The White House Project

The Huffington Post

November 10, 2009

by Marie Wilson and Shifra Bronznick

News last week of the establishment of The Women’s Leadership Fund, created by Switzerland’s Naissance Capital, Ltd made the financial world prick up their ears. Naissance has committed that the fund will only invest in companies with women in management and on their boards. The Fund will also take an “activist stance” against companies that have not yet committed to women in leadership positions.

The creation of The Women’s Fund echoes recent findings by several respected research groups here in the U.S.: there is a simple way to improve business performance significantly that requires neither a government bailout nor vast corporate investment. Appoint more women to company boards and top management teams.

For both reasons of justice and economics, making women’s leadership in corporate America a priority is a step long overdue. 66 of our top Fortune 500 companies have no women on their boards and only 3% have women CEOs. Catalyst, the leading organization for advancing women in business has published a series of research studies that demonstrate a link between gender diversity in leadership and corporate performance. Its 2004 report of 350 Fortune 500 companies found that those with the highest representation of women on top management teams performed better financially than companies with lowest women’s representation, as measured by return on equity and total return to shareholder.

The positive impact of women on the bottom line is confirmed and amplified in a 2009 study, “Women in Fund Management” from the National Council for Research on Women. A forthcoming report, “Benchmarking Women’s Leadership,” from the White House Project reflects the findings of the Catalyst and NCRW research not only in the corporate sector, but across 10 sectors of American culture.

Given the consistency of the research findings, logic would seem to dictate that CEOs would jump on this method of improving financial performance by adding women to top leadership posts.

Yet, as we have learned from watching corporations blind themselves to the consequences of their actions — from the subprime mortgage crisis to the collapse of the auto industry -we cannot rely on those who created the problem to see it and solve it.

The US government is intervening in business right now, because the well-being of the nation is at stake. Now may be the time to replace good intentions about diversifying leadership with government action. We should consider the full range of options from legislation mandating a reasonable representation of women on corporate boards to attractive financial incentives such as tax credits and other deductions.

Take Norway for example, which is just about the only western nation thriving amidst the current economic crisis. Not only did this country enjoy 3% economic growth in the last year, but it actually has an 11% budget surplus.

As of 2008, Norway has a large number of women on its corporate boards, a stark contrast with the paltry 15% representation of women on the United State’s Fortune 500 corporate boards.

How did Norway institutionalize this priority?

In 2002, Asnager Gabrielsen Trade and Industry Minister scanned corporate boards and saw that the percentage had stalled at 6%. A former businessman, Gabrielsen knew that very often male board members were drawn from a small social circle, of men who went “hunting and fishing together.” He led the effort to bring women onto Norway’s boards, not for the noble cause of helping women, but because he believed that diversity creates wealth.

By 2003 , Norway passed a law requiring all companies to fill 40% of board seats with women by 2008. The law was called “completely ridiculous” by the business community, and, they predicted, impossible to enforce. In 2006, as companies continued to resist, Karita Bekkemellem, Minister of Equality, threatened to close down companies that did not comply.

The result: As of the 2008 deadline, all 500 companies on the Oslo stock exchange now have 40% women on their boards.

Diversity does not just improve financial results. It also enhances the quality of a group’s capacity to think about complex issues. Researchers from the University of Michigan and Loyola University Chicago proved that random groups of intelligent problem solvers outperformed carefully selected group of people considered to be the “best,” when asked to solve complex problems. Why? Because the random group is more diverse, and this heterogeneity offers a distinct strategic advantage.

Our country certainly is facing a torrent of problems. We can equip ourselves to meet these challenges, by creating more diverse teams and adding more women to the leadership mix. US corporate leaders have not responded to the years of data that prove that women improve the bottom line. So, we need to ask our government to move them to action – and the good news is that this particular government intervention need not cost our beleaguered taxpayers another cent.

Women’s ENews

By Rich Daly

Despite the historic downturn in the economy, Ms. Magazine’s publisher sees many partial wage-related gains for women through the efforts of the federal government. The current issue of the magazine advances a complete paycheck agenda.

WASHINGTON (WOMENSENEWS)–Larger numbers of women face strained finances during the ongoing recession, but one of their leading advocates sees some consolation in federal laws and efforts to improve their economic opportunities.

“You’ve had actual gains in the last six to nine months, which is remarkable given the circumstances,” said Eleanor Smeal, president of the Feminist Majority, a women’s advocacy group based in Arlington, Va.

One of those gains is a first-time gender analysis of jobs created by federal stimulus programs.

“That’s a big deal because if you can measure something, then it exists,” said Smeal, who is also the publisher of Ms. Magazine, based in Los Angeles.

Smeal noted that other Western governments routinely analyze the gender effects of their annual budgets.

Christina Romer, then-nominee to chair the president’s Council of Economic Advisors, and Jared Bernstein, economic policy advisor to Vice President Joe Biden, conducted the first such analysis in January of the American Recovery and Reinvestment Act, the $787 billion stimulus law.

That initial analysis concluded that about 42 percent of the jobs funded through the stimulus would be filled by women, who had held about 20 percent of the jobs lost at that point in the recession.

More ‘Female-Centric’ Jobs

The analysis led congressional negotiators to amend the measure in February to increase the number of “female-centric” stimulus jobs in fields such as social services, education and nursing.

No follow-up gender analysis has been conducted, but billions of dollars were added to female-majority job sectors during congressional negotiations.

Another Obama-supported initiative would provide help to working women with young and school-age children. The proposal, found in his 2010 budget, is to fund several new early childhood support initiatives, including Title I Early Childhood Grants and competitive Early Learning Challenge Grants. Those programs are part of appropriations bills pending in Congress.

These recent measures to improve women’s economic opportunities join the Lilly Ledbetter Fair Pay Act, which Obama signed in January. The act removed the 180-day limit that a 2007 Supreme Court decision set for workers to file pay-discrimination lawsuits.

Another bill to help working women is the Paycheck Fairness Act (S 182), which Secretary of State Hillary Clinton sponsored before she left the Senate to join the administration. Among other things, it would prohibit employers from retaliating against workers who discussed their salaries–the first step in discovering a pay disparity.

Smeal described the paycheck bill as a modest measure that is expected to advance later in this Congress.

Congress also may finish work on the Federal Employees Paid Parental Leave Act by the end of the year. Passed by the House in June, the bill would provide a month of paid maternity or paternity leave to the federal government’s 1.8 million employees.

‘Gain Is a Gain’

Although such a measure falls short of a national change in law, the federal government’s positive experience with paid leave for new parents may convince employers that the added benefit would be an overall gain for them.

“A gain is a gain,” Smeal said. “You take what you can get and run.”

Another bill waits more tentatively in the wings: the Healthy Families Act (HR 2460), sponsored by Rep. Rosa DeLauro, a Connecticut Democrat. Stalled since it was introduced in May, it would require every employer to pay sick leave of up to seven days. Data compiled by the Institute for Women’s Policy Research, based in Washington, D.C., found that 40 percent of working women–more than 22 million women–have no paid sick leave.

On Oct. 20, Ms. Magazine published “Paycheck Feminism,” by Karen Kornbluh and Rachel Homer, which enumerates the economic reforms Smeal regards as unfinished business.

The article calls for changes in Social Security, health insurance, family and medical leave, child care and payroll taxes. The article, now available online, will appear in the Nov. 3 issue of the magazine.

The unemployment rate for women who head households reached 10 percent by May, according to an analysis by the Joint Economic Committee of Congress. The report did not provide the unemployment rate for men who head households.

By October, the unemployment rate for all men was 11 percent and 8.4 percent for all women, according to the Bureau of Labor Statistics.

Tomorrow, November 4th is Election Day and The White House Project wants you to take your daughters to the polls. Remember, when you take the girl in your life to the polls with you, you teach her the power of her voice, and show her that one day her name can be on the ballot.  Visit our The White House Project’s website to pledge to take a young girl to the polls this Election Day, and to send an eCard to a friend, colleague, or family member and encourage them to do the same.