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Why Arenít There More Women at the Top?
Transcription of interview with Douglas Branson on August 29, 2011.
Douglas Goldstein, CFPÆ, Financial Planner & Investment Advisor
Douglas Branson is one of the leading experts in corporate governance in the United States.
He wrote a book called No Seat at the Table: How Corporate Governance and Law Keep Women
out of the Boardroom and then followed with another book called The Last Male Bastion:
Gender and the CEO Suite. He has written 15 books and about 80 articles. Mr. Branson has
been a state department sponsor consultant on corporate governance outside of the United
States, Indonesia, Ukraine, and Slovakia, and he is also the Edward Sell Chair in Business
law at the University of Pittsburgh.
Douglas Goldstein, financial planner & investment advisor, interviewed Branson on the Goldstein
on Gelt Show.
Douglas Goldstein: What percentage of CEOs in the world are women?
Douglas Branson: It was 3% a year ago, but itís fallen. We had six resignations and
only one replacement, so weíre down to 2%. We probably lead the world, with 1% or less
most concrete. But in Germany and in Japan, it is not even 1 percent. Itís pretty low
everywhere you go. It means that women have been promised equality or parity for 30 some
years now. They have been going to business schools, graduate schools, law, and other
fields, but they only rise so far.
About half the middle managers in major companies are women now, but the percentage of senior
managers is about 7% or 8%. The glass ceiling can never be proved directly, but it probably
exists and women continue to bump up against it. There are a number of reasons for that,
but I look at this from the social justice standpoint. Other people are trying to make
the business case that more women on boards and more women senior managers will lead to
greater profitability, but the studies are mixed and you canít make that case. I primarily
get it from the social justice standpoint, and I am the father of two daughters so I
consider it very important.
Douglas Goldstein: The angle that youíre looking at is from social justice, which we
could term ëfairness.í It should be fair that that half the number of seats in the
CEO offices should be women because women are about half the population. Is that what
ësocial justiceí means?
Douglas Branson: No. I donít mean exact parity, but I want a removal of artificial obstacles
so that women may wind up with 20% or 70%. I just want the removal of obstacles in the
pathway that would lead women to senior management positions and boards of directors.
Douglas Goldstein: Is there perhaps an argument to the opposite, which is that it is just
more profitable to have women not represented as strongly?
Douglas Branson: I donít think that people make that study because it would be politically
incorrect. I donít think that they would have any chance of getting that kind of study
approved. I have never seen one that makes the opposite case. Iíve just seen the mega
studies, the study of studies, which show there are no convincing studies out there
that say board composition, whether it would be of women, minorities or other minorities,
African-Americans, that diversity on a board of directors or management wouldnít lead to greater profitability.
I think it misconceives the purpose, at least of the board of directors, which is not to
increase profitability, but to act like fog lights within a car - to sense the possibility
of disaster, to replace underperforming or mis-performing managers. The board of directors
will evaluate and if necessary replace senior managers only third or fourth, if the priority
to them is to contribute to profitability, and that would be in terms of long-run strategic
planning. Itís pretty hard to find any correlation or prove up any correlation between that and
profitability.
Douglas Goldstein: The board of directors is in theory supposed to represent the good
of the shareholders. The key benefit to the shareholders would be the increasing value
of the stock, and therefore wouldnít the interest of the board of directors, whether
they do it well or not, be to maximize profits?
Douglas Branson: Itís been a yin-yang. In the 70s and 80s, statutes were put on the
board in affirmative duty to manage the business and affairs of the corporation. In 1980, that
was changed to passive voice and the business affairs should be managed under the direction
and supervision of the board. A number of academicians and management writers, like
Yen Zhang, said that the boardís highest and best use is to monitor and if necessary
replace the senior managers. Only third or fourth priority is profitability, but then
after Enron, WorldCom, and some of the other imbroglios and Parmalat in Italy, people began
putting boards somewhat back into that management role. Whoís to say where we are now?
Like anything else, the view of what a board of director is and should be doing changes
every decade or two and it works from one thing into another. I think that there are
more people urging that boards should take an active management role than they were 15
years ago, but I still think the boardís highest and best use is to monitor the managers.
That does indirectly play a role in profitability.
Douglas Goldstein: In the western world, women these days receive the same educational opportunities
as men. They have access to family planning and they are certainly more emotionally capable
of being assertive than in the past. Based on all of these events, why would you say
that there are still so far fewer female CEOs?
Douglas Branson: One thing is that in western societies, women speak differently and act
differently than men do. Men as the dominant force in our societies often interpret that
as women being more emotional, women being less analytical, and women being intuitive.
But linguists like Robin Lakoff at California Berkeley and Deborah Tannen at Georgetown
have shown that thatís false. There is no correlation between the way a woman may speak
and act. She may use fewer imperatives. She may use conditional verbs. She may use edges
at the end of sentences like, ìDonít you think?î or, ìDoesnít that seem right?î
whereas a man will say, ìWe should manufacture X or Y.î The baggage associated with that
really doesnít exist. Thatís one reason that women have an advance that is not a very
good reason.
Another is childbearing. If the woman limits herself to one child and takes a minimum maternity
leave, in the United States she will make 99% of what a comparable male makes in their
40s. If however she has two or more children, takes time off for a little extra time for
childrearing, say one of her children starts school, she will make only 60% of what a male
makes. Paradoxically, as women go toward the top, they have more and more children.
I did a study with Joann Lublin of The Wall Street Journal last year. Out of 21 women
chief executive officers, 19 have children and the total number of children is 47. Numbers
of these women have three children, and they testify that as you reach the top in a business
organization, you need your family more than your family needs you because you need somebody
who gives you unconditional love and also gives you unconditional backtalk and guff.
Some of these women talk about Anne Mulcahy of Xerox who has a son who plays baseball
and another one who runs track. She made it a point never to miss one of their athletic
events. Women opt out because they see this future where if they take any more time, they
will make a lot less money. As they get in the senior ranks of management, having a family
is more important because it enables them to keep their sense of perspective.
Douglas Goldstein: Thereís no unusual curve? The curve is that with one child, you can
still make money comparable to men. You get a little more than your salary goes down but
then if you want to get to the top ranks, you have to have a bunch of kids. Is that
the statistics?
Douglas Branson: It helps. One of the real reasons is sociology. As women go above the
middle management rank, they may retreat into stereotypes, they may become the mother figure,
they may become the mascot, they may become the clown or they may become whatís called
ëthe ice queen.í Their true potential isnít as readily apparently as it is with men. When
two women are present in a work group or in a rank, you think it would be better? Itís
actually worse because thatís called a skewed group and the dominance in a work center or
particular rank will close ranks and engage in whatís called ëboundary heightening.í
There is a woman named Rosabeth Moss Kanther who is a sociologist and teaches at the Harvard
Business School, and she wrote a book in 1984 called Men and Women of the Corporation. It
sounds infantile, but a lot of the feminist writers say three or more is the magic number.
I think thatís true but not at the board of directors level. Ten years earlier, when
women are entering senior management, three is the magic number because if we have those
groups in various places 10 years later, the pool from which women directors and senior
managers could be chosen will be much larger. Itís a pool problem.
I just got a manuscript from a woman at Duke who wrote about three is the magic number
at the board of directorís level, and she misconceived the argument for a number greater
than two, and thatís 15 years earlier below a rank of senior management. Thatís for other
women in the support group as quasi-mentors and
the like.
Douglas Goldstein: Could you tell me how people could follow your work or learn more about
the research that youíve done?
Douglas Branson: Buy the book, they are on Amazon. I think thereís a lot of research
going on. Itís a very hot topic with the quarter laws in Norway, now in France and
in Spain. With the European economic crazies right now, itís moved a little bit toward
the backburner, but quarter laws are under consideration for Germany, for Italy. I donít
think youíll ever see quarter laws in Israel probably, in the United States or in the United
Kingdom, but there are other things too. The Australia Institute of Corporate Directors
started a very interesting mentoring program where the chairman of the board of various
companies promised to mentor a woman and put her on a board of a publicly held company.
The number has increased from 8 to 11% in less than a year of women on the boards of
publicly held companies in Australia. Thereís now a lot of writing or research but there
are lot of actual feet on the ground movements going on in various places. Itís a very hot
topic in Europe and the 27 member nations of the European Union. I think itís being
discussed in almost all of the capitals.
Douglas Goldstein, CFPÆ, is the director of Profile Investment Services and the host
of the Goldstein on Gelt radio show (Monday nights at 7:00 PM on www.israelnationalradio.com.
He is a licensed financial professional both in the U.S. and Israel. Securities offered
through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Accounts carried
by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company.
His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered
at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.
Disclaimer: This document is a transcription and/or an educational article. While it is
believed to be current and accurate, divergence from the original is to be expected. The original
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The opinions rendered herein are those of the guests, and not necessarily those of Douglas
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