Boys' Club Still in Charge of California Businesses

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Amanda Kimball

The 400 largest companies headquartered in California, representing almost $3 trillion in shareholder value, still resemble a “boys’ club” with women filling fewer than 10 percent of top executive jobs, a University of California, Davis, study has found. Incremental gains have been pitiful, in my opinion.

The Graduate School of Management’s eighth annual UC Davis Study of California Women Business Leaders — a yearly benchmark for the Golden State’s lack of progress in promoting women business leaders — paints a dismal picture for women in leadership during fiscal year 2011-2012. Some of the best known among these top companies, or the California 400, have no women leaders.

The survey is the only one of its kind to focus on gender equity in the boardrooms and executive suites of corporate California.

This year, for the first time, the survey also looked at ethnicity among the 85 Fortune 1000 companies in California, and only one company in this subset of businesses had an ethnic woman as the CEO. Furthermore, only 13 had any ethnic women directors. Said Steven C. Currall, dean of the UC Davis Graduate School of Management,

To compete in today’s global marketplace, successful companies need leaders from a variety of backgrounds, skills and experience to make critical strategic and operations decisions, but the lack of women in these California public companies is anything but forward-thinking. There are many talented, highly qualified women for these top leadership positions, yet every year we see the same figures and little improvement.

The survey featured one statistical bright spot: The percentage of women directors year-to-year jumped a half percent, the highest annual increase in four years. For the past few years, the figure climbed only 0.2 percent annually. According to Currall,

This is a slight increase, but not nearly what we should be seeing. We challenge the business community in California to improve on its past. Women, by far, make the most purchasing decisions in certain industries, for example, and they are nearly 50 percent of the U.S. workforce. So, it’s vital that we have that diversity of thought and experience in the leadership of these companies. More and more research is showing that having more women in top management and on boards actually improves company performance.

Among the key findings of the study:

  • There is only one woman for every nine men among directors and highest-paid executives.
  • Only 13 of the 400 largest companies have a woman CEO.
  • No company has an all-female (nor gender-balanced) board and management team.
  • Almost half (44.8 percent) of California’s companies have no women directors; 34 percent have only one woman director.
  • Among counties with at least 20 companies, San Francisco County has the greatest percentage of women directors (16 percent), and Orange County has the least (8.7 percent). Alameda County has the most highest-paid women executives in the study.
  • By industry, firms in the semiconductor and software industries and those located in the Silicon Valley (Santa Clara County) tended to include fewer women on the board and in highest-paid executive positions. Firms in the consumer goods sector had the highest average percentage of women directors and highest-paid executives.
  • Of the best-known companies in California — Apple, Google, Intel, Cisco, Visa, eBay, DIRECTV, Yahoo!, and PG&E — none of their highest-paid executives at fiscal year-end were women.
  • The Silicon Valley companies — representing nearly half the shareholder value of the companies on the list — showed the worst record for percentage of women executives, consistent with past years of the study. Only 6.6 percent of their highest-paid executives are women.

The study looked at the five highest-paid executives for each company, also called “named executive officers,” as reported to the Securities and Exchange Commission. The study examined filing data available as of Oct. 1, 2012. The 400 companies were selected based on market capitalization.

For figures on ethnicity, study authors used a database that tracks Fortune 1000 companies nationwide and other sources, including company websites and SEC filings.

The company with the best gender balance in this year’s survey was San Francisco-based Williams-Sonoma, Inc. The home furnishings and cookware company reported that women held nearly 47 percent of their highest-paid executive and board director seats. Says Laura Alber, president and chief executive officer, Williams-Sonoma,

Williams-Sonoma, Inc. is proud to be a leader in diversity and consider this to be at the core of our business practices. We work to create an environment that attracts great talent, and we seek to motivate, inspire and recognize high performance among all employees.

Williams-Sonoma was ranked ninth in last year’s study, with 31 percent of its executive and board member seats filled by women, and it has been in the top 25 companies in the list three years consecutively.

The highest ranking company two consecutive years previously, bebe stores inc., dropped to second place in the latest study while maintaining 40 percent women in its top positions. UC Davis partnered with Watermark, a Bay Area-based nonprofit that offers programs for executive women, to complete the study. Marilyn Nagel, CEO of Watermark, said,

Companies today know they need to increase innovation. They need talent on top that is tuned into customer needs. They need directors and executives who are strong, capable, qualified leaders in every sense. However, while so many are bemoaning the lack of these qualities in candidates for their top positions — they are overlooking the women right in front of them who can deliver all of these qualities in spades,.

Download 2012 UC Davis Study of California Women Business Leaders and  Why Investors Must Push Harder for Greater Diversity on Corporate Boards.  See also, Video Friday: Women on Boards & Glass Ceilings.

Amanda Kimball is a research specialist collaborating on faculty research projects. She authors the School’s annual “UC Davis Study of California Women Business Leaders.” Kimball is in the final stages of completing her PhD in Economics at UC Davis, where she earned her masters degree in 2003, with concentrations in Microeconomic Theory and Industrial Organization. She has a background in business and economics including having worked for Capital One, the Investment Company Institute, and the Corporate Executive Board.

Postscript: I contacted Amanda Kimball and asked her what can be done. Her response is as follows:

A recent guidebook from Catalyst suggested that hiring more women into senior roles, allowing for a more flexible work culture, and better role-modeling and support from senior leaders are all very important. Personally, I think we need a lot more visibility so that more men in senior leadership positions are put to the task of taking action to bring about change.

Incidentally, in the process of doing this study, I found that more visible companies (as measured by inclusion in the Fortune list) exhibit greater representation of women. I created a graph that isn’t actually in the study but is in my slide presentation, showing the positive relationship between visibility and the representation of women, both on the board of directors and among the top five highest compensated executives. The correlation could be due to ease of recruiting women to more visible companies, but that wouldn’t explain the discrepancy between women directors and women executives at the most visible companies. Among the Fortune 100, the percentage of firms with two or more women directors shoots up to 75%, whereas the percentage of firms with two or more executives languishes around 20%. This strikes me as an indication that public pressure (which focuses on gender diversity on the board of the most visible companies) is fairly effective.

So there you have it… visibility may be key. Maybe I should be posting pictures of board members, along with my voting recommendations. If those in the top 100 are embarrassed to completely exclude women and minorities, perhaps more publicity will do the trick for the remaining thousands of companies. Where is the wall of shame, listing companies with no women or minority directors? For additional resources, see Links+.

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