- The Washington Times - Monday, April 16, 2012

While the number of women in the corporate boardroom has been slowly rising in recent decades, some argue that the free market still needs a strong nudge from the government to shatter the glass ceiling.

Building on laws and regulations in a number of individual European states, the administrative arm of the European Union is an a “period of consultation” on a proposal to impose quotas for women on corporate boards throughout the economic bloc, citing in part studies showing that companies with more women in the boardroom are more prosperous and competitive. Companies that fail to measure up would face fines or other, unspecified penalties.

“I’m not in favor of quotas,” EU Justice Commissioner Viviane Reding told reporters recently. “However, I like the results they bring.”

Some hope - or fear - that the trend may be heading to this side of the Atlantic. With a fight breaking out last week between a Democratic strategist and Republican candidate Mitt Romney over the proper role of women in the workforce, the issue may get a higher profile as the presidential race heats up.

Proponents of accelerating the number of corporate board slots for women point to a 2007 survey by the nonprofit research group Catalyst, which describes its mission as “expanding opportunities for women and business.” The report found that the Fortune 500 companies with the largest percentage of female board members posted a 13.9 percent higher return on equity than their peers.

“I wouldn’t say that quotas don’t work, only that they’re not nearly as well received here in the U.S. as [they are] abroad. I would love to see them more,” said Maria Peqa, senior director of entrepreneurship and economic development for Vital Voices, an international nongovernmental organization that helps women become leaders and entrepreneurs.

“If the current rate of women’s incorporation of boards is left to happen organically, we’ll be here for another 3,000 years,” she said. “In general, if [quotas] work, we should allow them to work.”

“When women have a chance to work as full and equal partners, economies prosper,” said Neera Tanden, president of the Center for American Progress.

Norway is widely considered to have the industrial world’s most progressive approach to gender equality in the corporate hierarchy. On a recent Washington visit, Rikke Lind, deputy minister from the country’s Ministry of Trade and Industry, attributed much of Norway’s economic success to a 40 percent gender quota placed on all of the nation’s publicly traded companies in 2003.

Despite the cost of enforcing the quotas and policing the market, “it is worth the money,” she said.

Christina Sommers, resident scholar for the American Enterprise Institute, said mandating women in the boardroom though quotas or other coercive means would create the same backlash that such programs have created in other fields.

“If we’re going to be burdened by all sorts of political constraints, we will not have the benefit of highly expert and focused corporate leadership [and] our companies will suffer,” she said. “There is a place for women on boards, there are women qualified, and I think that a company that doesn’t take advantage of that will be harming themselves.”

Companies “should go for the best person,” she said. “If that’s a woman, then by all means take her.”

A numbers game

Although women make up more than half of the population and almost 49 percent of the U.S. labor force, the numbers give a mixed picture of their presence in the corporate boardroom. According to Catalyst, women’s share of the total board seats at Fortune 500 companies has risen from 14.6 percent in 2006 to 16.1 percent last year.

In a review conducted by The Washington Times, the top 20 U.S. Fortune 500 companies have 255 people on their corporate boards. Of that total, exactly 20 percent, or 51, are women.

The review found some surprising outliers. A group of companies such as Starbucks that appeal to a younger, supposedly more liberal customer base have an average of 16.3 percent female boardroom representation. Social media giant Facebook, preparing for its first public sale of stock this year, has come under fire for having not a single woman on its board.

Some companies whose target markets are heavily skewed toward women have made it a priority to display a pronounced female presence at the top.

Avon Products Inc., which sells makeup and other products for women, has intentionally sought out women for its board. At 50 percent, Avon’s board has the highest female representation of any Fortune 500 company.

Company spokeswoman Jennifer Vargas said Avon believes that proper representation of women at all levels of operation is important because women represent the company’s target market. In addition, Avon believes that having a “diverse perspective makes better management and that women are the start of that,” Ms. Vargas said.

The company made news again on the gender front with the appointment of longtime Johnson & Johnson executive Sheri McCoy to be the chief executive officer - the first woman to hold the post in the company’s 126-year history.

Macy’s Inc. also has a high percentage of female executives, with four women on the 10-member board. Spokesman Jim Sluzewski said the emphasis is intentional because company officials want the board to reflect their workforce and their customers.

“It’s actually pretty natural for us to have a large representation of women on the board,” said Mr. Sluzewski, who has been with the company for almost 30 years. “We’ve always had women on the board. I think we have a higher proportion now than we ever have before, but we certainly have for many decades.”

An unsettled debate

What impact the gender makeup of a corporate board has on the bottom line has been a subject of dispute, and scholars haven’t pinpointed how much active discrimination keeps women out of the boardroom.

“I think there are big cracks in the glass ceiling,” said Louis Galambos, professor of economics and history at Johns Hopkins University. “I think you’re seeing women who make it and don’t make it, but it’s not on the basis of gender - it’s on the basis of the firm’s performance.”

Ms. Lind said “no country, not even Norway, has reached full gendered equality. … Glass ceilings still remain, not least in the private sector and company boardrooms, in the management.”

Kenneth Ahern, professor of economics at the University of Michigan, said the gender quotas may be working in terms of putting greater numbers of women in reserved corporate board slots, but not in terms of making money for those companies.

In a study he published last year, he concluded that when a gender quota is imposed on a company, its stock price drops and its operating performance deteriorates.

“Going into [the study], there was an argument that, by increasing the gender balance, that maybe it would make boards operate better,” said Mr. Ahern. “But the results of our paper don’t support that view.”

Ms. Lind argued that women in corporate boardrooms tend to make their companies more economically stable.

“What we know is that in companies where there are more females in management and in boards, there is less risk-taking, there are lower bonuses. …” she said. “This is good for business, the financial sector.”

Ms. Sommers strongly disagreed. She said that the EU’s boardroom quota plan has the potential to increase gender prejudice in the workplace and divide management.

“This is going to be devastating to the business environment in Europe. It’s so wrong on so many levels,” said Ms. Sommers. She predicted that the ultimate result would be a “two-tier system of corporate leadership.”

“Men will be chosen because of their value to the company and women simply because they are women. And they’re going to bear the stigma of special treatment.”

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