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In September, California Governor Jerry Brown signed the SB 826 bill into law, a landmark legislation requiring female representation on corporate boards. Specifically, the bill requires that at least one woman be on the board of publicly-held companies in California by year-end 2019. Despite concerns over its potential efficacy, the bill is an important step in diversity and inclusion, as well as for the advancement of women.
In an official letter, Governor Brown stated, “There have been numerous objections to this bill and serious legal concerns have been raised. I don’t minimize the potential flaws that indeed may prove fatal to its ultimate implementation.” He continued, “Given all the special privileges that corporations have enjoyed for so long, it’s high time corporate boards include the people who constitute more than half the ‘persons’ in America.”
How does this concern real estate? Publicly-held real estate companies in California are most likely to be affected by this new legislation, requiring female representation on their boards. This might be a productive start for increasing the share of women in areas where they’re greatly underrepresented, such as commercial real estate.
A report by The Real Deal looking at top investment sales and leasing brokerages in Los Angeles, Calif., demonstrates the significant difference in female representation between commercial and residential real estate brokers. In the top commercial real estate firms in LA, the percentage of women brokers ranges from 0-29 percent, compared to 42-60 percent in residential firms.
At the executive level, the 2015 Commercial Real Estate Women Network Benchmark Study found that 17 percent of men surveyed held executive titles, while only 9 percent of women stated the same. Although residential real estate has a fair ratio of male-to-female agents, commercial real estate and leadership positions across the board are male-dominated.
A common reason for why there are few opportunities for female advancement in leadership positions is that the industry continues to be a “boys’ club,” where key players on the golf course often conduct business at outings and at retreats, where women aren’t invited. Also, those who are able to climb the ladder rely heavily on connections and networking, since the industry is based on relationships. Corporations and brokerages might find it costly to change their hiring processes, but the results will likely increase their customer base and book of business in the long run.
However, gender diversity shouldn’t stop at just meeting quotas to improve the quality and longevity of diversity in firms. Other ways companies and their employees can address the gender gap at all levels of employment include mentoring and collaboration among both men and women employees; changing hiring practices, such as creating recruiting ads that emphasize women’s strengths; and advertising recruitment opportunities at speaking engagements.
Gender diversity and female representation at the board level requires a more rigorous and formal approach from top down. Corporations will have to embrace diversity and inclusion as a core tenet in their ethos and daily operations until it becomes a continual practice with long-lasting effects.