Increasing the number of female board directors has been a priority for companies and investors around the world in recent years. Governments have introduced quota systems, companies have drafted internal policies addressing the issue and investor, stakeholder and public pressure have all led to real positive change. However, there is still a long way to go, with only one-fifth of board seats in the United States’ 3,000 largest publicly traded companies held by women.
Of the top 3,000 companies in the Russell 3000 Index, the number of women on boards hit 22 percent earlier this year, the highest it has ever been, Equalir says in its Gender Diversity Index. This is up from 21.5 percent at the end of 2019, and 15 percent when Equliar, which tracks corporate governance data, started the index in 2016.
Small companies lag behind larger ones when it comes to getting female representation on boards, the Women on Boards 2020 report on the 2019 financial year showed. Of the largest 100 companies in the Russell 3000 index, 27.7 percent of board seats were held by women compared to 15.7 percent for the smallest 1,000 companies. Women gained 811 board seats from 2018 to 2019, with 42 percent of new seats going to women between July 2018 and June 2019.
The trend of increasing gender diversity has become a top board priority. A 2019 EY Center for Board Matters report highlights that, with 53 percent of institutional investors saying it should be. And with the increasing diversity, female hires are being seen as much more than a check-the-box exercise, with conversations centering around their positive effects on companies.
The top 25 tech companies
We’ve compiled a list of the 25 leading tech companies with the highest percentage of women on their boards of directors, based on leadership team data from company websites. We’ve focused on the top performing public U.S. tech companies according to Fortune 500's 2020 data. These companies have boards where women comprise at least 30 percent of board seats:
Below is a detailed breakdown of the data supporting our analysis, which is based on company website data as of July 1, 2020.
|Companies||Board Members (Women / Total)||Share of women (%)|
|Booz Allen Hamilton||5/12||42%|
|Hewlett Packard Enterprise||5/13||38%|
For Pitney Bowes, which has five women in its ten-member board of directors, dedication to diversity and inclusion has been part of the company’s history for 100 years, and every employee bought diverse or distinguished characteristics to the table, a representative said. “Creating an environment where differences are valued allows them to bring the very best of who they are to work. When we do this, our clients get the very best from us.”
Jamie Smith, associate director at EY Center for Board Matters, told IR Magazine that a diverse board makes better, more robust decisions. She said a wide range of studies showed the benefits of board diversity, including how diverse perspectives enhanced issue identification and problem solving, and stopped the tendency for group-think.
She also noted growing evidence that more gender-diverse boards led to companies with better business outcomes.
This year, Broadcom, whose board includes three women directors out of nine, was awarded a ‘Winning W’ from 2020 Women on Boards recognizing the company’s commitment to diversity. Broadcom president and CEO Hock Tan said the company was proud to be formally recognized for its ongoing commitment to gender diversity. “An important part of our strength as a company is the perspectives and talents our diverse teams and leadership bring to work every day, and we are honored to have received this award," he said.
For Maximus, incorporating diversity, equity and inclusion was a cornerstone of the global business, a representative said. “We foster a culture that respects and values individual contributions and differences that spark innovation, leadership, and exceptional performance,” they said.
“We must lead by example, including representation of our workforce at all levels of our business, such as within our board of directors.”
To achieve “critical mass”, which can lead to better financial performance in a company, women needed to hold at least three board seats, Cynthia Soledad, Karoline Vinsrygg, Ashley Summerfield and Jennifer Reingold’s 2018 Global Board Diversity Tracker: Who’s Really On Board? found.
A second study showed that critical mass could change boardroom dynamics to a point where innovative ideas were born from the diversity, and another study found having women on boards led to other female directors having longer tenures.
For Maxim Integrated, which has three women on its nine-member board, empowering design innovation meant empowering diverse perspectives and ideas, a representative said. “As a company with customers around the world, we foster a workforce that reflects the diversity of the markets we serve and embrace different backgrounds, viewpoints, skills and talents.”
The representative said Maxim Integrated believed in the power of diverse perspectives and ideas at work, and management knew that having the very best employee population meant actively seeking out people with different genders, races, cultures, religions and other backgrounds, experiences, and perspectives, and providing them opportunities for growth and advancement.
Creating for the future
Having women board members also led to more women being appointed CEOs, and the recruitment and promotion of people of color, Utah State University professor Christy Glass told Fortune.
Hewlett Packard Enterprise, which has five female board members of its 13 member board, has long been committed to board diversity, a representative said. To address the underrepresentation of women on boards, HPE was taking steps to build a future pipeline of board-ready female talent through an acceleration program called Ready Now!, founded by two female board members.
“The program is aimed at equipping our female leaders with the skillsets and knowledge to pursue and procure external seats on boards,” the representative said.
Microsoft, which has five women on its 12 member board, is committed to maintaining a board with diverse backgrounds and experiences that matched the evolution of the company, a representative said.
“The Board is committed to actively seeking highly qualified women and individuals from minority groups to include in the pool from which new candidates are selected,” the representative said.
“The Board’s objective is to recommend a group that can best ensure the continuing success of our business and represent shareholder interests through the exercise of sound judgment using its diversity of experience and perspectives.”
In 2018, California became the first state in the United States to pass a gender quota for boardrooms of publicly traded companies. Under the law, companies need to have at least one female director or face a $100,000 fine. By 2021, companies with a five-member board must have two female directors and at least three female directors on boards of six or more.
The law cites studies showing critical mass changes the environment to one where women are no longer viewed as token. The Female Quotient CEO Shelley Zalis told NPR there was 30 percent rule, “When you have a minimum of 30%, that's when you see a transformation of culture and a true transformation of how business operates. But we have to start somewhere."
The bill’s sponsor, State Sen. Hannah-Beth Jackson, said the bill was a giant step forward for women, citing how multiple studies showed companies with gender diverse boards were more profitable. Since the law was passed, TheBoardlist (a database for companies to find female directors) reported a 20 percent increase in inquiries, and a halo effect was happening with increased discussions and recognition of the value of diversity.
And there are already other states following suit. Similar legislation has been introduced in Illinois, Massachusetts, New York, New Jersey and Washington.
However, the law isn’t without its critics. Lawsuits have been filed in California, saying the law is discriminatory and unconstitutional, with one senior attorney involved in a case saying it violated the 14th Amendment’s promise of equal treatment before the law.
In the European Union, quota systems have been improving boardroom diversity for years. In October 2018, women held 26.7 percent of board seats in the largest publicly listed companies in EU member states. Of the top ten countries ranked by those with the most companies with three or more female directors, nine had gender quotas in places.
In January, Goldman Sachs announced it would stop taking companies public in the United States and Europe unless they had at least one “gender or racially diverse” board member.
Goldman Sachs CEO David Solomon told CNBC he had looked back at IPOs over the last four years, and in the U.S. when there was a woman board member the IPO was significantly higher than when there wasn’t. "We have four women out of 11. We have a black lead director. I really value the diverse perspectives I'm getting which are helping me run the company," Solomon said.
Goldman Sachs board member and former DuPont CEO Ellen Kullman said companies have long used networks of friends and acquaintances to fill board seats, which had historically created male boards. “If it's word of mouth and you ask the men, historically, they have given a lot of names of other men. So now, we need to do the same."
BlackRock, one of the world’s largest money managers, has said it would only invest in companies that have two female directors or more. Wall Street Journal reported BlackRock sent a letter to around 300 companies in the Russell 1000 that had less than two directors, asking them to disclose diversity practices and to establish a timeframe for improvement.
The letter said BlackRock believes a lack of boardroom diversity undermines a company’s strategic decision-making abilities and inhibits capacity for long-term growth.
Challenging preset ideas
A major obstacle to increasing female representation in boardrooms is a perceived lack of experience amongst women, with boards historically selecting candidates who have served as CEOs of public companies, which are predominantly run by men.
Executive-level recruiting firm DHR International Managing Partner Jeanne Branthover said her team was trying to introduce boards to ‘board-ready’ women, those with senior, C-Suite level experience who might have served on the boards of nonprofits, or schools. She said there were plenty of high-quality candidates.
Increasingly, board seats were being redefined as functional roles, Robin Toft, founder of Toft Group Executive Search told The New York Times. This is opposed to previous years, where boards were composed solely of CEOs and CFOs that had little deep knowledge of certain functions, she said.
A number of companies and nonprofits have sprung up to address diversity issues in corporate governance, including in recruitment, training and cultivation. One such group is Forté, which partners with business schools and companies globally to identify women interested in advancing their careers in business and ultimately becoming eligible to serve on a corporate board. To do this, Forté member schools identify and recommend their alumnae for the board-ready initiative.
While progress is certainly being made in achieving gender diversity in the boardroom, women still face an uphill climb. The push for diversity is working alongside slow-moving corporate change, with most major indexes showing only one or two percentage point changes in the number of women directors year-on-year.
However, increasing discourse around the benefits of diversity, investor and stakeholder pressure, and increasing networks of support for women are making their mark, and should be further pushed to keep giving women more shoulders to stand on.
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