The EU’s New Rule – 40% Women on Boards

Women on Boards.   I have been writing on this topic  for some time and as one of the founders of The 30% Coalition I am in strong support of this new rule, and I  only wish we could do it here in the United States as well. In particular I like how this article in The Nation  addressed why it has to be an all in approach.

 

Eleven EU member states (Belgium, France, Italy, the Netherlands, Spain, Portugal, Denmark, Finland, Greece, Austria and Slovenia) have recognized this and have already started to act by introducing different types of rules to advance gender equality on company boards. However, a piecemeal approach on such an important social and economic issue can hamper our single market. Companies need a coherent, reliable legal framework, especially when they want to do business in the EU’s single market. Our proposal therefore aims to create an EU-wide framework for positive action rules that gives direction to national policymakers and legal certainty to businesses.

For the past few weeks I have been working hard on a TED TALK that  I will be giving at TEDxWomen in Washington, DC on the 30th of this month.  In preparation I have read and reread every major research report on gender inequality  and diversity  I can find. And guess what I found? There is simply NO GOOD REASON why at this moment in our world’s history we are not much closer to gender parity in leadership.  Study after study shows the benefits of diversity and yet…. and yet…. whenever  any type of quota is mentioned people freak out. Forcing diversity will likely lead to better outcomes people!!!!  Not worse. If you say prove it than I say you prove it that having a homogenous board of older white males is the superior mix. At the end of the day it is a leap of faith but the evidence is lined up in support of this move.

What also makes me nuts is this idea that the world is a meritocracy, and that public companies operate that way. Maybe some do but most do not. It is human nature to like people like yourself, to promote people like yourself, to want to be with people who think like you and that is why diversity of all kinds takes so long to happen on it’s own.   We need a massive intervention to shake this up. Time and effort have shown that being nice and  gentle about it is not working. Making the ‘business case’ has only taken us so far.  Biases are so engrained, run so deep, that forced change at the board level is one of the only ways to challenge the culture of public companies that are, by the way, accountable to their shareholders.

I spent 14 years at Goldman Sachs including the last two in the Executive Office working on all human capital management issues. I served on the Partnership Committee composed of the most senior leaders of the firm responsible for ensuring that Goldman was a true meritocracy. And guess what? It most certainly was not in my opinion. Did they try? Did they want to be? Did most of the leaders believe it was? Yes. But it was not. There was actually no way it could  be because at the end of the day people were hired , fired, promoted, paid based on personal judgement.  Yes they tried to make the process as transparent and objective as possible but someone(s)  made the decision, yes you are a partner, or no you are not.

I wrote an article a while back called “The Myth of Meritocracy” and that is what it is for most organizations, a myth. Of course the senior leaders need to believe it as to believe otherwise would suggest that maybe they were more lucky than smart, more favored than talented, more liked than gifted. And that does not feel as good.  I always would tell people when asked about my early partnership ( age 32, 8 years in to my career from undergrad) that is was a combination of talent, hard work and being in the right seat at the right time. For me I believe it also HELPED not HURT that I was a woman!

So I applaud this move by the EU. I say it is about time. I say this will be huge step forward for all of us that believe  the world is far from being a meritocracy. Might it be that some women get on boards that are not as ‘qualified’ when considered in isolation? Perhaps, but I am sure unqualified men have been getting those positions for ever.  But that is not the point. The point is that taken as a whole, a more diverse board is better than a less diverse one.  The point is that countless women deserve board seats but are not getting them because of ingrained bias. The point is that  what makes a good board member should be expanded to include a wider variety of people who actually have more TIME to serve well. The point is boards should in some reasonable way represent the customers they serve.

I want to share one quick anecdote. Years ago when I just left Goldman I met with a highly respected search person to explore a corporate board seat. I provided a detailed bio and she, SHE dismissed me like I was yesterdays breakfast.  At the time, 10 years ago, I though “oh gosh, I am not qualified I guess” and let it be. In the years that followed I started to hear the same story from other highly qualified women about this one search person.  Of course I will never know if she just didn’t support women, or perhaps did not think her clients would hire women, but I have since had this bad taste about the whole thing. It is clubby. It is a lot about who you know not what you know. It is time to shake it up.

 

In addition to the work of The 30% Coalition check our 20% by 2020. ( click here)  On their web-site you can search by company to see their board composition.  Thank you for this great service and PLEASE can we have an ap for that?

 

See the statistics for yourself, here are some research articles related to boardroom diversity…

Catalyst: Women Board Directors: A Comparison of Economic Results

Credit Suisse: Gender Diversity and Corporate Performance

Goldman Sachs: The Economic Case for Increasing Female Participation

McKinsey & Company: Women Matter

TechCrunch 2012: Why Your Next Board Member Should be a Woman

And visit the Corporate Boards section in the resource section on my website for about 60 more articles…

 

 

 

 

One thought on “The EU’s New Rule – 40% Women on Boards

  1. Hallejujah for your frank comments. I’m looking forward to your talk at TEDxWomen!

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