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comment by wasoxygen
wasoxygen  ·  969 days ago  ·  link  ·    ·  parent  ·  post: THESE TECH COMPANIES WILL NEED MORE WOMEN ON THEIR BOARDS

Thank you for sharing your thoughtful comments. I have also taken some time to reflect on my position.

I don't see a significant moral difference between reducing gender-based disparity of participation on boards today and supporting the idea of gender-balanced boards as a social norm in years to come. If one is good, so is the other.

You didn't specify the reason, but if your workplace is adjusting the bonus system to attract more female employees and promote a gender-balanced workforce, I would say that's great, and I hope the initiative is successful. If any employee felt resentment at being rewarded for her secondary sexual characteristics rather than her skills and performance, she would be free to seek employment elsewhere. She might even find work at a company with a reputation for discriminating against women; that would be clear evidence of her value as a worker.

This proposal is different. There is an inequality of power which allows the California legislature to force businesses to take gender into account when hiring, enforced by fines starting at $100,000, even if they prefer to hire based on merit only.

Is this cultural progress? I find it creepy and nosy when paperwork asks me whether I am "black" or "white" and am glad these questions are optional (outside the doctor's office). Do we want job applicants to face mandatory Female and Male checkboxes, knowing that their answer will have a bearing on the hiring decision?

In Zzyym v. Pompeo a judge found that the State Department was out of line in requiring a gender designation before providing a passport. Rules around marriage have also moved away from the state prying into peoples' underwear.

The justification to intervene with force, I believe, is that stereotypes, tradition, and misogyny have kept qualified women out of positions they sought. No doubt that is true. My argument about roofers and masons is simply that there are factors besides bias to consider, and it is impossible for us to recognize and measure them all. I think it's plausible that, on average and with many exceptions, women and men have different preferences regarding, for example, risk tolerance, and this is one ingredient in the complex mix of preferences and incentives that results in electrical power lines being mostly installed by men.

It is also clear that there are employers in California, like Google, that actively seek and prefer female employees. Good for them! I work in IT and value associating with a diverse workforce.

Does the Google preference exactly balance the misogyny? Who knows? It's very hard to measure these things. It seems strange to me to conclude that if the gender ratio is far from 50/50, there must be a problem, but if the workplace population is proportional to the general population it's okay.

"In 1970, 7% of gynecologists were women. Now 59% are."

Should someone have hit the brakes at 50%? The shift is continuing: women made up about 85% of the obstetrics/gynecology graduate medical education class of 2013-2014, with a 75% female majority in pediatrics.

It's easy to imagine why patients might prefer a female OB-GYN. Having a man poke around down there might be "weird for them," as you put it. If we value customer preference, provider preference, merit-based hiring, and also the freedom of people to make their own choices, how can we assume that getting all these right will result in a 50/50 gender balance?

    Corporations don't care about you, and neither does the government.


The government of California cares about corporations, however, judging from the language in the bill. It claims that "Numerous independent studies have concluded that publicly held companies perform better when women serve on their boards of directors," which one could argue is a reason to let misogynistic companies pay the penalty for their own bias, so companies with a more open-minded culture will prosper and out-compete them.

The bill cites a Credit Suisse study, with the characteristic advocacy pattern in which a causative link is implied that the authors of the study do not describe: "women on boards improve business performance for key metrics, including stock performance."

It's a subtle difference: "publicly held companies perform better when women serve on their boards" is a correlation that can be measured in the data, but "women on boards improve business performance" suggests a cause/effect relationship that the study does not support.

In the section "Rationalizing the link between performance and gender diversity," the study recognizes that

    There is a significant body of research that supports the idea that there is no causation between greater gender diversity and improved profitability and stock price performance.

The most obvious hypothetical explanation for the correlation in performance and gender diversity is that larger companies are more likely to have female board members, just as they are more likely to have left-handed board members, and larger companies also have better performance.

The study makes some effort to control for this by considering companies with market capitalization over and under US$10B separately, though there appear to be very few large-cap (>10B) companies with no female board members. The average market cap for companies with all-male boards is given as $8100M. Only one such large-cap appears among the Fortune 500.

The study also notes that companies in "Sectors that are closer to final consumer demand have a higher proportion of women on the board" and "Certain regions (e.g. Europe) and countries (e.g. Norway) tend to have relatively high ratios of women on the board, for others the numbers are extremely low (e.g. Korea)." (Though Figure 2 shows North America has the lowest percentage of companies with no women on the board, at 15.8%, compared to 16.3% in Europe, 60.8% in Latin America, and around 70% in Asia.)

With so many variables in play, a clear link between gender diversity and performance is hard to find.

    There is a significant body of literature on this issue; articles on the subject span several decades. Some suggest corporate performance benefits from greater gender diversity at board level, while others suggest not.

    In the positive camp are the likes of McKinsey and Catalyst. Catalyst has shown that Fortune 500 companies with more women on their boards tend to be more profitable. McKinsey showed that companies with a higher proportion of women at board level typically exhibited a higher degree of organization, above-average operating margins and higher valuations.

    Other studies, such as those conducted by Adams and Ferreira or Farrell and Hersch, have shown that there is no causation between greater gender diversity and improved profitability and stock price performance. Instead, the appointment of more women to the board may be a signal that the company is already doing well, rather than being a sign of better things to come.

The improved performance in companies with more female board members was not apparent before the financial crisis, but observed after, leading to two conclusions:

    1. That stocks with a greater degree of gender diversification appear to be relatively defensive in nature; and

    2. That the outperformance of stocks with women on the board may not continue if the world shifts back towards a more stable macro environment in which companies are rewarded for adopting more aggressive growth strategies.

Thus, the "Rationalizing" section mentions risk aversion, citing research showing that "women tended to be much more risk-averse investors than men" and "companies with women at board level are more likely to have lower levels of gearing" which was advantageous in recent years:

    lower gearing has delivered average outperformance of 2.5% per annum over the last 20 years and 6.5% per annum over the last four years (within European listed equities). It is far from a consistent determinant of performance: in periods of rapid economic expansion and equity bull markets, low gearing is often an underperforming style.

A section on "Barriers to change" describes some obstacles.

    But it is not just the perception of female employees that is the potential barrier to promotion; more women than men choose to opt out of a professional career to have, or look after, a family. This automatically reduces the talent pool that managers can choose from and limits the number of women available for board positions.

Apparently it's a problem if some people, like me, prefer to nurture and spend time with family rather than struggle for more money and power in boardrooms and business class. Most highly-qualified men do not "aspire to positions of power," only 27% do, compared to 15% of highly-qualified women. What can be done?

    A full range of solutions has been trialed across different markets. Norway has taken coercive action, the USA and Canada have encouraged voluntary commitments, the UK has adopted a collaborative approach. Progress has been similarly varied. The Scandinavian markets have delivered significantly higher female board representation but other research suggests that forcing the issue via quotas has been to the detriment of morale, the working environment and potentially profitability.

Sorry for the lengthy and rambling comment! It's a complex issue with a broad diversity of perspectives.