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Great businesses are like rainbows, reflecting and refracting light into an array of vibrant colors. Successful business people understand that the broader their reach, the greater the palette of colors they’ll be able to display. Our world is now moving away from antiquated norms imposed by a select few and embracing a more realistic and inclusive view of humanity.
Over the past year, we’ve been forced to explore diversity in new and unexpected ways. We’ve attempted to end and upend systemic racism and discrimination. We’ve witnessed Black Lives Matter and MeToo movements, seen sports and entertainment figures come out of the closet and learned that the world goes on even when people don’t show up at the office.
People are demanding to be seen for who they really are, not judged by the color of their skin, sexual orientation, gender, race or any other box that they are forced into by social constructs fueled by ignorance, fear or a desire to control.
Diversity, equity and inclusion, or “DEI,” have become the new corporate mantra, and companies across the country have rushed to adopt DEI programs. In addition to addressing disparities in recruiting, hiring, pay and promotion, DEI turns out to be good for the bottom line. But companies that fail to implement DEI at all levels — including the executive suite — cannot truly consider themselves successful.
A board game is needed
In 2018, California enacted the “Women on Boards” law, making it the first U.S. state to mandate that women be represented on the boards of publicly traded companies. At least one person who identified as a woman had to sit on corporate boards by the end of 2019; in 2022, two women must sit on boards with five directors and three women on boards with six or more members.
California isn’t an outlier. France, Germany, Norway and Spain also require female representation on corporate boards. This year, lawmakers in Washington, Massachusetts, New Jersey, Hawaii and Illinois have passed similar laws, with Illinois requiring public companies to submit a report of their board constitution.
It’s about time. Women have built companies, run countries and gone into space. They should certainly be included in the ranks of corporate directors. But they aren’t.
Laws are needed
Despite the great strides women have made in recent decades — in government, business, science and the arts — they are still woefully underrepresented in the corporate stratosphere. If it takes laws to make corporate America do the right thing, then so be it.
According to a recent report, of the 650 public corporations in California subject to the Women on Boards law, less than half have so far complied. The law imposes penalties for noncompliance, but the state hasn’t actually enforced these. Nevertheless, the law has made a difference: Women used to hold just 17% of the seats on company boards in California; now they hold more than 30% of board seats.
It’s a good start, but there is a long way to go before women are meaningfully represented on corporate boards. Keep in mind that the laws only cover publicly traded companies. Most companies are still free to do whatever they want with their boards.
Given what we know about public companies, it’s a safe bet that few women sit on the boards of private companies, in California or elsewhere. It’s time for all companies, including small businesses, to take a serious look at who sits on their boards of directors and to commit to making changes.
Women are needed
Why women? And why now? From a purely economic standpoint, studies show that companies with greater gender diversity are more profitable. It should be obvious that women comprise a large segment of our society. They vote, shop, work and serve in the armed forces. Women do pretty much everything the male half of the population does.
In fact, it could be argued that they do far more than their male counterparts. Some give birth. Some serve as the primary caretakers for children and elderly relatives. Some generally run the household, providing cooking, cleaning, laundry, shopping and transportation services. In addition to all of these “jobs,” women also hold actual jobs and earn wages.
Women bring a different perspective to business issues. They provide an alternative approach to problems and a unique understanding of consumers’ needs and concerns. Remember the scene in the movie Big, in which Tom Hanks’ character — a child in a man’s body — tells toy-company management what kids really like? A company that doesn’t include women in its top ranks risks losing potentially half of its market.
Diversity is essential
The same could be said about every demographic in our society. Today’s businesses should embrace diversity, not just among rank-and-file workers, but in management and on boards of directors. Executive suites and corporate boards should reflect the consumers to whom companies market and sell their products and services.
Hollywood is an interesting microcosm of the workplace in that for too many years diversity was (and to a certain extent still is) glaringly absent. Then, seemingly out of nowhere and contrary to diversity myths, the blockbusters Black Panther and Crazy Rich Asians proved that diversity actually sells big time in Hollywood.
A 2022 resolution
When DEI is implemented at the highest levels of business, everyone benefits. Consumers know that their interests are important, and companies know that they are building a loyal and dedicated customer base.
Even small businesses can and should make this happen. Let’s make diversity an essential for entrepreneurs in 2022!