Gender equality activists may be pleased to know that female representation got a firm shout-out in a recent California Senate bill. On Wednesday, legislators in the Golden State passed a bill which would require public companies to appoint women on their boards in California. If the bill becomes law — which was introduced by California state senators Hannah-Beth Jackson and Toni Atkins — such publicly-traded enterprises will have to appoint at least one woman to each board or they could end up facing financial punishment.
"One-fourth of California's publicly traded companies still do not have a single woman on their board, despite numerous independent studies that show companies with women on their board are more profitable and productive," state Sen. Jackson said on Wednesday, according to The Wall Street Journal. "With women comprising over half the population and making over 70 percent of purchasing decisions, their insight is critical to discussions and decisions that affect corporate culture, actions and profitability."
Vicki W. Kramer — who wrote Critical Mass On Corporate Boards, a study on women's representation in corporate governance and leadership — told CNN that the Californian legislation may face opposition from some observers. "People don't change what they've always been doing easily," Kramer said. "The way people get on boards is so much of who you know and who you're comfortable with, and who people know is still the same people they play golf with and do business deals with. I don't think without real pressure and real consequences we're going to see changes."
Whether the bill meets opposition or not, its supporters, such as Sen. Jackson and Atkins as well as social media users, have used passionate language to argue in favor of SB-826. In its text, the bill's authors said, "More women directors serving on boards of directors of publicly held corporations will boost the California economy, improve opportunities for women in the workplace, and protect California taxpayers, shareholders, and retirees, including retired California state employees and teachers whose pensions are managed by CalPERS and CalSTRS."
Proactive steps need to be taken, according to the bill's authors, or it could take four to five decades to reach gender equality in corporate boards.
Such representation could help companies during tough times, too. According to the authors of SB-826, companies with women on their boards tended to do better when hit by recession. Additionally, such companies on an average were less likely to take frequent risks. And if that wasn't enough, the authors wrote that companies with women on their boards maintained lower debt compared to other enterprises. For naysayers, these points could prove to be persuasive.
According to the bill, if it passes, companies with five board members will have to ensure that two of them are women. If it's six members, then three have to be female. And that could help companies tremendously, according to analysts. In July, CNN reported that the magic spot is in the number three. If three women are appointed to a corporate board, it's not only a boost to company profitability — it also could lead to a healthy shift in corporate culture.