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The Forum of Executive Women, the region’s premier organization of influential women leaders in business, today released the research results from its 7th annual Women on Boards survey, a look at how the boards at the 100 largest publicly held companies in the Philadelphia region reflect gender diversity.
Although this year’s research shows slow progress in several areas, it will take more than 70 years at the current rate to reach parity in local boardrooms. And Philadelphia companies continue to trail the national average for the number of women leaders in business.
The research, conducted by The Forum of Executive Women’s Executive Suites committee in concert with professional services firm Deloitte & Touche USA LLP, entitled “Women on Boards 2007: The Time Has Come,” is based on 2006 data reported by the region’s 100 largest public companies. Here are key findings:
• The number of female board members here increased less than 1 percent over the previous research year – from 9.73 percent in 2005 to 10.41 percent in 2006.
• The numbers are better for the 15 local companies in the Fortune 500, with 13.77 percent women board members. However, this lags the national 2006 Catalyst figure of 14.6 percent for Fortune 500 companies overall.
• The percentage of women leaders in business serving in executive positions remained stagnant - with 8.7 percent in 2006, compared to 8.61 percent in 2006. This number is tracked because it represents a key “pool” for board candidates. Of those executives listed as most highly compensated, women made up 6.48 percent of those reported as top earners.
• Overall racial diversity on boards decreased by 1 percent, while the number of seats filled by African-American women declined from 7.14 percent in 2005 to 5.75 percent in 2006. The number of Asian-American women holding board seats also dropped, from 2.38 percent in 2005 to 1.08 percent in 2006.
• In 2005, 43 companies had no female board members; in 2006 that number dropped to 40, a positive sign.
• It appears that “early adopters” – those companies which have added women directors over the past few years – are gaining momentum. Published research points to the critical mass or “tipping point” of a minimum of three female board members or 25 percent. In our region, seven area companies – Charming Shoppes, Inc., CIGNA Corporation, Genesis HealthCare Corporation, Harleysville National Corporation, Kenexa Corporation, Penn Virginia Resource Partners, and Mothers Work, Inc., now have boards comprised of at least 25 percent women members.
The report, now available online at foew.com, shows that despite what is a significant pool of qualified female executives and an acknowledgement of the importance of boards reflecting the demographics of their constituencies, most area public companies are still not making sufficient progress to place women on their corporate boards.
“At the current improvement rate, it will take nearly 50 years for executive women leaders in business to reach gender parity, and nearly 75 years to reach parity in board seats,” said Elva L. Bankins, President of The Forum of Executive Women, and Senior Vice President at CEO Resources, Inc. “While there is some encouraging data, the numbers are essentially flat. So we must continue to engage in discussions with our corporate leaders to identify the obstacles and take advantage of all opportunities to make strategic and meaningful improvements. It is essential that we remove the barriers that are keeping our region from reaching its fullest potential.”
”There is greater pressure on companies today than ever before,” said Bankins. “Times have changed. Having female board members is not just ‘the right thing to do,’ but is essentially required in today’s climate of increased corporate governance scrutiny under Sarbanes Oxley. We can only hope that United States companies will make more rapid progress voluntarily before further regulatory intervention. If not, we may just have to learn from countries like Norway. In 2002, with only 3 percent female representation on boards, Norway mandated that 40 percent of its public companies’ board members be female. And that certainly got people’s attention.”
"Faced with a war for talent and demanding expectations for performance, organizations that promote women into leadership positions will have an opportunity to add diversity, capability, momentum and a strong ethical base to their ranks", said Tara Weiner, Managing Partner Greater Philadelphia, Deloitte & Touche. "We need to recognize that tapping into the full pool of talent makes economic sense in a competitive landscape."
Published research also shows a strong correlation between higher shareholder returns and a higher proportion of women leaders in business serving as executives. A decades-long study of Fortune 500 companies by the Glass Ceiling Research Center at Pepperdine University showed that the companies with the very best records for promoting women tended to be the most profitable. Gender-diverse companies are 69 percent more profitable, according to a study published several years ago in the Harvard Business Review.
“It is often the female board members who raise the most questions about how a company is cultivating a diverse pool of employees to support its succession planning and whether the pool includes women and people of color,” says Vicki W. Kramer, co-author of “Critical Mass on Corporate Boards: Why Three or More Women Enhance Corporate Governance,” released last fall by the Wellesley Centers for Women. According to the study, three women board members are the “tipping point.” Only 76 boards among the Fortune 500 have three or more female members, and only seven in this region meet that threshold.
“It’s a mindset among top executives,” said Michael Useem, Professor of Management at The Wharton School at the University of Pennsylvania. “But research confirms that when governing board members are diverse, their firms are less likely to break the law and more likely to perform well.” A July 2007 study by New York-based Catalyst found that “gender stereotyping” was one of the key barriers to women’s advancement in corporate leadership, regardless of leadership styles, resulting in organizations’ routinely underestimating and underutilizing women’s leadership talent.
As a result of these statistics and studies, The Forum of Executive Women is focusing its efforts on several fronts to increase the number of women on corporate boards. The Forum offers direct support by providing names of qualified female candidates to companies seeking to diversify their boards. The group also continues to work closely with search firms that advise corporations on board appointments; and to mentor and coach rising women to develop their leadership skills. The Forum will also work with women leaders in business who are already on corporate boards to increase the number of boards on which they serve, and work more closely with those “early adopter” companies. A new initiative will help build critical mass by targeting those 40 companies who have no female board members -- requesting direct meetings with each of them over the next 24 months to identify and resolve barriers.
The Forum also continues to share information with a network of similar regional organizations across the United States, all of which work to advance women to positions of power in the business world, primarily to boards of directors and executive suites. All of the regional data, including California, Chicago, Florida, Georgia, Massachusetts, Michigan, Philadelphia and Wisconsin, will be available in Spring 2008.
The “Women on Boards 2007” report is a joint initiative of the Forum of Executive Women and Deloitte, which helped fund and conduct the research. Founded in 1977, The Forum of Executive Women (foew.com) is a network of 300 of the most influential women leaders in business in the region.
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