California state & women on boards

To the cynical eye, of which there are many, the California state law requiring women directors on boards of public companies headquartered in California can look politically expedient, half-hearted, potentially tokenistic approach. To critics on one side, it is unconstitutional, and to those on the other side, it does not go far enough either to enhance diversity or to create inclusion on boards and which may not do anything to change how different voices are heard on boards of companies.

To the hopeful, who are reading about it in the week when the number of women directors on FTSE 100 company boards reached 30.4%, the law looks like a bold first move which will ignite the conversation that needs to be had. To those, who say “Yes but the FTSE 100 company boards achieved it without a quota enforced”, I would recommend clicking on the link in the previous sentence to see what concerted efforts were made over what time frame to ensure it did happen.

The gender imbalance on Californian companies especially startups is so well-documented that it does not need repeating. What does however need saying is that women are discriminated against on boards.

First, getting women on corporate boards has been difficult.

Many explanations are advanced to explain why there are so few women on corporate boards e.g. the pipeline problem is cited most often perhaps because it is solvable, while board hiring largely remains informal and not always transparent. The effort and cost of finding women board directors are also cited as issues.

Many “fixes” have been advanced too — formal reviews and targets as in the case of the UK, outright quotas as seen in Scandinavian countries (with mixed success, as board quotas are not solving the senior executive pipeline problem, as argued here), initiatives addressing the talent pipeline issue.

Second, once women are on corporate boards, they may find their voice is not heard, or they are mocked or spoken over. One of the most recent public examples of this mockery has been the Uber board director, who made a sexist remark to Arianna Huffington about women talking too much at a forum about sexism. As you may know, that did not end well for him but who is to say how many times Ms Huffington had heard similar stuff in closed meetings! It was not like Uber’s culture was being celebrated for its exemplar inclusiveness.

The real problem is not about including or excluding women on boards but the wider cultural issue of discrimination that persists below the level of boards i.e. in executive rooms — which was what the 30 Percent Club cited earlier sought to address.

The usual red herrings are being thrown at the debate: “Now do we have to lower the bar just to let the women on boards even if they don’t deserve it?

Ah yes, glad you asked about merit!

Including me, most women serving on boards have heard many versions of it. Especially from boorish men we encounter in places we expect to encounter them i.e. everywhere.

Whenever the word “diversity” is mentioned in presence of incumbent holders of power in any group — and corporate boards are no exception — the question whether diversity should be a goal “regardless of lack of skill, talent, ability or knowledge” is asked.

This is a diversion from the real challenges of group-think and other risks posed to good corporate governance from groups that are altogether too homogeneous, too familiar, too “normal”.

I put “normal” in quotation marks for a reason. The word “diversity” assumes and embodies in itself that there is a “normal” and everything else is, well, diverse, deviant. This is why “inclusion” is gaining currency as the goal for boards and companies alike. “Inclusion” is positive and acknowledges that different people have different experiences, skills, talents, knowledge and perspectives that they bring without necessarily giving primacy to one “normal” and homogeneous perspective.

There are several ways of tackling the question.

One is to challenge the assumption that aiming for diversity and inclusion on boards automatically is about lowering the standards. It is not. When a board seeks inclusion, the usual first step is to diversify the channels through which board directors are recruited. Traditionally these channels have been unofficial, below-the-radar, non-transparent because directors just tapped their own networks and friends. Some even went a step ahead and made the case that not paying a headhunter was a saving for shareholders! The effect of tapping the same old networks with more men than women in the workforce has meant, for instance, that more and more men were in consideration and got on boards. This led to a sense of selection and confirmation bias in the sense that if someone is on a board, he must be competent. This is not borne out by research which shows mediocre men have been able to get these positions simply by being around in larger numbers, and not because they brought merit or skills or capabilities. But when hiring channels are diversified and more types of communities are tapped, what boards find is a range of specialist skills, experiences, and access to further and different networks of contacts. Indeed the only group that is at risk from diversity and inclusion is the mediocre male, as research has also found.

The second is to address the fear of diversity and inclusion that afflicts the incumbent group holding power and control. This is understandable. We fear what we do not know. The solution could be to avoid what we do not know, or to make a bold step towards the unknown knowing that plenty of research tells us that net gains in performance and other metrics outweigh the net risk.

When boards pursue an agenda of enhancing diversity and inclusion, contrary to the fears of incumbents, they raise the standards in many different ways. The net gain in performance and governance accrues to shareholders and stakeholders, whom board directors are tasked to serve.

Are quotas the answer?

I am not in favour of quotas but I am also aware of my own privilege when I make that claim with a dismissive sweep of my hand.

There is a personal and a structural challenge here.

My meritocratic self says women need no quotas or affirmative action, mainly because women playing for board roles are as smart as — if not smarter than — most men vying for those roles, and also partly for the reason that everyone, especially male colleagues around them, think that they do not deserve their position and their merit, skills, capabilities and knowledge are doubted, making it harder for the women to be effective and collegial in discharging their duties.

My pragmatic self, grounded in the realpolitik of gender, race, class, education etc, knows that incumbency is not broken by pretending that everyone plays on a level field.

My pragmatic self also knows that women’s talent and education and experience are no vaccine against aggressively clueless bullying that men will mete out to them, while the women try to get to board seats and even when the women get to board seats legitimately.

My pragmatic self also says that if I get to serve on a board, I should and will hold space for those who have the right experience and who deserve a chance, but won’t get it because they do not have the networks or the right establishment pedigree. This goes beyond gender to include race, sexuality (if I had a £ for every casual homo-and trans-phobic “joke” I hear in industry events!), religion and other markers of identity that are not deemed the norm.

To that extent, I will not ask or lobby for quotas but I will support endeavours such as the 30% Club which are about industry leadership openly pledging their commitment to diversity and inclusion.

Holding space till the glass ceilings are shattered is no mean feat. For now, we throw at the problem what it takes, regardless of our personal, conflicting feelings about it. Demeaning women regardless is a problem boorish men have to fix for themselves.

Will demanding women’s inclusion on boards by force of law solve anything? Likely not but that does not mean it is not a big daring opening gambit in forcing the long overdue conversation on diversity and inclusion.

And in the long game, the gambit should be noted.