Today I'm hosting a post with an interesting perspective from Liz Kofman. Liz Kofman is the co-founder of The Lattice Group, a non-profit that conducts research on work-life issues from a Gen Y perspective, and a PhD candidate in Sociology at UCLA. This post looks at how many of the largest companies in the United States have few to no women in their corporate board rooms. It also highlights an interesting correlation between this and corporate performance over time. Whether you agree or disagree, I would love to hear your take on this interesting position.
As a loyal reader of The College Investor, I know it's important to start investing young. And there is absolutely nothing I love more than a good deal. So when the stock market tumbled last Monday, I went bargain hunting for stocks.
One company that caught my eye was Zipcar, the car-sharing service. Sure, they haven’t made a dime in ten years but I think this kind of operation takes a while to get going. They have great name recognition, and they just expanded to the UK. Brits don’t mind small, silly looking cars, so I think things are looking up. While doing my research, I glanced at their Board of Directors. Here they are:
Notice anything strange? They’re all men. This was a major turn off. I won’t deny that I was simply a bit offended they couldn’t scrounge up at least a token woman to put on their board. What are we, chopped liver? But more importantly, from an investing standpoint, it just doesn’t seem like a prudent business strategy.
Where Are The Women?
How can a company expect to thrive in a market where 50% of potential customers are women, when they don’t have a single female voice in the boardroom? This isn’t some crazed feminist rant, I swear. It just seems like common sense.
Remember that scandal at The New York Post a while back? When a cartoonist drew President Obama as a chimp? I’ve always felt that if there was a single black person on the Post's editorial board they would have said “Hey, heads up guys, some readers are not going to like this. Let me tell you a story about the pre-Civil Rights era…”. Crisis averted.
Anyway, I got increasingly miffed when I noticed this wasn’t some aberration. Nearly every company I was interested in didn’t have a single woman listed among their officers and directors.
I was annoyed because I had saved my pennies and wanted to invest them with a solid, undervalued company that would make me filthy rich one day. Or at least help me pay of student loans. But I really didn’t feel good about betting on a company that, in the 21st century for crying out loud, had a board full of men sitting around a table talking about golf.
This wasn’t just a gut feeling, a preponderance of research bears it out:
- A McKinsey study of European companies found that companies with the highest level of gender diversity in top management positions outperform their sector in terms of return on equity and stock price growth.
- A report by Catalyst, found that Fortune 500 companies with 3 or more women on the Board gain a significant performance advantage over those in the bottom quartile of gender diversity, including a 73% return on sales, an 83% return on equity, and 112% return on invested capital.
- A Pepperdine University study that tracked 200 of the Fortune 500 companies over several years found a consistent correlation between high-level female executives and corporate profits. In every one of those years, the companies identified as being the best at promoting women outperformed the industry median on all three profitability measures.
Yet, in 2006, less than a third of the largest 1,500 US companies had even a single woman on their top management team. Overall, women represented less than 9% of top managers.
Annoyed and with plenty of time on my hands, I wrote Zipcar an email. It felt good. Then, I thought, what if a lot of people wrote similar emails telling companies that they won’t invest until there are women (notice the plural) in their boardroom. So I created this nifty petition at Change.org: Corporate Women's Rights.
When you sign it, the CEOs of 40 publicly traded companies with 75% or more male boards will receive an email. If you can't beat them, annoy them.
I hope you consider signing the petition. In the meantime, anyone have a list of publicly traded companies with a decent balance of men and women on their board? I have some lonely cash in my Sharebuilder account in need of a good home.
Readers, what are your thoughts on this?