out earlier this month supports the point Huffington was making.
The consulting firm found that globally, companies with women in top leadership positions have almost twice as many women on their boards compared to those led by men. The inverse is also true: Gender diverse directors are more likely to appoint a female chief executive officer and board chair.
These findings may offer a “road map” for speeding up corporate progress on gender diversity, Dan Konigsburg, senior managing director of Deloitte’s Global Center for Corporate Governance, said. Women hold just 15 percent of the world’s board seats, a modest improvement over the 12 percent Deloitte reported two years ago.
“There’s a long way to go, but this shows that it’s quite possible to do,” Konigsburg told Bloomberg BNA.
Other studies show companies with more women in decision-making roles perform better financially. “There’s enough research now that we’ve reached a tipping point where the business case is compelling,” said Joe Keefe, president and CEO of Pax World Funds, which has voted against more than 1,000 board slates due to lagging gender diversity.
Companies in search of gender balance tend to look to the same pool of eligible women, who collect so-called golden skirts as they accumulate directorships. Deloitte’s study quantified that idea in a “stretch factor.” The higher the stretch factor, the more board seats are occupied by the same woman in a given country.
The country with the highest stretch factor is France, where a government-imposed quota for boards’ gender breakdown went into effect this year. Lower stretch factors were recorded in the U.K., which has no such quotas in place, and the U.S., where some states have passed nonbinding measures to help increase women’s representation on boards.
For both women and minorities, “the same candidates are being brought to multiple boards, more than you would see for white men,” Deloitte’s chief inclusion officer Deborah Dehaas told Bloomberg BNA. One of Deloitte’s pieces of advice for boards is to consider not just gender, race and ethnicity, but also age, skills and other aspects of diversity in their searches.
It’s even harder for women to get into executive suites than onto boards. Women’s representation as CEOs and other positions that report to the CEO has barely changed from two years ago, according to a 2016 Credit Suisse study of 3,000 of the world’s companies.
“There are not a lot of women in executive management,” said Rachel Sheinbein, who co-founded Makeda Capital, a fund that invests in women-led companies in the U.S. “I think that’s influencing why there are fewer female CEOs.”
Another report by McKinsey & Co. and Facebook Inc. Chief Operating Officer Sheryl Sandberg’s nonprofit LeanIn.Org suggests that is the case. Even though more than 75 percent of CEOs include gender equality in their top 10 business priorities, women are less likely to receive the first promotion to manager, meaning far fewer end up on the path to leadership. They are also less likely to be hired into more senior positions.
So the higher you look in companies, the fewer women you see. “The numbers are basically saying we need to fix the pipeline before we see improvement at the CEO level and the board level,” Irina Starikova, a partner in McKinsey’s Silicon Valley office, told Bloomberg BNA.
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