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Women on board

As corporate culture slowly shifts, gender diversity is breaking through stereotypes

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Corporate boardrooms remain a boys' club in the United States and across much of the world.

Central Pennsylvania is no exception.

But gender diversity is slowly breaking through cultural and historical stereotypes. Investor pressure and voluntary changes have continued to spur annual growth on boards.

In industrialized nations, the percentage of companies with at least one female director rose to 66.6 percent in the first quarter of this year compared with 57.9 percent in the fourth quarter of 2009, according to research firm GMI Ratings.

The firm found that 77.3 percent of companies on the Standard & Poor's 1500 have at least one woman on the board. And 14.4 percent of companies in industrialized markets — up from 8.5 percent — have at least three female directors.

Some researchers consider that to be mainstream.

Greater board diversity often translates to stronger financial outcomes for a company.

"There is more of an awareness that diversity on the board brings together better performance," said Ray Gibney, associate professor of management at Penn State Harrisburg. "I think that has gotten through to different boards."

A 2012 report from Credit Suisse on gender diversity and corporate performance found that women on boards translated to higher return on equity and better net income growth compared with those lacking female representation.

So, when will we finally cast aside societal stigmas about women in the workplace and reach that critical mass on boards?

It's going to take an undetermined amount of time, say midstate advisers and consultants who focus on corporate leadership.

"It is changing ever so slowly, but it is changing," said Marsha Everton, former head of The Pfaltzgraff Co. and director at The Bon-Ton Stores Inc. who remains active on corporate boards and in various advisory roles.

Diversity itself is shifting beyond gender and ethnicity as companies focus more on adapting to an increasingly global economy, Everton said. Corporate leaders are looking for a broader knowledge base and different perspectives to help craft long-term strategies.

"That, in some ways, provides more opportunity for women," she said. "It moves the discussion to specific skill sets, rather than just, 'Do you know somebody?'"

Career choices certainly play a role in gender diversity on a board, Gibney said.

Social and business networks are another big factor, he said. Boards tend to appoint directors from within, which means through an informal process involving smaller circles. And they are often set up in ways — length of terms or lack of term limits — that restrict turnover and growth in diversity.

"Those networks are dominated by men, so it's a self-perpetuating cycle," Everton said.

Boards also are looking for CEOs and leaders with prior board experience, specific backgrounds or skill sets that might further narrow the field.

"Many challenges are based on societal norms that say (women) may or may not stay in the workplace," said Kristen Murren, director of people development at Dillsburg-based Suasion Marketing & Communications, a woman-owned firm.

History has shown that it's normal for women to leave when they have children and for men to be in the boardroom, she said.

"It doesn't look like a problem. It's all we've ever seen," she said. "By including women and having diversity on our boards, we're going to make better decisions."

Murren ran leadership institutes and was a consultant for top state executives through the Department of Public Welfare before recently leaving for Suasion.

Many of those executives were women. Her job was to help them grow as people and leaders.

"We have found that people have not had opportunities to be exposed to growing their own character, especially women," she said. "People are put in roles and taught how to do their jobs, but they are not given the skills to be better leaders."

The latter is a major reason that employees decide to leave an organization, Murren said.

In her new role, Murren is working with the firm's nonprofit and health care clients as well as governmental organizations to develop stronger leaders.

"We are seeing more and more that if people feel cared about and someone is giving them attention and recognition, then it's personal," she said. "People want to stay and work there."

Higher levels of competition in certain industries and a slower economic recovery than in the past also might have more companies tightening their belts and breaking away from the past, Gibney said.

"Companies are becoming more aware of the difference between the consumer of a product and the decision-maker," he said, which is often women on the purchasing side.

Sectors that are closer to final consumer demand — health care, for example — have a higher proportion of women at board level, according to Credit Suisse. Heavy industry and informational technology have a much lower percentage of women.

Other than radical changes, which would include instituting quotas, the only path to greater corporate diversity is giving it time, Everton said.

Gender split

On the world stage, women now hold about 11 percent of board seats at the largest and best-known companies, according to a 2013 survey from GMI Ratings. The survey included data on nearly 6,000 companies in 45 countries.

Among those companies, 63 percent have at least one female director, and 13 percent have at least three women — a level that some research considers a critical mass.

Women make up 11.8 percent of directors in developed markets and 7.4 percent in emerging markets, according to GMI Ratings.

Norway, Sweden and Finland lead the world with 36.1 percent, 27 percent and 26.8 percent, respectively.

In the U.S., the companies on the S&P 1500 — which consists of up of the S&P 500, S&P Midcap Index and S&P Smallcaps — have 14 percent women on boards. The Russell 1000, which includes the 1,000 largest companies in the U.S., has 14.7 percent, according to GMI Ratings.

Just 2.6 percent of board chairs on the S&P 1500 are women.

—Jason Scott

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