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In February, Representative Gregory W. Meeks (D-N.Y.) introduced the H.R. 1018 – Improving Corporate Governance Through Diversity Act of 2019, which will require public companies to disclose the gender, race, ethnicity and veteran status of their board directors, nominees and senior executive officers, as a way to track the progress of diverse representation in the corporate sphere.
“Diversity has been proven to have a positive impact on business performance, and it is only natural for investors to want to know which companies are choosing to bring in a wealth of different perspectives into their corporate board rooms,” Representative Meeks said in an official statement. “Revealing the gender, racial, ethnic, and veteran makeup of these corporate C-suites and boardrooms will not only shed light on the value of diversity, but hopefully encourage corporate shareholders to increase diversity in the highest ranks of their corporations.”
The bill has received support from the National Association for the Advancement of Colored People (NAACP), the Council for Institutional Investors and from the U.S. Chamber of Commerce as a way to increase the diverse representation of gender, race, and ethnicity on the corporate boards of directors.
Having a diverse board leads to better business performance according to the PwC’s 2018 Annual Corporate Directors Survey. Of the board directors surveyed, 94 percent claimed that have a diverse board brings unique perspectives, 84 percent indicated that such diversity “enhances board performance,” and 91 percent stated that their boards are taking measures to increase diversity.
The introduced bill will endeavor to make sure public companies are doing their part to bring more unique voices to the table by empowering the SEC’s Office of Minority and Women Inclusion (OMWI) to publish triennial reports of best practices for complying with the new disclosure rules, as well as create an advisory council with the Federal Advisory Committee Act. OMWI will also be allowed to solicit public comments on its best practices publications.
The Chamber notes that this “model to organically boost diversity on boards” has the potential to be more effective at producing deliverables than quota-driven strategies that have previously been attempted by jurisdictions.
Obstacles to Gender-Diverse Leadership
According to a recent report by IBM titled “Women Leadership, and the Priority Paradox,” a significant share of organizations are not making the increased inclusion of women in leadership roles a top business priority. Among the 2,300 organizations that were surveyed worldwide, only 18 percent had women in top leadership positions, including the C-suite, vice presidents, directors and senior managers. This finding is in stark contrast to a new wave of advocacy for gender-diverse leadership and a common understanding that diverse leadership leads to better financial performance.
Laissez-Faire Approach to Diversity
Why aren’t more women being promoted into leadership positions? According to IBM, a majority of organizations are not making the advancement of women a “formal business priority,” which would mean setting reachable goals and applying metrics to measure progress. Rather, they taking a laissez-faire approach to diversity that relies on “good intentions.”
Good intentions are not enough to drive action for tangible results, and this is the situation we are seeing among companies who are not making a concerted effort to improve the opportunities women have to take their seat at the table.
Top 3 Reasons for the Gender Gap
The three primary reasons for the looming gender gap among leadership positions in these organizations are
• Many organizations are not fully convinced of the benefits of having gender equality in leadership despite evidence supporting it. Many hold the false assumption that “women are responsible for their own lack of advancement,” such as prioritizing family over their career and not desiring leadership obligations.
• Organizations are relying on “good intentions” instead of establishing an operational business strategy. More than 75 percent, or three-fourths, of respondents said this issue is not treated as a formal business priority.
• Men, who represent an overwhelming share of leadership roles, tend to underestimate the role of gender bias in their workplace plays in inhibiting their female coworkers. When asked if they would have been as likely to have been promoted to their current position if they were women, an astounding 65 percent say they would be “equally likely.”
First Movers Are Leading Change
Twelve percent of organizations surveyed report that they are dedicated to advancing women to leadership roles in their workforce and have made it a formal business priority. As much as 81 percent said that gender parity is included in their strategic agenda.
The main habits of First Movers include
1) Providing career development planning specific to women’s needs;
2) Applying the same metrics of job performance evaluation to both men and women;
3) Providing equal career opportunities to both men and women; and
4) Creating a culture that embraces women’s leadership styles.
First Movers report outperforming competitors in profitability, revenue growth, innovation and employee satisfaction, which indicates they are seeing tangible results of their efforts to achieve gender-diverse leadership.
Our Commitment to Diversity & Inclusion
NAWRB has been heavily involved in addressing the issue of diversity and inclusion throughout the entire housing ecosystem. In August 2010, I wrote an article for HousingWire, bringing attention to the Dodd-Frank Act specifically the Provision 342 for the creation of the Office of Minority and Women Inclusion (OMWI) in federal agencies beginning in January 2011.
This was a major step towards accountability for women’s employment and women-owned businesses in our industry. Since then, we have had OMWI directors speak at each and every one of our conferences to discuss current progress and strategies.
Six years later, NAWRB submitted comments in response to the Federal Housing Finance Agency (FHFA)’s Notice of Proposed Rulemaking (NPRM) and Request for Comments (RFC) published by the FHFA in October 2016, calling for the public’s input on the proposed changes to their minority and women inclusion amendments. Our comments were taken into consideration and discussed in the rule’s final version.
In 2018, we publicly supported the passing of the SB 826 Women on Corporate Boards Bill that required public companies in California to have at least one woman on their boards by the end of 2019.
We are pleased to see policies and legislation taking a step toward actionable solutions for increasing the representation of women and minorities at all levels of employment, and making sure they have a seat at the table.