Women on Corporate Boards: The New Economic Stimulus

Woman Holding Dollar Bill with Jumper Cablesby Liz O’Donnell (Boston)

Since Catalyst first published the report “The Bottom Line: Connecting Corporate Performance and Gender Diversity” in 2004 showing a positive connection between women in top management positions and an organization’s bottom line, a number of financial institutions, law firms and Fortune 500 companies have introduced some kind of gender diversity program. However, when you look at how few women there are in the top spots today, and then you contemplate the magnitude of the financial crisis we have witnessed, it begs the question: what if there was greater diversity on the boards and management teams of our financial institutions and major corporations?

“Would we have avoided this [economic crisis]? No. [But] I do believe it would have been different,” says Jacki Zehner, a founding partner of private wealth management firm Circle Financial Group and a former partner at Goldman Sachs. ”

While we can’t change the past, we can re-examine how businesses operate going forward.  As Shyama Venkateswar, Ph.D., Director of Research & Programs for the National Council for Research on Women, says of Wall Street, “It is so full of opportunities.”

The key to maximizing those opportunities, according to an entire new set of research reports, is to enlist women. Reinforcing what Catalyst pointed out five years ago, are studies from Ernst & Young, McKinsey & Company, Pepperdine and Columbia Universities all showing a correlation between women in management and strong corporate performance.

The data doesn’t surprise Zehner. “We’re in a new paradigm,” she says. “So what kind of leadership is going to be the leadership that shapes our new paradigm? I really believe the rise of women is key to having a sustainable future.”

Understanding the data is one thing. Acting on it, is quite another. As we have previously reported, Norway and Spain have both mandated that a certain percentage of women be appointed to corporate board. Should the United States do the same?

“There are enough qualified women,” says Zehner. “I could think of no better way than to do that. You bring critical mass to boards and you will have a critical mass of women holding management accountable. I think that is a powerful way to promote change. The status quo isn’t working for anyone. At the end of the day equity works,” says Zehner.

Dr. Sasha Galbraith, a partner at Galbraith Management Consultants, Ltd. and a former Vice President of Wells Fargo Bank, isn’t as optimistic. “I would personally love to see the Norway mandate here but I don’t see it happening in this country. I can already here the screaming.”

Perhaps a more practical discussion is how to keep women in the game so that they can ascend to the top positions. Karen Fenaroli, a vice president at executive recruiting firm, EFL Associates who specializes in placing high level financial executives, says it comes down to succession planning. “When opportunities for succession planning arise, diversity has to be on the menu,” she says. “Diversity in the boardroom, of any type, makes a company better. It allows the paradigm to shift.”

So, will Wall Street and Corporate America listen or will the data be discounted? Jan Shubert, Director of the Center for Women’s Leadership at Babson College, says, “No one is lame-brained enough to say those reports are false.” Let’s hope she’s right.