Golden State Tarnished by Lack of Women’s Leadership

Contributed by Heather Cassell

California has a reputation for its progressive politics as well as being a well of innovative inventions and opportunities, but the golden state doesn’t have a sunny disposition when it comes to women’s leadership.

Nearly half, 49.8 percent, of California’s 400 publicly held companies have no women executive officers, according to a University of California at Davis Graduate School of Management report revealed last October, and only 34.3 percent of the state’s public companies have only one woman on its board of directors. This means that in such a trend setting, policy establishing progressive state women make up only 27 percent of the active directors and executive officers of California’s 400 largest public companies. But for the largest publicly held companies headquartered in California the number of women who comprise directors’ and executives’ chairs in 2007 drops to 10.4 percent and this is a slight increase from 10.2 percent in 2006, according to the report.

“It could well be the case that [these companies] have great gender diversity in their rank and file employees,” said Katrina Ellis, author of the study, “but when we are looking at corporate leaders a lot of those companies do not have women at the top.”

Ellis found that in 2007 women only make up 11.6 percent of the 2,878 executive officers and women only occupy 9.4 percent of the 3,283 directors’ seats of California’s public companies. This is disappointing for a woman who when she was a little girl thought all of the barriers for women in the workplace had been broken down.

The San Francisco Bay Area is an anomaly California’s corporate leadership dynamic in regards to women. The number two financial hub of the state’s industries (47 percent), including high tech, trailed slightly behind Southern California (49 percent), with “tinsel town.” The Bay Area’s leading edge over Southern California: women directors and executives.

Bay Area companies have one percent more women directors on average than Southern California companies. Three of the seven Bay Area counties are among the state’s top six with respect to the percentage of women executive officers. San Francisco and Marin counties are the top regions for women executive officers, both with 20 percent women executives and San Francisco had the highest number of women directors (16.9 percent).

The flip side of the Bay Area’s gender coin is Santa Clara County, better known as Silicon Valley, which bottomed out with the lowest number of women directors (7.3 percent) and only 9.1 percent women executive officers. This is compared to 76 percent of the telecommunications industry and 67 percent of the semiconductor industry comprised of all-male boards. It isn’t surprising that 73 percent of semiconductor companies and 83 percent of the electronics industry have all-male executive teams. Obviously, as innovative and progressive as the tech industry is it has a long way to go to attract women and to build a strong relationship with women.

Who knows, perhaps the relationship will strengthen these companies bottom lines. Ellis found that overall the largest companies had the larger boards with three times as many women directors as the smallest companies and the companies with revenues between $2 billion and $5 billion have the highest percentage of women executive officers and she isn’t alone. Other studies have concluded that greater gender and ethnic diversity on boards is “correlated with higher return on assets and return on investment, as well as higher firm value,” according to the Board of Director Diversity and Firm Financial Performance.

It is Ellis’ goal with the report to “kick start” some of the companies to try harder to seek out qualified women for its board of directors. She recognized that is where change is really happening in corporations.

“Companies don’t actually change their CEO every year. But the place where companies actually do have a reasonable amount of turnover is on the board of directors,” said Ellis. “The first year [the report] came out we had companies say that, ‘Yes, we realize that we don’t have a woman on our board. We are actually in the process of getting a woman.’ In the next year the numbers show[ed] that they added a woman to their board.”

To help facilitate the change Ellis partnered in 2006 with the Forum for Women Entrepreneurs and Executives based in Palo Alto, California. Together the organizations became the eighth member of the InerOrganization Network, a national organization that works to advance women to positions of power in the business world, particularly to the boardroom, but if an executive suit is offered they’ll take that too.

“Women are still going to have to work very hard,” said Ellis, “to get over company barriers along the way.”
Fortunately, the Bay Area is strong in many of the industries women are excelling in either as executives and/or directors, according to the report. Retail has the highest percentage (21 percent) of women executives with the financial industry following closely behind with 17.5 percent. The pharmaceutical sector has the highest percentage (16.4 percent) of women directors with the media sector taking second place with 14.9 percent.

This was the third consecutive year Ellis examined California’s top public companies reports culled from the Securities and Exchange Commission (July 1, 2006 – June 30, 2007), Standard and Poor (June 1, 2006 to May 31, 2007), and the Investor Responsibility Research Center (2005) to find the top female brass. Eventually, as she continues to improve the study, she hopes to gather more information about women executives and directors and the companies they lead.

The only publicly recorded personal information Ellis extracted from the Investor Responsibility Research Center was that 273 women are directors out of 310 positions. Of those 273 women, 140 are Caucasian or didn’t identify their ethnicity, seven are African American, six are Hispanic, and four are Asian.

To learn more about the study, visit their website.