The 3D Blog

Term Limits Could Improve Diversity, Performance and Governance suggests Pennsylvania State Treasurer Rob McCord

Pennsylvania State Treasurer Rob McCord continues his call for greater gender diversity on corporate boards following the release of GMI Ratings' annual “Women on Boards” report, which showed little progress over the past year. 

Mr. McCord stated in a press release yesterday that the GMI Ratings report "is another indicator publicly traded companies are making slow progress” and that “we need to think innovatively about how we address this challenge, and shareholders should demand change." 

Treasurer McCord has advocated for greater gender diversity as a member of the Thirty Percent Coalition -- a group of public and private sector leaders whose goal is to attain at least 30 percent female representation on public company boards by the end of 2015.

So what's the bottom line on diversity? Without a law, not much happens.

GMI Ratings released today its annual report on Women on Boards. Based on data for almost 6,000 companies in 45 countries, the survey provides a broad and detailed assessment of global progress on gender diversity among corporate directors. The survey finds extremely slow progress, largely due to countries without legal mandates for the representation of women on corporate boards. 

The key findings of the report will be of particular interest to those seeking to increase board diversity through non-legislative means in North America and elsewhere.

Guardian launches Women in Leadership, a new section focusing on gender diversity in the workplace

Women in Leadership will focus on all aspects of women at work - from graduate recruitment all the way to the boardroom. 

As Vince Cable stated in a Women in Leadership article posted today, "There is a chronic deficit of women in top decision-making jobs and that's something that can't be remedied in the short term... It requires a building up of the pipeline over a decade or more, companies identifying high performing women and making sure they get the necessary support and that they move through middle and upper management. It's a more difficult cultural change, but it's terribly important."

Strategy born of experience

Two years ago when Beth Stewart's board service for General Growth Properties ended, and after several months of searching for a new role, she concluded “there was no demand for women” and decided to start her own business, Trewstar. 

In a recent New York Times article Stewart said, “I saw how difficult it was for a woman to become a director.” She added, “I started this business because I saw a gap in the market, and I believe I have a different approach to the other alternatives out there.” 

As Facebook prepared to go public last April, Stewart's firm helped to publicize the lack of women on their board. A few short months later, Facebook named its first female director, Sheryl Sandberg. 

Stewart recently co-hosted an event where she discussed a variety of corporate governance topics for women directors. She offered examples of potential obstacles and encouraged the attendees to discuss possible responses. Her point, she said, is “to brainstorm about specific blocking and tackling techniques to overcome the subtle resistance.” 

Morgan Stanley's free-market solution to supporting more women on boards

In a recent Huffington Post article by Kay Koplovitz, Founder, USA Network; Chairman and CEO, Koplovitz & Co, she says that only time will tell if the new Parity Portfolio from Morgan Stanley is a free-market solution to more women on boards. 

Putting more women on boards is a hot topic in financial circles around the world. How does the US size-up? In the past few years women have seen little advancement and still only hold 16 percent of the Fortune 500 board seats. Koplovitz adds, "All talk and no action is what we have seen." 

Launched on April 1, the Parity Portfolio from Morgan Stanley includes only US companies with at least three women on their boards. Investors will be required to invest a minimum of $250,000 in the portfolio of companies.

A new study argues that female corporate directors make better decisions on complex issues than men

According to a recently published study in the International Journal of Business Governance and Ethics, women were more likely to use “co-operation, collaboration and consensus building” when dealing with complex decisions. 

The findings, based on 624 board directors polled in Canada, mean boards “may actually be shortchanging their investors” if they have no women around the table, says study co-author Chris Bart, a business professor at McMaster University in Hamilton. Prof. Bart says his research suggests there could be a logical connection to better corporate performance if women make better decisions on complex matters.

'Parity Portfolio' from Morgan Stanley aims to invest in women

Slated to begin April 1, Morgan Stanley will offer a new option that will only invest in U.S. companies with at least three female directors. Eve Ellis, financial adviser with the Matterhorn Group at Morgan Stanley Wealth Management, is running the strategy with her colleague Nikolay Djibankov.  The idea came about after a report released by Credit Suisse stated that “at least some” companies with women on their boards did better in terms of share price performance.

Studies on Women on Italian and French Boards

Last week GMI Ratings' published a report on Female Directors in the FTSE MIB. In 2011, Italy passed legislation requiring its public companies’ boards to be one-third female by 2015.  A review of the boards of the forty companies in the FTSE Milano Italia Borsa (MIB) as of mid-February 2013 shows that these firms will have to make major changes in the next two years to comply with the mandate.  Women currently hold just over one-tenth of the directorships at companies in the index, and only seven of the firms have boards that are at least 20% female, with none having attained the 33% target yet. 

Similarly, a report published last May examines the effect of the 2010 French board diversity law. The report found that the diversity of new female director candidates dispels the myth that mandates and quotas lead to a small group of women holding multiple board seats.

Gender diversity improves board functioning

Gender diversity improves board functioning, and may also contribute to stock price performance in certain circumstances.  GMI Analyst, GMI Ratings' flagship product, allows subscribers to identify companies whose boards are lagging with regard to female representation. You can learn more by downloading the latest report in GMI Ratings' Key Metrics Series.

According to Manchester Business School, women are more underrepresented in the boardroom than previous figures state

According to a recently released study by Manchester Business School (MBS), the number of female directors on UK boards is nearly half the amount as previously reported in the 2011 Davies Report. 

The research states the reasons that previous diversity studies aren't reflective is due to unrepresentative samples, such as a concentration on the largest firms and no accountability for multiple directorships.