Editor’s Note: This blog was written by Vision 2020 Visionary Delegate Susan Butler.
When it comes to improving gender equality on corporate boards, two of the world’s most economically important countries just declared it’s time for more action.
In Germany, Chancellor Angela Merkel recently announced her party will push for a policy to require companies’ boards of directors to include at least 30 percent women by 2020.
In Japan, meanwhile, Prime Minister Shinzo Abe has said he wants the country’s biggest business to set a target of appointing at least one woman executive per company.
“Women are Japan’s most underused resource,” Abe said, according to the Financial Times. Women hold less than 2 percent of executive roles at Japan’s top business groups.
The moves by leadership in Germany and Japan follow the imposition of quotas that require companies to appoint more women executives in other countries around the world.
Norway, for instance, now requires companies to fill at least 40 percent of corporate board seats with women. The European Commission wants women to fill at least 33 percent of board seats by 2020. To get countries moving in the right direction, Britain several years ago announced an unofficial quota of 25 percent women on corporate boards by 2015.
In a world where women make up half of the population and in many countries make up half of the workplace, having a relatively small percentage of women as directors seems like a small consolation.
Is it time for corporate board quotas in the United States? I don’t think so.
But, I would hope U.S. companies would do what is right to improve the embarrassingly low numbers of women on their corporate boards.
It just makes good business sense.
Study after study shows that companies that have more women on their corporate boards have better returns than companies with fewer women. Adding more diversity at the upper echelons of management also means better diversity of thought — which in turn means better decision making and broader appeal to more potential customers.
Yet unfortunately, most U.S. companies still don’t get it. Many are still stuck in the “good ol’ boy” system of yesterday that makes it tough, if not impossible, to add diversity on their corporate boards.
Just look at the recent news about Hewlett-Packard. There, longtime board member Ray Lane had to be all but forced out of his role as chairman of the company, according to The New York Times.
HP isn’t as bad as places like Occidental Petroleum, where former Chairman and CEO Ray Irani has been on the board for nearly 30 years, according to the Times.
Instead of waiting for government quotas, boards would be wise to do more themselves to term-limit director positions and implement ‘diversity of thought’ in every way they can.
They can start by helping support women at all rungs of the career ladder.
They can pay women the same as men to make them true equals in the workplace and actually impact the GDP.
They can put more women in leadership positions to feed the pipeline to the boardroom.
And they can support efforts to develop more women leaders across corporate America. One example they can learn from is a women’s leadership event that Microsoft and Amway recently held in Michigan.
By not taking steps like these to improve diversity in the boardroom, corporate boards are not living up to their fiduciary responsibility to do what’s best for their companies and their shareholders.
And that’s not just bad for women and for companies. That’s bad for all of us who depend on a vibrant, diverse economy.