The social and economic upheaval unleashed by the coronavirus pandemic will increase pressure on companies to diversify their boardrooms.
In 2018 California was the first state to pass a law requiring publicly traded corporations headquartered in the state to have at least one woman on their boards by the end of 2019. This mandate increases to two women for a five-person board by the end of 2021.
Progress toward appointing more women on boards has been slow, giving momentum to the argument that laws are necessary to force companies to act. Women hold just 20.4% of board seats among the largest publicly traded companies in the Russell 3000 Index, according to a report by Women on Boards, an advocacy group.
Of the 13 Oregon companies on this index, only eight have 20% or more women on their boards.
2020 could be seen as an inflection year for improving gender diversity in the boardroom. The coronavirus pandemic, which has sparked large social and economic upheaval, has put stress on leaders at the highest level of the corporate hierarchy.
In Oregon, for example, Black Lives Matter protests, sparked by racial inequities exposed by the coronavirus, have led corporations to commit to improving diversity at their own organizations.
“It is imperative that we have a rich and diverse sets of opinions and experiences, because those result in better decisions,” says Robin Tompkins, chair of Women on Boards Oregon. “Businesses are now challenged to think about their relationships not only with employees and shareholders, but also with customers, stakeholders and communities in different ways.”
Evidence is strong that gender diversity at the leadership level is good for business. A 2012 study by the University of Maryland and Columbia Business School found female representation in top management leads to better firm performance if the firm is focused on innovation as part of its strategy.
The coronavirus pandemic has exposed gender workforce issues, such as the enormous stress put on women struggling to cope with homeschooling children while maintaining a job working from home. This has arguably made it more important than ever to have women at the table when making decisions about corporate strategy.
“Boards are recognizing individuals with crisis management skills and diversity and inclusion skills,” says Tompkins. “I am hearing that many CEOs are reaching out to fellow CEOs to get a backbench of more diverse experience to guide them through these issues. This year is a crucial year to continue this message and shed light on it.”
The pandemic has shown how women are adept at managing crises at the leadership level, which could add impetus to appointing more women to board director positions. Some point out that countries which have successfully contained coronavirus, such as New Zealand and Germany, are led by women.
In November Women on Boards is holding its annual event to raise awareness about the need for gender equity in the corporate boardroom. The organization educates women about what steps they need to take to improve their chances of getting on boards.
There is a common misconception that people have to be exceptionally skilled and knowledgeable about a specific industry to become a board member. Boards seek professionals who have broad profit and loss experience to sit on three main committee types – governance, compensation and audit.
It is hard for women to gain entry on boards because so many positions are filled through networking, often among men who hold positions of power at the executive and board levels. Board members often sit on multiple boards and there is little turnover. Less than 20% of board seats are filled by search firms.
Women leaders play an important role in bringing more women into the boardroom, says Tompkins.
In Oregon there are few publicly traded companies that are headquartered in the state, which is one reason that a law requiring such companies to improve the gender diversity of their boardroom may not have as big an impact as in other states.
A recently passed board-level gender-equity law in Washington, home to large publicly traded corporations such as Amazon and Microsoft, could arguably have more impact.
But Tompkins says support for women on boards at Oregon companies is strong among business leaders. Several public companies in Oregon already have women directors. One example is Umpqua Bank, which in 2018 appointed Anndria Clack-Rogers Varnado, a vice-president at Macy’s, who is the youngest Black woman to hold a board seat in the U.S.
Private companies can also play an important role in appointing more women to the board, especially in Oregon which has a larger share of private and family-owned businesses, as well as startups.
As the economic fallout from the pandemic deepens – some forecast a double-dip recession as COVID-19 infection rates rise ahead of the winter and economies face repeated lockdowns – having strong and effective leadership will be critical to navigating the economic stresses still to come.
“We are going to have to do a lot of work to rebuild segments of our economy. We will have huge policy decisions that will be made in large corporations at board level,” says Tompkins.
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