Tuesday, December 15, 2009

A Back-Handed Compliment

Remember Carol Hymowitz of the Wall St. Journal fame? On March 24, 1986, she and
Timothy Schellhardt use the phrase "glass ceiling" to describe the limits women faced rising the corporate ladder. Up until the end of last year, she wrote the WSJ column, "In The Lead," where she continued the arguments that "Women Can't, Won't, or Don't."

However, for the past year Ms. Hymowitz has had a new gig, focusing on the achievements of contemporary women in leadership. See her continuing impressive work at Forbes.com

Ms. Hymowitz no longer speaks about the negative stereotypes keeping women "in their place." In fact, she gave a back-handed compliment to a major theme in my book, "myth-busting," when she wrote her October 16, 2009 article titled: "Bucking Stereotypes: Mythbusters are women who dare to do what they want – and ignore those who say they can’t."

Read it at: Forbes.com.

You GO-O-O-O-O, girl!

Saturday, December 12, 2009

On Promoting Women

Shaun Rein writes a leadership column for Forbes. His December 11, 2009 article was titled, Why Men Don't Promote Women -- something which will surely enrage some people. His points were well taken:

  • too often women fail to ask and negotiate for the promotions they like
  • and
  • some women use (or abuse?) their sexuality in a professional setting which only undermines their promotability.

    His company is China Market Research -- a consultancy specializing in market intelligence: "our team of analysts conducts customized, objective, and discreet research."

    An interesting additional research question for his firm might be whether or not women also fail to promote women?

    His article prompted me to think about how often we hear women admire men who let the "softer, feminine side" of their personalities emerge. Yet those same women will resist showing self-confidence or -assuredness, arguing that such behavior might "make them look and sound like a man!"
  • Friday, December 11, 2009

    Magic Occurs

    When I submitted an article on the subject of "The Invisible Woman" to a major business journal, I was informed that "that’s so-o-o 2009!" Apparently, there are no more problems with women expressing themselves effectively in group settings. Brava!

    Then, at a recent panel dedicated to educating today’s women how to prepare themselves for public company board of director roles, I heard the following statement:

    "You know of course that 'three women make a critical mass on a corporate board' and that women have told me that they will not be the first woman on a corporate board because 'research says' that the first women will not be listened to, heeded or have an effect."

    That sounds like some women still believe "the invisible woman problem" continues to exist. It also demonstrates the powerful negative impact that selected editorial-oriented research can have on the minds of young women who, otherwise, might invest in their education and preparation for top corporate and governance roles.

    I’ve resisted critiquing some of the women-on-boards-advocacy research for a long time in deference to the efforts. But, I believe the time has come to speak up about the travesty of some negative research and its increasing efforts to try to "market" women into the boardroom.

    How is it possible that all women could possibly avoid being a "first" woman on a corporate board? Doesn’t someone have to be "first"? Are we educating young women to wait until there are "girl gangs" of three or more are already ensconced on a corporate board so they can enter, what, safely? Do we see the negative impact of this research, yet? Do we understand, yet, how much young women need to learn about overcoming their "invisible syndrome?"

    Could we please look at the research that’s being cited, rather than merely echo the "old wives’ tales" which that study is fostering?

    V.W. Kramer, A. Konrad and S. Erkut, "Critical Mass on Corporate Boards: Why Three or More Women Enhance Governance," Wellesley Centers for Women, Report No. WCW 11 (2006). You’ll have to read the Executive Summary unless you wish to subsidize the "center for women" with a $100 fee.

    The executive summary states that the "in-depth research" was based on anonymous interviews and discussions with "50 women directors, 12 CEOs, and 7 corporate secretaries from Fortune 1000 companies." The executive summary does not indicate how many of the CEOs or corporate secretaries were women or men; nor how many of the 50 women directors served at major corporations (F500) or smaller corporations (F501-1000). The hearsay evidence thus gathered concluded as follows:

    1 woman on board -- "report experiences of lone women not being listened to, being excluded from socializing and even from some decision-making discussions, being made to feel their views represent a 'woman’s point of view,' and being subject to inappropriate behaviors that indicate male directors notice their gender more than their individual contributions."

    2 women on board – "tend to feel more comfortable than one does alone. Each woman can assure that the other is heard, not always by agreeing with her, but rather, by picking up on the topics she raises and encouraging the group to process them fully. Two women together can develop strategies for raising difficult and controversial issues in a way that makes other board members pay attention. But with two women, women and men are still aware of gender in ways that can keep the women from working together as effectively as they might, and the men from benefiting from their contributions."

    3 women on board – "magic seems to occur" "Women start being treated as individuals with different personalities, styles, and interests. Women’s tendencies to be more collaborative but also to be more active in asking questions and raising different issues start to become the boardroom norm. We find that having three or more women on a board can create a critical mass where women are no longer seen as outsiders and are able to influence the content and process of board discussions more substantially."

    This research disparages the very significant majority of women directors who serve alone or with one other woman director at the corporate board level. The evidence indicated that 74% of the Fortune 500 companies had 1 or 2 women directors –- implying that a significant majority of women directors must have been subjected to the abuse identified in the study.

    "The most recent Catalyst report (2005 Catalyst Census of Women Board Directors of the Fortune 500) indicated that women held only 14.7 percent of all Fortune 500 board seats. Among the Fortune 500 companies, 53 still had no women on their boards, 182 had one woman, 189 had two, and only 76 [companies] had three or more women directors." (Emphasis added.)

    Only 15% of the companies had "magic" occurring among their women corporate directors. Of course, we probably should exclude HP, which also had 3 women directors at the time (as they do now -– wonder why magic occurs with this 3-some, not that 3-some?)

    It would be extraordinarily difficult for me to imagine any of the women at top Fortune 500 firms tolerating the "experiences" cited by the Wellesley report. It is unimaginably difficult for me to believe that corporate boards, specifically their nominating and governance committee, would take the trouble and effort to find competent women to serve, to complement their strategically-needed functional expertise, and then abuse and mistreat them so cavalierly. In the interviews that I’ve conducted with women directors (on the record, by the way), I have been impressed by how proud the boards are to have found the talent as they did among women director candidates. And the pride was reciprocated.

    It would be unthinkable for me to imagine these same women saying anything so negative about their board peers. Women directors are able, ready and willing to serve; honored to have the opportunity to learn about a company from the top most rung inside the corporation.

    It’s beyond belief that women directors -- who are chartered with an expectation of a duty of care, a duty of loyalty, and the challenge to think independently -- possibly might conspire to behave in the very same way that they allegedly despise among men: "to develop strategies for raising difficult and controversial issues."

    Would most individual women prefer to find other, comparably talented and capable women candidates whom they might recommend to their board? Oh, you bet! Why? Because women directors know the substantive business value they bring forth from their careers and experience. They know the independence of their perspective. They also know there are other similarly talented women out there who could bring new business value to the corporation and enable it to succeed strategically.

    Would any woman director ever consider bringing onto the board a women who is too cowardly to serve, on her own, in a demanding business decision-making setting? No way! Would any woman director ever consider bringing on board a second-class director just to get the board up to 3 women directors? What do you think?

    Would a "lone" woman director hesitate to speak up if she observed questionable risk management practices or if her experience provided insight on management development or executive compensation strategies? If there were such a "lone" woman director who perchance DID hesitate to speak her mind, how could she justify to herself or her shareholders a decision to remain on the board?

    And I defy anyone to explain to me what IS "a woman's point of view"? Which woman?

    The implications of the Wellesley research are serious -– if it were a valid research study. If it were valid, we probably would know much more about the women whose opinions were cited. Are they all Wellesley graduates? Do they have business degrees or other advanced degrees? Is this a phenomenon associated with women lacking practical business experience? What is their average age? Is this a current or an ancient phenomenon? On how many boards do they currently, and have they previously, served? Is this a dilemma of overbooked or inexperienced women directors?

    Most of all, in the interest of full disclosure and transparency, it would be appropriate to know the names and corporations of the women who cited this experience because I would like to divest my portfolio of shares in the companies on whose boards they serve.


    Perhaps now you might be interested in reading my unpublished article about The Invisible Women Problem. Click here.

    Thursday, December 10, 2009

    Gender Equity Funds

    Recently, I've received a barrage of emails announcing "the new!" women's equity investment fund supported by Naissance Capital (Zurich, SW), except that it's not news. The facts please:

    The Women’s Leadership Fund, founded in October 2009, will invest in companies with larger shares of women in senior roles. The fund is managed by Zurich-based Naissance Capital with backing from Cherie Blair (English barrister and wife of the former prime minister of the UK, Tony Blair), Kim Cambell (former prime minister of Canada), Jenny Shipley (former prime minister of New Zealand), and Wendy Luhabe (Chair of South Africa’s Industrial Development Corporation). Daniel Tudor will manage the fund for Naissance. See the factsheet.

    And the Guardian article by David Teather, "Fund Manager Launches Scheme to Invest in Firms with Women on Top," (October 26, 2009)

    This is not the first women's investment fund. Pax World, the Citizens' Index, and Amazone Euro Fund all have tried this before with mixed success.

    Pax World Gender Equity Fund
    http://www.paxworld.com/funds/womens-equity-fund/

    Pax World (Portsmouth, NH) has been a leader in promoting gender as an investment concept —- the idea that companies that empower women perform better financially over the long run. It owns the Pax World Women's Equity Fund, which it bought in October 2007. The individual fund (PXWEX) was begun October 1, 1993 while the institutional fund (PXWIX) began April 1, 2006.

    The charts below compare the PXWEX and PXWIX share performance over the past three years relative to the S&P 500 (charted in red). Both funds have consistently underperformed the S&P 500. The individual fund (PXWEX) was almost 50% below, and currently stands at almost 30% below, November 2007 share levels. The institutional fund was almost 60% below, and currently remains almost 40% below, November 2007 levels.





    The Women’s Equity Mutual Fund

    The Women’s Equity Fund (FEMMX and FEMIX), located in San Francisco, was started in 1992 by Linda Pei and Leslie Christian; commenced operations October 1, 1993.

    For more on the life of Linda C.Y. Pei, see:
    her bio and a Pax World memorial essay.

    Walden Asset Management was the subadvisor for the fund, with Walden's Heidi Soumerai and Bill Apfel serving as co-portfolio managers. The funds were sold to Pax World in October 2007.

    "Women's Equity Mutual Fund Supports Businesswomen Through Screening and Now Microfinance," by William Baue in Sustainability Investment News (June 17, 2005).

    International Finance Corp. (World Bank) Gender Investment Indices

    Pax World also worked with KLD Research & Analytics, Inc. (Boston, MA) to construct five indices that are part of a gender investment series being developed for International Finance Corp., a member of The World Bank. See: press release

    The first phase of the IFC project included choosing the companies that would be included in the five indexes, all of which were to be launched by the end of April, 2009:

    1. Global Women Investment Index (GWI), consisting of 3 subindices:
    2. The North America index, (216 companies)
    3. Asia Pacific Women Investment Index (APWI)
    4. Europe Women Investment Index (EWI)
    5. Global 100 Women Investment Index (GWI100), representing the 100 top companies for women worldwide.

    The second phase of the project would be for IFC to fund the calculation of the indexes, which could then be licensed to a company as the basis of an index fund, she added.

    However, KLD was acquired by RiskMetrics Group (New York, NY) effective November 3, 2009. It will be interesting to see if RM will continue to provide environmental, social and governance (ESG) research and indices for institutional investors and whether it will maintain a "gender investment" series.

    According to PAX World sources, "You are correct that Pax and KLD developed the Global Women Investment Index series under contract to IFC earlier this year. That contract is now finished, and it is my understanding that IFC is not in a position to commercialize any of the indices .... Pax is not in a position to license these indices either, and KLD would probably need at least one licensee before they commit to maintaining and calculating these indices on an ongoing basis. So the indices, which were never really operational, remain in that state."

    According to a spokesperson for the IFC, "The indices created by KLD were just a prototype to see what an actual index would look like and whether it would be feasible to create one. IFC is currently working with partners to see how best to fund the calculation of index, and monitor its actual performance for the next couple of years."

    Amazone Euro Fund of AMM Finance SA

    Amazone Euro Fund was founded in 2006 to exploit the basic premise that firms with a high mix of male and female managers tend to outperform over time. AMM Finance SA is a boutique money management firm based in Geneva launched in 2000 with a focus on private wealth management.

    Amazone Euro Fund began with just €3m ($4.5m) to invest in companies that have at least two women on the board. Tests during 2000-05 showed it performed "fantastically well", said Nicolas de MalĂ©zieux, a fund manager. In 2007 the Fund performed in line with world markets; but, in 2008, it underperformed at the peak of the crisis. It is ahead of the markets in 2009.

    Mr de MalĂ©zieux says: "It is not easy to prove that women improve performance. If you look at last year, then it’s no. If you look at this year, it’s yes."

    "Jury’s out over taking women on board" by Richard Milne, FT.com, October 25, 2009
    http://www.ft.com/cms/s/0/97f5e7a8-c186-11de-b86b-00144feab49a.html?catid=68&SID=google

    "Gender mix at top gives an edge" by John Bonaccolta, FT.com, October 22, 2007
    http://www.ft.com/cms/s/0/f04b3160-8038-11dc-b075-0000779fd2ac.html?nclick_check=1

    The Citizens Index

    Citizens Funds (founded by Sophia Collier) was a leader in serving the socially responsible needs of retail investors and institutional investors since 1982.

    The Citizens Index consisted of what Citizens Advisors believed to be the best large-cap companies across a broad range of industries in terms of business fundamentals and corporate citizenship.

    "Adding to the literature that links gender diversity with positive financial performance is a recent report published by Citizens Advisers, Inc. of Portsmouth, New Hampshire. That report focuses on the 298 companies in the Citizens Index, each of which meets Citizens’ investment criteria by having at least one woman or minority on its board of directors or in the upper two levels of its management and satisfies Citizens’ standards for 'industry representation, financial soundness and corporate responsibility.' Citizens’ researchers found that the total and average annual return on the stock of those companies with the highest gender diversity on the board and in the upper two levels of management was several percentage points higher than that of the companies with the lowest gender diversity. In addition, the stock of the companies with more women had less volatility or risk than those with fewer women."

    The primary advocate for the Citizen's Index was Dr. Vesela Veleva, author of "Gender Diversity and Financial Performance," (2005). Formerly, Dr. Veleva was a Social Research Analyst at Citizens Advisers, the management company for Citizens Socially Responsible Mutual Funds. Today she is Research Manager at The Center for Corporate Citizenship at Boston College.

    On April 4th, 2008, Citizens Funds merged with Sentinel Funds, owned by Sentinel Investments, the investment management arm of Vermont-based National Life Group. The index is not longer maintained.

    Wednesday, December 9, 2009

    GMI Women on Boards Study

    Governance Metrics International began including women directors among their governance ratings services in March 2009. According to their study of Women on Boards: A Statistical Review, "each GMI Rating Report -– specifically the Board of Directors Summary -- includes statistics to compare the percent of women on the board in question to the average for companies in the same sector and to companies in the same home market or region."

    The report itemized the percentage share of women directors on boards at 4,203 companies in 19 industry sectors. The overall average share is 8.9% (or about 3,740 women directors), from a high of 13.5% for the 256 companies in the Retail sector, down to a 4.9% for the 76 companies in the Automobiles & Parts sector.

    What was interesting was to see how women directors spread themselves across the full range of sectors, as shown in the chart below. The sectors on the left show a "concentration" of women directors (above the average) whereas sectors on the right show "deficits" of women directors (compared to the average). All this indicates is that women tend to have strong functional expertise and experience in about half of the full array of industry sectors tracked by GMI.



    The chart simply suggests that if there were more women working in the "non-traditional" industry sectors, that clearly would help raise the overall share of women directors at top corporate boards.

    Thursday, December 3, 2009

    Big Time -- Women on Boards

    James Kristie, editor of Directors & Boards Magazine, wrote in his blog, Boards at their Best (see: December 3, 2009) that women represented 43% of the "new directors" added to corporate boards for the 3rd quarter 2009, following a positive trend throughout the year: 38% for 1st Q, 32% for 2nd Q. This truly is a "big time" improvement reflecting growth in the number of new women director announcements tracked by his magazine's Director Registry.

    Mr. Kristie's report contrasts with other census reports which focus on the snapshot share of "sitting directors," a static look at women (and other diversity candidates) who have been seated along with other directors for a number of years (which varies dramatically with company and their governance practices). Mr. Kristie's data is a lot like the reports that we have been tracking with Alice Krause of NewsOnWomen.com.

    There are many ways to count. Reports by executive search firms covering the top S&P 200 and Fortune 100 firms tend to record higher shares of seated women directors than other censuses. The top corporations tend to have larger boards and are more likely to include a wider spectrum of independently-minded directors. Why? Maybe because those companies have more global business activities, or more products or services. They also have a wider array of employees contributing to their diverse mix. All good reasons to tap a wider pool of directors to guide their strategic growth.

    Other censuses of women directors take snapshots of companies located in a city, a multi-state region, a whole state or nation. The number of companies surveyed can be just a handful of firms all the way up to the top 100 or 400 firms in that geographic area. The top companies will be included among these, but their share will vary.

    Mr. Kristie and Ms. Krause's surveys focus on net new additions each quarter or each month. Thus, their reports cover the current candidates whom boards are selecting. That's why their news is "good news", big time!