Joseph Keefe, CEO, Pax World Management LLC
Today, there is a growing consensus that the smartest companies are those that take full advantage of the talents, ideas and contributions of women. A compelling body of research suggests that where women are better represented in management and on corporate boards, companies simply perform better for shareholders. At my company, we call this “gender equality as an investment concept.”
When women are at the table, the discussion is richer, the decision-making process is better, management is more innovative and collaborative, and the organization is stronger. Women bring new perspectives, consider different issues when making decisions, and tend to use a more collaborative leadership style, increasing win-win problem solving. Women are more likely than men toposetoughquestionsand to ask formoredetailand substantiation. For these reasons, “a critical mass of three or more women on corporate boards can cause a fundamental change in the boardroom and enhance corporate governance.”1
In Lean In, Google’s Sheryl Sandberg has done much to advance the conversation about the status and role of women in American business. Ms. Sandberg argues that women need to lean in – essentially, assert themselves – in order to succeed and prosper in our still patriarchal corporate culture. There is undoubtedly much truth to this. But as important as Ms. Sandberg’s book is, the lean in framework only accounts for part of the equation. As Tina Brown, editor in chief of Newsweek and The Daily Beast, stated shortly after Lean In hit the best seller lists, in order to truly achieve gender equality we will also need tolean on those who stand in the wayof full and equal rights for women.
In the U.S. today, too many corporations are still in that category, telling women that, even if you are smarter, better educated, work harder, and accomplish more, you likely will fall behind anyway. Women remain under-represented, under-utilized and underpaid. Women still earn only 77 cents for every dollar a man makes and hold only 16% of Fortune 500 board seats. Moreover, this persistent discrimination is withering away at only a glacial pace
Even with women leaning in, I think it is also more apparent than ever that we will also need to lean on corporations if we are to make any meaningful progress. We will need to demand that they change. Much of this pressure, much of this demand, will have to come from the people who actually own these companies – their shareholders. That is to say, from you and me.
Most Americans own shares of publicly traded corporations through mutual funds, workplace retirement savings plans, Individual Retirement Accounts (IRAs), and direct investments. Corporate directors – some 84% of whom are men – are, after all, supposed to be representing us.
As the owners, we have the power to say “no” to all-male corporate boards every year when companies send out shareholder proxies prior to their annual general meetings. Although most investors don’t vote their proxies directly, they can take steps to assure that whomever does vote their proxies – financial adviser, mutual fund or retirement fund – votes in a manner that advances rather than thwarts the aspirations of women in the workplace, and in particular, the need to dramatically increase the number of women on corporate boards.
If you believe that women should be better represented in the board rooms of corporate America, but you are invested through financial intermediaries that rubber stamp all-male corporate boards, then you are part of the problem rather than part of the solution – or at least your money is. You might think about instructing your proxy agents differently or switching to an investment advisor or mutual fund company that better understands your values and priorities.
We are approaching a tipping point on this issue. The demographic trends speak for themselves: Women comprise over 50% of the work force, over 50% of college grads and accounted for 72% of high school valedictorians last year. Forty five percent of American millionaires are women and by 2030 it is projected that roughly two-thirds of the nation's wealth will be in women’s hands. Women are the breadwinners or co-breadwinners in two-thirds of American households. They own more than 40% of all U.S. businesses.Of estates worth more than $5 million, women currently control more than 48%. And on a global basis, they stand to inherit 70% of the $41 trillion in inter-generational wealth transfer expected over the next 40 years.
Holding back half of the earth’s population inside an insular patriarchy left over from centuries ago is economically stupid. We need to lean on this stupidity. Holding back our daughters because of their gender is morally repugnant. We need to lean on this injustice. I truly believe that we can change the business culture of the U.S. to advance gender equality, and if we do, perhaps the progress we make in the U.S. can be felt elsewhere, and hopefully lead to good things for women and girls across the globe.
1V.W. Kramer, A.M. Konrad, and S. Erkut, “Critical mass on corporate boards: Why three or more women enhance governance,” Wellesley Centers for Women, Paper No. WCW 11, 2006.
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