According to the latest report from GMI Ratings on gender diversity on US Boards of Directors, female representation varies greatly between different regions, owing mostly to the industries that dominate those regions.
GMI Ratings found that 36% of companies in the Russell 3000 have no female directors, and only 8% have three or more women. But the numbers look quite different in the Midwest, where 12% of boards have more than three women. New England and the Mid-Atlantic regions aren’t far behind at 11% and 10% respectively.
On the other hand, in the Mountain and South regions, only 5% of companies have women on their boards, and in the West (Washington, Oregon, California, Alaska, and Hawaii) only have 6%. The state with the best representation of boards with more than three women was Connecticut at 15%, followed by Minnesota at 14% and Ohio and Illinois at 13%. Minnesota also had the lowest number of boards with no women: 15%. The state with the highest number of boards with no women was Texas at 52%.
The report authors, Michelle Lamb, Senior Research Associate and Kimberly Gladman, Ph.D., CFA, Director of Research and Risk Analytics, point out that this has more to do with the industries focused in certain states and regions that it does with the locations themselves.
The Midwest scored high for women on boards – and is also a region highly populated with companies in the consumer staples industry. Consumer staples companies were the most likely to have more than three women on their boards (20%). On the other hand, energy companies were the most likely to have zero female directors (61%) and only 1% had more than three female directors, which can account for much of Texas’ weak representation when it comes to boardroom diversity.
Lamb and Gladman suggest that, because gender diversity issues vary by industry, solutions should be industry-focused as well.
While utilities and consumer products companies scored high when it came to women’s representation on boards, most other industries didn’t fare as well. Energy had the highest percentage of companies with no female board members (61%), while IT (49%) and Telecommunications Services (55%) were also in the bottom tier. Lamb and Gladman write that this can also explain the West’s low scores, as technology companies make up much of the business in the region.
Gladman explains, “The study confirms that the representation of women on U.S. boards remains low. But we caution readers not to assume that these statistics only reflect the impact of cultural attitudes or biased approaches to recruiting. For example, the regional variations detailed in the findings are almost entirely explained by the concentration of male-dominated industries in various regions.”
She added, “The representation of women on the boards of technology companies lags the national average. Despite a few high-profile women like Marissa Mayer at Yahoo, Silicon Valley is mostly a man’s world when it comes to the boardroom.”
The report authors suggest that because the challenges are industry-related, companies should work together to share best practices and develop programs to advance women within the leadership pipeline.
The report says, “Gender diversity on corporate boards varies widely by US state and region, but the major driver of this variation appears to be industry. … Therefore, efforts to improve boardroom gender diversity in a given state or region may be best executed on an industry-specific basis.”
One way to catalyze this action may be to focus on the business case for gender diversity at the top. Lamb says:
“Multiple academic studies have concluded that diverse corporate boards exercise more diligent oversight. They have better attendance records than homogenous boards, and they invest more effort in auditing when the complexity of the business warrants heightened scrutiny. Diverse boards also have more rigorous and multifaceted discussions, avoiding groupthink.”
The research is also encouraging shareholders to speak up. “As a result, institutional investors are increasingly pressing on many fronts to improve board diversity, including the representation of women,” Lamb added. By creating industry initiatives to make women more visible and provide a pathway to the top, and coupling that with investor pressure, advocates for boardroom gender diversity will begin to see more movement on the issue.