Levers of Power Increasing the Number of Women on Boards SAIS - - PowerPoint PPT Presentation

McKinsey & Company

Levers of Power Increasing the Number of Women on Boards SAIS Global Conference on Women in the Boardroom

September 29, 2015 Celia Huber

DRAFT 09/03/2015

McKinsey & Company

Companies with 3 or more women on their boards have better results on

• rganizational and financial performance

Companies in the top quartile for the women representation in executive committees Companies with 0 women in executive committees Better results on the 9 dimensions of organizational performance

SOURCE: Women Matter, McKinsey & Company

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Past years, we discussed how women are underrepresented

• n boards, and sadly, the numbers have not changed much

3 10 19 19 22 22 23 23 29 30 36 France Denmark Sweden Norway Japan India Germany Denmark United States United Kingdom Italy Corporate Boards Percentage of total, 2014

SOURCE: Catalyst, Company websites, McKinsey analysis

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At the historic growth rate, the US would not reach 25 percent women on boards until 2030

SOURCE: Spencer Stuart, McKinsey analysis

Women as percent of all directors Historic Estimated 2004 2014 2030 2040 +3 pts in 10 years +6 pts in 16 years +5 pts in 10 yrs 16 19 25 30

1.7% 1.7%

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Supply of top women is not a board constraint; neither is male buy-in

Supply

• Estimated women

across F1000 top teams

• Open Board seats

in 2012

3+ women on

every Board

• 1 more woman on

every Board with less than 3 87% 74% Total Women Total Men

• SOURCE: Women Matter survey 2013

Percentage Agreeing and Strongly Agreeing Number of respondents= 1,421

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Around the world, several countries are making significant progress using four main levers of change

Full National Law Private Sector Only Quota Law Reporting Government Advocacy & Task Forces Private Business Groups Public/Private partnerships

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Around Europe, many countries are utilizing quotas

Norway

▪ Longest standing quota, enacted in 2004 ▪ 40% women on listed companies by 2008

France

▪ French Parliament Zimmermann Cope 2011: “Real

Equality Between Men and Women”

▪ 40% female board representation by 2017

Italy

▪ “Pink Quotas” enacted in 2011 ▪ 33% women on boards listed on CONSOB in 2015

Germany

▪ Gender quota on supervisory board enacted in 2015 ▪ 30% of nonexecutive directors on DAX100 by 2016

16 7 20 35 19 22 30 36 Italy France Norway Germany

2014 2011

SOURCE: Catalyst, Company websites, McKinsey analysis

McKinsey & Company

Australia and UK utilize a mix of levers, without a quota

Workplace and Gender Equality Act (Federal Law) through ASX Governance Council

▪

Requires companies to report annually on gender diversity Sex Discrimination Commissioner Elizabeth Broderick

▪

Partners with, promotes Male Champions of Change Male Champions of Change

▪

“Panel Pledge” – Leaders refuse to sit on panels lacking diverse speakers

▪

“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 6.7 Percent of women on boards Australia: ASX 200

SOURCE: Australia Institute of Company Directors; Davies Report Women on Boards

Mervyn Davies and Review Task Force

▪

Issues Davies Report yearly, 10 Recommendations Financial Reporting Council: Corporate Governance Code

▪

Sets reporting requirements for diversity on boards Executive Search Firms: Voluntary Code of Conduct

▪

Sets search firm best practices: 30% of candidates are women 30% Club

▪

Advocates for more women on boards, offers networking and mentoring Australia United Kingdom 7.9 Percent of women on boards UK: FTSE 100 2015 2011 2015 2012 13.4 20.1 15.6 23.5

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We have identified four main levers of change, based on

• ther nation’s success stories

Norway France Italy Germany Australia UK

Full National Law Private Sector Only

Quota Law Reporting Govt Advocacy &Task Forces Private Business Groups

McKinsey & Company

As we try to move the US forward in board equality, there are many questions to consider

▪ We like voluntary not mandatory

programs

▪ We like private sector driven action,

and less government driven action

▪ No clear centralized leadership

driving a set of initiatives

▪ Transparency and disclosure are

valued over quotas and mandates

▪ Board tenures are long and turnover

is rare

▪ How do we spur voluntarily

promotion of women?

▪ How do we balance national

programs and endorsements with private sector decision-making?

▪ How should the private sector step

up to lead the country on this – how do we create a movement? Given we know that… How do we address?