DRAFT 09/03/2015 Levers of Power Increasing the Number of Women on Boards SAIS Global Conference on Women in the Boardroom Celia Huber September 29, 2015 McKinsey & Company
Companies with 3 or more women on their boards have better results on organizational and financial performance Better results on the 9 dimensions of organizational Companies in the top quartile for the women performance representation in executive committees Companies with 0 women in executive committees SOURCE: Women Matter, McKinsey & Company McKinsey & Company
Past years, we discussed how women are underrepresented on boards, and sadly, the numbers have not changed much Corporate Boards Percentage of total, 2014 Norway 36 30 France Sweden 29 23 Denmark United Kingdom 23 Italy 22 Denmark 22 Germany 19 United States 19 10 India Japan 3 McKinsey & Company SOURCE: Catalyst, Company websites, McKinsey analysis
At the historic growth rate, the US would not reach 25 percent women on boards until 2030 Women as percent of all directors Historic Estimated 30 1.7% 25 1.7% +5 pts in 19 10 yrs 16 +6 pts in +3 pts in 16 years 10 years 2004 2030 2040 2014 SOURCE: Spencer Stuart, McKinsey analysis McKinsey & Company
Supply of top women is not a board constraint; neither is male buy-in ��������������������������������������� Supply ���������������������������� ������ Estimated women ������������������������������������ across F1000 top Percentage Agreeing and Strongly Agreeing teams Number of respondents= 1,421 ��� Open Board seats 87% in 2012 74% ���� 1 more woman on every Board with less than 3 ����� 3+ women on every Board Total Men Total Women SOURCE: Women Matter survey 2013 McKinsey & Company
Around the world, several countries are making significant progress using four main levers of change Public/Private partnerships Full Private National Sector Law Only Quota Law Reporting Government Private Advocacy & Business Task Forces Groups McKinsey & Company
Around Europe, many countries are utilizing quotas 2011 Norway 2014 36 ▪ Longest standing quota, enacted in 2004 35 ▪ 40% women on listed companies by 2008 30 France ▪ French Parliament Zimmermann Cope 2011: “Real 22 Equality Between Men and Women” 20 ▪ 40% female board representation by 2017 19 16 Italy ▪ “Pink Quotas” enacted in 2011 ▪ 33% women on boards listed on CONSOB in 2015 7 Germany ▪ Gender quota on supervisory board enacted in 2015 ▪ 30% of nonexecutive directors on DAX100 by 2016 Norway France Italy Germany SOURCE: Catalyst, Company websites, McKinsey analysis McKinsey & Company
Australia and UK utilize a mix of levers, without a quota Australia Workplace and Gender Equality Act (Federal Law) through ASX Governance Council ▪ Requires companies to report annually on gender diversity Australia: ASX 200 Sex Discrimination Commissioner Elizabeth Broderick Percent of women on boards ▪ Partners with, promotes Male Champions of Change Male Champions of Change 20.1 6.7 ▪ “Panel Pledge” – Leaders refuse to sit on panels lacking diverse speakers ▪ 13.4 “Plus One” – MCC executives pledge to appoint one more woman executive in 12 months Australian Institute of Company Directors ▪ Runs a diversity initiative, mentors female business women 2011 2015 United Kingdom Mervyn Davies and Review Task Force UK: FTSE 100 ▪ Issues Davies Report yearly, 10 Recommendations Percent of women on boards Financial Reporting Council: Corporate Governance Code 23.5 ▪ 7.9 Sets reporting requirements for diversity on boards Executive Search Firms: Voluntary Code of Conduct 15.6 ▪ Sets search firm best practices: 30% of candidates are women 30% Club ▪ Advocates for more women on boards, offers networking and mentoring 2012 2015 SOURCE: Australia Institute of Company Directors; Davies Report Women on Boards McKinsey & Company
We have identified four main levers of change, based on other nation’s success stories Full Private National Sector Law Only Private Business Quota Law Reporting Govt Advocacy Groups &Task Forces Norway France Italy Germany Australia UK McKinsey & Company
As we try to move the US forward in board equality, there are many questions to consider Given we know that… How do we address? ▪ We like voluntary not mandatory ▪ How do we spur voluntarily programs promotion of women? ▪ We like private sector driven action, ▪ How do we balance national and less government driven action programs and endorsements with ▪ No clear centralized leadership private sector decision-making? ▪ How should the private sector step driving a set of initiatives ▪ Transparency and disclosure are up to lead the country on this – how do we create a movement? valued over quotas and mandates ▪ Board tenures are long and turnover is rare McKinsey & Company
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