The Week in Ethics: Seriously? No Qualified Women for European Central Bank Board

When it comes to issues like gender diversity on corporate boards and in C-Suites, we’ve seen glacial progress. It has led some countries to impose or threaten quotas.  While laws force progress, so also can the voice of a leader using his or her position and personal authority to hold others accountable.

Sharon Bowles, chairwoman of the European Parliament’s economic and monetary affairs committee used her well positioned leadership this month to postpone a hearing on a European Central Bank executive board seat because no women had been considered.

The current statistics on gender diversity in corporate boardrooms remain grim. According to Catalyst  August 2012 research on percentage of board seats held by women globally: Japan weighs in at .9 percent, Italy 3.7, Germany 11.2, France 12.7, the United Kingdom 15, and the United States 16.1. The leader is Norway at 40.1 percent, a result of imposing quotas.

For those for whom diversity isn’t a personal or corporate value, there is mounting evidence that having a diverse board makes excellent business sense.

Most recently, a report by the Credit Suisse Research Institute indicated that companies with women board members on average have a little less debt and are a little more risk averse; in the last six years, shares of companies with market capitalization of over $ 10 billion who had women board members outperformed comparable businesses with male-only boards by 26 percent worldwide. In addition, for companies with women board members, their net income growth averaged 14 percent compared to 10 percent for all-male boards.

Insisting on diversity is pretty straightforward. It is about how a leader uses his or her voice. It is leadership that shapes a culture of inclusion.

Former Alcoa chairman and CEO Paul O’Neill insisted on it. I spent an afternoon with him a few years ago asking questions that elicited stories about how he leads by values.

In his first week at the helm of Alcoa in 1987, O’Neill (who later became U.S. Treasury Secretary) said he discovered Alcoa didn’t have a policy against using clubs (social, golf etc) that didn’t have an open admission policy. He immediately created one. He got push back, he said, from those who asked if he was sure he wanted to make this one of the first things he did at Alcoa.

Among the consequences was that Alcoa co-owned, with nine other companies, a golf course that didn’t admit women or minorities. He made it clear that Alcoa could no longer belong unless the club changed its policy. Within two weeks the club did.

The CEO of the European Central Bank, or any bank or company can decide to use his or her voice and influence to insist that best practices for ensuring diversity is a practiced value in the organization– from corporate policies, to recruitment and promotion of employees, to selection of board members.

Insanity in leadership, as in life, is doing the same thing over and over that isn’t working and expecting a different outcome.

Gael O’Brien      September 8, 2012

The Week in Ethics

Gael O’Brien is also a columnist for Business Ethics Magazine. Her September  2012 column is on The Responsible Company


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