Cracks Begining to Show in California’s Glass Ceiling – Where and Why

By Tina Vasquez (Los Angeles)

For the past five years, the UC Davis Graduate School of Management has worked in conjunction with the Forum for Women Entrepreneurs and Executives (FWE&E) to collect the data for their Study of California’s Women Business Leaders, which takes a census of California’s women directors and officers and sheds light on the lack of female representation found in these roles. For many of us already aware of the dismal numbers in which women are represented in c-suite positions and on boards across the country, it will come as no surprise that 2009’s study found that women continue to remain one of California’s most untapped resources.

The Bay Area: A Contradiction in Gender Representation

Nationally, only 15.2 percent of board positions are held by women and the numbers aren’t much better in California. FWE&E CEO, Wendy Beecham, has the unique perspective of having the area where she both lives and works be a representation of the best and worst of California. Beecham is a major proponent of diversity in the boardroom and her Palo Alto, CA office serves the entire Bay Area. Oddly enough, the Bay Area has both the highest and lowest numbers in the state for women directors. In San Francisco County, 15.7 percent of board positions are held by women, which is the highest in the state and higher than the national average. Just a little over sixty miles away; however, the booming Silicon Valley in Santa Clara County, considered the high-tech hub of the country and home to technology giants like Adobe Systems, Apple, eBay, and Google, continues to remain an all boy’s club with just 8.2 percent of board positions being held by women.

“Choosing not to hire women is often not intentional. It’s both a conscious and subconscious decision,” Beecham said. “Consciously, a male executive may say that he chose a man for the position because there were no qualified women in the pool of candidates. If that’s true, then perhaps the company’s leader has not championed diversity to a point where HR is required to cast a wider net to find qualified women. Subconsciously, a white male executive may be more comfortable hiring someone like himself.”

The Times they are a-Changin’

Beecham strongly believes that these disappointing numbers will change drastically in the near future for a number of reasons: More women are graduating from law school than men and the number of women currently receiving their MBAs far exceeds men. The recession has also taught big business quite a bit about the importance of having qualified, capable board members. “With companies like GM, we saw that people were serving on boards who weren’t qualified for that particular position,” Beecham said. “There is now more corporate and shareholder awareness of recent studies which found that a more diverse board leads to a more financially successful company. As companies seek out the most qualified and diverse candidates, it should lead to more women serving on boards.” It’s not just more women that Beecham hopes to see, either. “Diversity has to come from the top; it can’t just be an HR initiative and ‘diversity’ doesn’t just mean including women. It means including people of all kinds: people of color, people with different types of education and experience, people with new perspectives, and people with various backgrounds.”

A recent ruling by the U.S. Securities and Exchange Commission (SEC) will also greatly assist women hoping to attain positions as company directors. Effective this year, the SEC’s new amendments require that companies make “new or revised disclosures about: compensation policies and practices that present material risks to the company; stock and option awards of executives and directors; director and nominee qualifications and legal proceedings; board leadership structure; the board’s role in risk oversight; and potential conflicts of interest of compensation consultants that advise companies and their boards of directors.” In other words, this will lead to greatly increased governance disclosures relating to director qualifications. According to Beecham, “This is a step in the right direction.”

Other UC Davis Findings

UC Davis’ Study of California’s Women Business Leaders resulted in many eye-opening statistics. For example, it was found that women hold only 10.6 percent of the board seats and executive officer positions in all 400 of California’s largest public companies combined. Even worse, 119- or 29.5 percent- of these 400 companies have no women board directors or women executive officers and of the 3,252 board seats available, only 9.8 percent are held by women, which is actually down from 2008’s numbers. It was also found that 33.5 percent of the 400 public companies only have one woman director.

The statistics don’t get much better for executive officers, either. UC Davis’ study found that women only account for 11.6 percent of the 2,770 executive officers in California’s largest public companies. Also, less than half (49.3 percent) of California’s companies have absolutely no women executive officers and only 19.7 of the companies have more than one woman executive. Lastly, of those 400 public companies, only 15 have a woman serving as CEO.

According to the study, there are three major factors that affect these numbers: Industry, company size, and location. In industries that are dominated by women, such as the consumer products sector and the retail sector, it is more likely that women will hold high-ranking positions. For example, Bare Escentuals Inc., a San Francisco-based natural makeup company, was found to be the company with the highest percentage of women leaders in the state. It was also found that the larger the company, the more likely it will be that women are serving on its board. Generally speaking, the study found that larger companies have larger boards and almost three times as many women directors as the smallest companies. It’s also about location, location, location. A majority of California’s largest companies are located in Southern California (43.8 percent of them, at least) and the San Francisco Bay Area (52 percent of them). This means that if you’re a California-based woman living outside of those specific areas, you’re even less likely to serve on a board.

According to the study’s conclusion, the lack of female representation in corporate boardrooms and executive offices can partly be attributed to these three factors (industry, company size, and location), but as Beecham said, until diversity comes from the top, the chances of these numbers truly changing in any significant way is slim.