Gender Balance is an Investor Issue Too

People get awfully excited about quotas. So do countries. After Norway's lead in 2008, gender quotas on corporate boards have been rolling out in a whole series of countries: Spain, then France, the Netherlands, even Italy voted them in. EU Commissioner Viviane Reding is pushing hard, and if she has her say, and if companies continue to make so little progress unassisted, quotas are likely to become an EU reality within the next few years.

Managers in Anglo-Saxon countries hate the idea. And perhaps there's a better alternative: harness the power of investors.

New York City's public pension fund has just nudged Goldman Sachs and MetLife to disclose their gender balance stats. To quote John Liu, the city's comptroller: "without quantitative disclosure, shareholders have no way tog evaluate the effectiveness of these efforts."

But very few companies actually publish their gender statistics, and certainly not anything more explicit than an aggregate 'women in management' number (which means they can all be first line managers). They much prefer publishing the wonderful initiatives they undertake in support of women in leadership, rather than the actual result of their efforts on the gender balance at the three levels below the CEO.

The reason, I'm afraid, is simple: the statistics reflect the constant and largely unconscious preference and promotion of men over women. The Wall Street Journal recently reported how the 53% F/ 47% M gender balance at graduate entry level was followed by a drop to 35%F/ 65% M at Director level, which went down further to 24% F/ 76% M at Senior VP, and ended up at 19% F/ 81% M in the C-suite.

This is no glass ceiling. It's a gender preference that starts relatively early in careers — and then continues. And this reality is not visible enough, nor even acknowledged inside companies. For most managers, there are 'more' women than there used to be, so all is improving naturally, right?

But if companies actually believed all the data showing a correlation between gender balance and financial performance, we shouldn't really need quotas at this point. That, of course, is the rub. They don't really believe it, or buy it. That is the work that still remains to be done. And one of the quickest ways to get there would be getting financial investors — like the New York pension fund — to convince them that THEY think it's important.

Reporting the reality should be enough to let investors and stakeholders decide whether they buy the correlation argument. And that's a lot easier to legislate — and a lot less controversial — than quotas.