Seek­ing gen­der bal­ance in the board­room

Cal­i­for­nia law could be tem­plate for lo­cal ac­tion

Connecticut Post (Sunday) - - Sunday Business - By Paul Schott

Cal­i­for­nia has en­acted a first- of- it­skind law to tackle the lack of women on boards of di­rec­tors of pub­licly traded com­pa­nies based there. Sim­i­lar un­der­rep­re­sen­ta­tion per­sists in board­rooms in Con­necti­cut.

The Golden State last week be­came the first to re­quire that pub­lic com­pa­nies in­clude women on their boards, a man­date that sup­port­ers have said would help firms to cul­ti­vate fairer and more hos­pitable work en­vi­ron­ments. Equiv­a­lent leg­is­la­tion is not yet on the table in Con­necti­cut, but law­mak­ers and cor­po­rate lead­ers agree that pur­su­ing more gen­der bal­ance should be a top gov­er­nance pri­or­ity for com­pa­nies in a state where women ac­count for no more than one- third of any For­tune 500 firm’s board seats.

“I think the Cal­i­for­nia law is great, and I’d love to see some­thing sim­i­lar in Con­necti­cut,” said Fran Pa­s­tore, CEO of the Stam­ford- based Women’s Busi­ness De­vel­op­ment Coun­cil. “In the last year, we’ve seen the neg­a­tive out­comes than can oc­cur when you don’t have in­clu­sive and di­verse lead- er­ship teams and boards.”

A push for more rep­re­sen­ta­tion

Re­flect­ing the # MeToo move­ment’s cam­paign against per­va­sive sex­ual mis­con­duct and gen­der dis­crim­i­na­tion, the Cal­i­for­nia state leg­is­la­tor who cham­pi­oned the new law said hav­ing more women in lead­er­ship po­si­tions could help re­duce sex­ual as­sault and ha­rass­ment in the work­place.

About 25 per­cent of pub­lic cor­po­ra­tions head­quar­tered in Cal­i­for­nia do not have any women on their boards.

“This is one of the last bas­tions of

to­tal male dom­i­na­tion,” said Cal­i­for­nia state Sen. Han­nah- Beth Jack­son. “We know that the pub­lic and busi­ness are not be­ing wellserved by this level of dis­crim­i­na­tion.”

The law calls for at least one fe­male di­rec­tor on the board of each Cal­i­for­ni­abased pub­lic cor­po­ra­tion by the end of next year and up to three by the end of 2021.

A num­ber of Euro­pean coun­tries, in­clud­ing France and Nor­way, have sim­i­lar man­dates.

In Con­necti­cut, women are also un­der­rep­re­sented in the up­per ech­e­lons of pub­lic com­pa­nies. They ac­count for no more than one- third of the board mem­bers of any of the 16 com­pa­nies based in the state that made this year’s For­tune 500 list.

Fron­tier Com­mu­ni­ca­tions, The Hart­ford, Syn­chrony, United Rentals and United Tech­nolo­gies are the firms with one- third fe­male rep­re­sen­ta­tion. Two com­pa­nies cur­rently have a chair­woman: Stam­ford- based United, the world’s largest equip­ment- rentals com­pany, and Nor­walk- based Fron­tier.

Jenne Britell, an ad­viser with Man­hat­tan- based Brock Cap­i­tal Group and a for­mer ex­ec­u­tive vice pres­i­dent at GE Cap­i­tal, has served as United’s chair­woman since 2008.

“A board with di­ver­sity has an ex­panded per­spec­tive, and it en­hances the ten­dency to fos­ter di­ver­sity through­out an or­ga­ni­za­tion,” Britell said. “A di­verse

board is go­ing to en­cour­age a com­pany’s lead­er­ship to ask dif­fer­ent kinds of ques­tions, such as why there aren’t more women and mi­nori­ties in a com­pany, es­pe­cially in lead­er­ship po­si­tions.”

Among the Con­necti­cut For­tune 500 group, Char­ter Com­mu­ni­ca­tions, Cigna, Em­cor Group and Prax­air lag, with only one woman on each of their boards.

Model for Con­necti­cut?

State Sen. L. Scott Frantz, R- Green­wich, said he would be will­ing to dis­cuss with his fel­low co- chair­per­sons of the state Leg­is­la­ture’s Com­merce Com­mit­tee the de­vel­op­ment of in­cen­tives such as tax cred­its to help in­crease the num­ber of women in pub­lic com­pa­nies’ gov­ern­ing po­si­tions.

“In­creas­ing the num­ber of women on cor­po­rate boards is an ex­cel­lent idea,” Frantz said. “How­ever, I would have liked to see Cal­i­for­nia use in­cen­tives, in­stead of law with re­quired min­i­mums, to achieve some­thing that is em­i­nently pos­si­ble in the pri­vate sec­tor.”

Alex Berg­stein, the Demo­cratic nom­i­nee for the 36th District Se­nate seat held by Frantz, gave a sim­i­lar as­sess­ment. She pointed to find­ings by con­sult­ing firm McKin­sey & Co. and other re­searchers show­ing that the pres­ence of women on boards and in ex­ec­u­tive po­si­tions gen­er­ally im­proves busi­nesses’ per­for­mances.

“Women don’t need data to un­der­stand why this is true. Un­for­tu­nately, some male- run com­pa­nies still

re­fute the data,” Berg­stein said. “So a statute that starts the process is help­ful. Let’s re­mem­ber the law only re­quires one woman on the board, which is hardly a ma­jor over­haul. This should not be con­tro­ver­sial at all.”

State Rep. Car­o­line Sim­mons, D- Stam­ford, also a co- chair­woman of the Com­merce Com­mit­tee, de­scribed the Cal­i­for­nia law as an “en­cour­ag­ing step towards im­prov­ing gen­der di­ver­sity on cor­po­rate boards, which I be­lieve is es­sen­tial to eco­nomic growth.” Com­pa­nies with more women on their boards per­form bet­ter, are more col­lab­o­ra­tive and in­no­va­tive, and bet­ter re­spond to fe­male con­sumers’ needs, she said.

Mes­sages left for Barry Michel­son, the Repub­li­can nom­i­nee for the 144th District seat held by Sim­mons, were not re­turned.

No Con­necti­cut leg­is­la­tors have com­mit­ted to de­vel­op­ing such leg­is­la­tion in next year’s ses­sion, but any who did would likely face skep­tics. Op­po­nents of the Cal­i­for­nia man­date, such as the Cal­i­for­nia Cham­ber of Com­merce, ar­gued that com­pa­nies should de­ter­mine their boards.

The Cal­i­for­nia law would fine com­pa­nies $ 100,000 for a first vi­o­la­tion and $ 300,000 for sub­se­quent in­fringe­ments. It also re­quires com­pa­nies to re­port their boards’ com­po­si­tion to the state and would levy a $ 100,000 fine if a com­pany did not com­ply.

“I would back com­pa­ra­ble leg­is­la­tion here, though I would ex­pand the size/

penalty range for vi­o­la­tors; $ 100,000 to $ 300,000 is a pit­tance for most ma­jor firms,” said Me­gan Cas­sano, the Green Party nom­i­nee for the 36th District Se­nate seat. “I would also ex­plore man­dat­ing co­op­er­a­tives or ‘ open- book’ man­age­ment prac­tices, em­pha­siz­ing em­ployee- driven mod­els as a prospect for mak­ing the work­place more gen­der- equal.”

Mov­ing for­ward

Britell said she was op­ti­mistic the Cal­i­for­nia law would help fos­ter greater di­ver­sity, but also noted that boards can take steps on their own to be­come more het­ero­ge­neous.

“There are many paths to the board­room, so there is not only one way of demon­strat­ing skill sets,” Britell said. “I’m hope­ful that the Cal­i­for­nia law will en­cour­age boards to look at back­grounds that are dif­fer­ent from ones that have been looked at in the past. If we look at the cri­te­ria for board po­si­tions and ex­pand them, not di­min­ish them, we will get more di­verse groups.”

The lack of women in lead­er­ship po­si­tions in the cor­po­rate world is hardly con­fined to the board­room. Only 5 per­cent of this year’s For­tune 500 com­pa­nies have a woman CEO. Stam­ford- based Syn­chrony is the only Con­necti­cut com­pany on the lat­est list with a fe­male chief ex­ec­u­tive. Mar­garet Keane has led the firm since it was spun off in 2014 from GE.

“While this Cal­i­for­nia law is great, the work does not end there,” Pa­s­tore said. “There have to be foun­da­tions put in place — in­clud­ing men­tor­ing and net­work­ing and flex­i­ble work­ing sched­ules — to sup­port women through­out ev­ery or­ga­ni­za­tion. We have to change how we view and value work.”

Michael Cummo / Hearst Con­necti­cut Me­dia

In­side the United Rentals head­quar­ters at 100 First Stam­ford Place in Stam­ford. In Con­necti­cut, women ac­count for no more than one- third of the board mem­bers of any of the 16 com­pa­nies based in the state that made this year’s For­tune 500 list.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.