Ranks of Female Business Executives Seen Thinning

By Heide B. Malhotra
Heide B. Malhotra
Heide B. Malhotra
January 6, 2010 Updated: January 6, 2010

WASHINGTON—Female representation on company board seats and in executive positions in the business world has not moved forward as hoped, but by some measures, it is slowly losing ground again.

Women have been fighting for equality since the 1800s and have won many a battle, beginning with the right to vote in 1848. During and after World War II, women were slowly introduced to the business sector.

In 2009, women held only 10.6 percent of board and executive positions in 400 of California’s largest public companies. This is a 0.3 percent decline over 2008.

On the other hand, 15 women held chief executive positions in 2009, two more than in 2008.

There were a total of 2,770 female executives in 215 of the companies, with almost half of the companies employing only male executives. One-fifth of the companies had two female executives and the remainder only one.

The number of females among the business elite was creeping up slowly from 10.2 percent in 2005 and 2006 to 10.4 percent in 2007.

“The business world is in dire need of more connected, empowered and effective women leaders,” said Wendy Beecham, CEO of the Forum for Women Entrepreneurs & Executives in a recently released study by University of California at Davis.

“Nationally, research shows that companies with the highest representation of women on their top management teams experience stronger financial performance when compared to companies with the lowest representation of women in senior positions: return on equity is 35% higher and total return to shareholders is 34% higher for companies with more senior women executives,” said Beecham.

It is discouraging to hear there are no women board members or executives in 118 (or almost 30 percent) of the 400 largest California companies.

In California, the telecommunication and electronics sectors employ the least female executives, while the majority of female executives work in the consumer product and the retail sectors.

“Our study continues to paint a bleak picture of the progress of women in corporate leadership,” state the researchers in the UC Davis study.

New England in Similar Situation

Massachusetts did not fare better for women executives, according to the 2009 study “Building for the Future or Stuck in the Past?” performed under the leadership of Bentley University and co-sponsored by the Boston Club, an organization for professional women, and Mercer LLC, a consulting business.

Only 8.6 percent of the executives in 100 of Massachusetts’s public companies are females. Fifty-six of the companies employ only male executives, the highest since 2003, when tallies were taken for the first time.

“The 2009 Census tells a story of stagnation and decline regarding women in corporate leadership in Massachusetts,” the researchers said in the Boston Club report.

In 2006, 30 firms reported at least one woman among those with the highest income. By 2009, only 23 companies reported at least one highly paid female executive.

Out of 10 Fortune 500 companies located in the state, only two companies, TJX Companies Inc. and BJ’s Wholesale Club Inc., employed female CEOs and three women directors.

But the data is on the upswing. Since 2003, firms with at least one female director increased from 50 to 62, a 24 percent increase.

Retail and wholesale consumer goods along with health care firms employ the most females in higher-level positions, while technology and manufacturing sectors lag far behind.

Female Board Members a Luxury During Good Times

Researchers from the United Kingdom’s Cranfield University School of Management found in a 2009 study that British firms have been reluctant to hire females into high posts.

In 2009, there were 131 female directors versus 834 men in director positions in British firms. In 2008, there were a total of eight female CEOs in Britain’s firms. Today, there are only four female CEOs.

The United Kingdom and the United States lag far behind Norway and Spain when it comes to women in CEO and executive positions. Women held 30.5 percent of Norway’s director positions and Spain’s women composed 55 percent of all of that country’s directors’ positions.

The Cranfield researchers are impressed with Norway and Spain’s progress in hiring females into high-level positions. A few years ago, female participation in high-level positions in both countries was very low compared to the United States and the United Kingdom.

In Spain, the corporate governance code and the Equality Law spurred firms into action and women made great strides in the business world; while in Norway, quotas were the driving force for substantially increasing women’s ability to move into executive and CEO positions.

“I reject the argument of those who say ‘because the economy is in difficulty we should put equality on the backburner. It is a luxury we cannot afford right now.’ Equality is not just for the good times. It is for all times. It is vital for every individual, for a vibrant economy and for a fair society,” said MP Harriet Harman, Britain’s Minister for Women and Equality, in the Cranfield study.