BY Peter H. Griffith
As we watch the economic crisis unfold whether here in Los Angeles or around the world we are all asking the same questions: How did we get here and what will it take for us to recover? I’m not sure anyone has all the answers yet. However, as I listened to the president’s recent address to Congress (along with my wife, three daughters and son), part of the solution may have been right in front of me. Women.
Women make up two-thirds of my household, but according to a 2008 study by Catalyst they hold only 15 percent of board seats in the Fortune 500, far out of proportion to their numbers, education and purchasing power.
For companies headquartered in California, it’s even worse.
A UC Davis report released last November found that in California’s 400 largest public companies, women directors now comprise 10 percent of board seats, up from 9.4 percent in 2007 and 8.8 percent in 2006. At this rate of change, it could take women 67 years to reach parity with men as corporate officers. It only took the United States 11 years to put a man on the moon.
These numbers should disturb you and here’s why: Decades of research have proved that adding women to the leadership mix not only begets creative solutions and a focus on long-term results, but also higher profits and that’s something we don’t hear much these days.
Catalyst found that, on average, Fortune 500 companies with more women on their boards of directors significantly outperformed those with the least in return on equity (by 53 percent) and return on invested capital (by 66 percent). Similar studies have been conducted by major universities, the United Nations and the World Economic Forum with the same results.
Collaboration, cooperation
But rebounding from the economic crisis will require more than profits it will take the leadership of executives who are committed to collaboration and cooperation, areas where women may also help move the needle. Researchers at the University of Maryland and the Columbia University Business School found that women’s distinctive leadership style can be especially effective when enhanced communications and teamwork are required. Their study goes on to conclude that these leadership attributes are especially effective in organizations that require innovation, a quality as plentiful as sunshine here in Southern California. Contrast that observation with the fact that, according to the UC Davis study, nearly half of the 400 largest public California companies have no women on their executive teams, with the percentage of all-male boards highest in some of the most innovation-driven industries: telecommunications, semiconductors and electronics.
In the face of the unprecedented global economic crisis, closing the gender gap may be as much of a business imperative as finding alternative energy solutions or enabling entrepreneurial growth. Leading organizations are embracing this reality and they aren’t stopping there. They are recognizing the value inherent in the unique skills and decision-making abilities that result from an environment where everyone regardless of ethnicity, gender, sexual orientation or disability has an equitable opportunity to achieve their potential.
If I’ve learned anything in more than 27 years serving clients in Los Angeles and all over the world, it’s that the organizations with the best talent and the widest perspectives will succeed.
“Let’s put a W on the board” is a popular sports clich & #233;, which is probably used too often in business where driving short-term sales growth may cloud long-term vision. But when the W stands for women gaining a voice in the boardroom, it’s not only the right thing to do, it’s smart business.
Peter H. Griffith is a vice chairman of Ernst & Young LLP and managing partner of the firm’s Pacific Southwest region. He is based in downtown Los Angeles.
