Sunday, July 15, 2007

All Too Typical Arguments

The issue of how women do or could rise to leadership and corporate director positions too often becomes confused by arguments about the myths and hyperbole that surrounded women’s efforts to advance in the past. Below are a sampling of some of the more popular arguments and some suggested alternative, counter thinking.

1. There are too few women on corporate boards.

Counter: There are exactly as many women on boards who aspire to be on boards and who are competent and qualified to do so.

2. Corporations need to provide “special inducements” to entice women to join their boards of directors.

Counter: The women who serve on boards demonstrate how competence is built from a fundamental skill and interest developed and refined over time. Cutting that process short would result in less qualified candidates. Qualified candidates do not require bribes to consider top level opportunities to further refine their knowledge and skill.

3. Discrimination and prejudice are pervasive in the boardrooms and discourage women from pursuing leadership roles.

Counter: Boards and directors consistently have shown they value diversity, talent, and competence. Boards have led the way in bringing the best females into the boardrooms. Corporations have downsized their boards to make them better governance vehicles, yet the number of women on boards has increase by 223 whereas the number of men has declined by almost 4 times that amount during the past decade.

4. It is only through the dogged determination and efforts of a handful of women’s rights advocates that women have achieved the small increments in female directors.

Counter: Individual women who have taken on leadership roles and responsibilities in the corporate marketplace excelled during times that were far less forgiving than the present. These are the women who have been most effective in opening doors of opportunity for other women. Rather than belong to some “rights advocacy” group, these women tend to belong to global, public policy, professional or educational groups – most of them with completely diverse memberships.

5. Women need “special help” to manage and balance the demands of their workplace and their family obligations as they progress to leadership roles.

Counter: Demands of the director marketplace are encountered by mature females, not women facing the start of their reproductive years or child-tending years. The average age of female directors is 56 years. Women who have succeeded in leadership roles have learned how to manage the many contesting demands on their time, not by waiting for special help, but rather by effective task delegation, prioritization, and making the tough decisions that all men and women with families must make.

6. Boards and corporations “must” focus on meeting the needs of women with children if they want to increase the number of women in leadership positions.

Counter: Women in the workforce include those with families and those without families. The percentage of women in the civilian labor force with children under 18 years of age is 38%. That is 6% more than the share of women in the total population at large with children that age. A presumption that just one part of the eligible female population (less than 4 in 10) warrants special subsidy of their career choices would mean that other parts of that candidate pool will be at a disadvantage in the marketplace.

7. Women’s “special role” as caregivers warrants consideration in salaries, benefits and work assignments.

Counter: Family size is smaller than ever before, women are more mature when they have their first child, incomes are higher as are discretionary expenditures. Women today have more options and opportunities than ever before to manage households and the demands of complex career choices. And more men than ever before are taking responsibility for family caregiver challenges.

8. The number of women “in the pipeline,” (in the candidate pool) has increased dramatically, yet the increase in women in leadership has not grown in tandem.

Counter: Increases in the number of educated, experienced women, while commendable, does not automatically translate into increases in the number of women who choose or are capable of facing the unique risks and challenges of leadership. When women take more business school and economics classes and are willing to create companies that address real world problems, the number of women in leadership will also increase.

9. “We all” have a vested interest in promoting and advancing women to leadership roles.

Counter: Individual women can only be responsible and accountable for the success and contributions which they construct themselves, as individuals in this society. If that becomes a beacon for others to follow, it is only because those others also chose to learn from their inspirations. Women today are too diverse, too different, too varied to constitute one homogeneous marketplace. Not all women are alike. Not all women think the same way.

Thursday, July 12, 2007

What IS “The Problem?”

The statement, “there should be more women directors on corporate boards” generates a cascade of reactions depending upon what are the pre-conceived notions one brings to the debate.

In argumentation theory, that suggests there are too many stases or focal points of debate surrounding that one simple statement. We are not able to agree on a definition of “the problem.” So, as a consequence, the debate ends up going all over the place. We argue at length from widely different perspectives. We lose the true goal of participating in a debate on the subject, which is that we might – after discussion – possibly arrive at a sound, shared judgment or conclusion.

One common stasis or debate focal point is that “it’s all their fault” -– that all current sitting board members exclusively hold the responsibility to recruit more women directors. Or that CEOs are not doing enough to find female director candidates.

Another variation moves entirely out of the boardroom and enters the bedroom, or at least the home. Husbands don’t do enough to care for children so that women could pursue careers. Work-family balance is unattainable. Daycare is costly and of poor quality. Women should be able to stay at home with their kids AND also strive and succeed in the competitive global business marketplace. Corporations or society should subsidize those economic choices.

Earlier in our history, there was a time when there were few women who played championship golf, tennis or ran marathons; few women went to medical, law or business schools; and no women served as justices, representatives or corporate leaders. If we could learn how women have accomplished those great strides, perhaps their experiences might provide guidance and direction for women who today aspire to corporate director roles.

That might represent a new stasis or focal point for discussion and debate about how women can reach leadership heights.

A viable “laboratory” for evaluating how women lead might include the women on corporate boards of directors at Fortune 1000 firms located in California.

Why California?

It is a big enough laboratory to be representative of the larger marketplace.
It is small enough to be manageable as a study sample.
It is a framework capable of being replicated: New England, New York, Texas, Southeastern states or Mid-Western states.

Why these women?

As in medicine, one could focus on gathering evidence from the sick or from the healthy.
Gathering evidence from women who simply want to be on a board is not as meaningful as the evidence and insights gathered from those with substantive real world experience actually serving on corporate boards of directors. Women who are willing to discuss that experience -- on the record, for attribution – are better sources of information than even women who help place others on corporate boards.

Why focus on the paths they took?

There is not simply 1 way to become a corporate director. The paths group together similar experiences, but retain information about the diversity of choices the women have made throughout their careers. There is incredible variety even within these 6 paths.

Why “SHOULD there be more women on boards?”

Diverse thinking is a reflection of the experiences which individuals acquire throughout their education and careers. Independence of thought is a valued asset in the boardroom where risks must be assessed from different perspectives in order to identify and assess alternative strategies for the business.

Directors are responsible for decisions and actions that reflect the best long-term interests and perspectives of the “share-owners” of the corporation. Owners are 50-50 men and women. If boards tap only 50% of the “gene pool” of available talent, competence and experience in the marketplace, only retrieving male directors, then boards arbitrarily eliminate 50% of the knowledge available to society as a whole.

Tapping 100% of the available talent pool probabilistically doubles the corporation’s chances of finding the best available talent to deal with strategic corporate challenges and management risks. Looking at the full available marketplace does not imply that every woman has an inalienable right to hold a corporate board seat. Some women will lead. Not all women can lead.

The priority is to keep the focus on the right stasis: corporate governance, NOT “women’s rights.”

What are the best skills for leadership and share-ownership representation? How can society best develop those skills and expertise? How do women demonstrate a proficiency and readiness for leadership roles and corporate board responsibilities in today’s economic business marketplace?

That IS where we must focus our attention and discussion together.

Tuesday, July 10, 2007

The Problem with Percentages

“There are three kinds of lies: lies, damned lies, and statistics.” (Mark Twain credited Benjamin Disraeli with that quote).

When you read about “the share of women” anywhere, be sure you know if you’re talking about a marketplace that is growing or not.

Elsewhere, we’ve discussed how some women-on-board advocates have focused on a falling “percentage share” of women directors by doubling the sample size to include Fortune 1000 boards in their state, rather than just the Fortune 500 or Fortune 200 boards. The very top boards tend to have higher average percentages of women, while smaller companies are just beginning to add women. Having a “smaller share” means the advocates can demand “more action!”

Another study that selectively uses “the share of women” rather than examine the actual increase in the number of women in venture capital is entitled Gatekeepers of Venture Growth: A Diana Project Report on the Role and Participation of Women in the Venture Capital Industry. The Diana Report study is a project of the Kauffman Foundation and is based on data from the PricewaterhouseCooper/Thomson Venture Economics/National Venture Capital Association MoneyTree Surveys.

The study compares the venture capital marketplace between 1995 and 2000. For reference purposes, let’s include a current snapshot of what that period represented, overall:



The period 1995 to 2000 is described as the “dot com bubble.” Thus, The Diana Project report is a snapshot of how women participated in the boom-bust years of a highly speculative market economy.

For the 10 years, 1990 to 2000, venture capitalists funded over 23,000 businesses. Of those firms, 1,800 went public. Generally, women have not participated at levels comparable to their male peers. Also as a backdrop to this data, let’s remember that women represented barely 25% to 30% of enrollment in business schools up to that time.

The Diana Project bemoans the fact that in 1995, “only 10%” of managers among U.S. venture capital firms were female, dropping to “only 9%” in 2000. Since the number of managers increased from 3,647 in 1995 to 5,903 in 2000, that meant that the actual number of women managers increased from 364 to 510. That means that every year for 5 years, 33 new talented women were added to top management of venture capital firms.

Did you read about ANY of them? I know I didn’t hear a peep from the business media about these talented, competent women.

The number of women who became partners in U.S. venture capital firms went from “only 27%” in 1995 to “only 25%” in 2000. Since the total number of partners increased from 965 in 1995 to 1,355 in 2000, that meant that the actual number of women partners increased from 261 to 339. Again, every year for 5 years, 16 women became partners at top U.S. VC firms.

The change in the managerial ranks was treated the same way. Men kept their share of the total number of management in VC ranks at 70%, and women kept their share at 30% between 1995 and 2000. That meant that the actual number of women in VC management increased from 182 to 308 or an increase of 25 women every year.

But even more important was the change within managerial ranks. Women opted to move into the “top decision-making roles” and exit the “low decision-making roles.” Women’s percentage of the top positions went from 40% to 46% or from 73 women to 141 women (an increase of 69). Women’s percentage of the middle positions went from 36% to 47% or from 66 women to 145 women (an increase of 79). And, women wised up and got out of the low decision making levels, changing from a 24% share to a 7% share or dropping from 44 women to 22 women (a decline of 22).

It really doesn’t matter if women’s “share” still remains relatively small provided women are getting smarter about where the real business opportunities lie. If women are moving in the right directions, as is suggested by the real numbers of women moving into the VC marketplace, then they can take all the time they need to become acclimated to this brave new world.

But let’s stop demeaning their accomplishments and let’s start giving women the credit they have so clearly earned.

Friday, July 6, 2007

Learning from Warren Buffett

Warren Buffett, Chairman of Omaha, NE's Berkshire Hathaway Inc., has a long and renowned history of recognizing top leaders among women business executives. He was a close adviser to Katharine Graham, owner and president of The Washington Post and served on her board of directors as she guided the paper through some of its most turbulent and most successful years.

Last year, Buffett bought Businesswire.com headed by president and CEO Cathy Baron Tamraz. Buffett called businesswire.com “a gem of a company.”

Earlier in July 2007, Buffett invested in Kraft Foods just four months after Altria Group Inc. spun-off the food maker. Kraft Chief Executive Officer Irene Rosenfeld seems to be finding success in boosting shareholder returns by enhancing the firm’s international presence.

Noteworthy also was the addition of Susan Decker, Yahoo! CFO, to the board of directors at Berkshire Hathaway Inc.

Susan Decker's nomination came to light in the Buffett Annual Letter to Shareholders (March 1, 2007) announcing she would be up for election at the annual meeting, May 5th. Mr. Buffett's comments on board selection considerations are worth repeating:

"In selecting a new director, we were guided by our long-standing criteria, which are that board members be owner-oriented, business-savvy, interested and truly independent. I say “truly” because many directors who are now deemed independent by various authorities and observers are far from that, relying heavily as they do on directors’ fees to maintain their standard of living."

"Charlie [Munger] and I believe our four criteria are essential if directors are to do their job -– which, by law, is to faithfully represent owners. Yet these criteria are usually ignored. Instead, consultants and CEOs seeking board candidates will often say,

“We’re looking for a woman,” or “a Hispanic,” or “someone from abroad,” or what have you. It sometimes sounds as if the mission is to stock Noah’s ark. Over the years I’ve been queried many times about potential directors and have yet to hear anyone ask, “Does he think like an intelligent owner?”

"The questions I instead get would sound ridiculous to someone seeking candidates for, say, a football team, or an arbitration panel or a military command. In those cases, the selectors would look for people who had the specific talents and attitudes that were required for a specialized job. At Berkshire, we are in the specialized activity of running a business well, and therefore we seek business judgment."

"That’s exactly what we’ve found in Susan Decker, CFO of Yahoo!, who will join our board at the annual meeting. We are lucky to have her: She scores very high on our four criteria and additionally, at 44, is young – an attribute, as you may have noticed, that your Chairman has long lacked. We will seek more young directors in the future, but never by slighting the four qualities that we insist upon."