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How About a Title IX for Women on Boards?

Title IX took women off the sidelines and we are the better for it. Let's do the same for American business. We will not regret it.
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It's the year of the women at the Olympic games: Bob Costas made it official last night when he wrapped up another day of American women taking the medal stand: women now make up a slight majority of the U.S. Olympic team, and in medal count they are outperforming men in most categories. Track and field, volleyball, soccer, rowing, gymnastics, basketball, tennis and swimming -- women make headlines, command prime time coverage, and come up smiling.

Was not always thus. The change over the last decades is remarkable.

Success has a thousand fathers and Olympic coverage keeps us entertained with feel-good stories of how hard these women (and men) have worked, and the extraordinary sacrifices made by their parents, coaches and role models. But let's give credit where credit is due: the real parent is the law passed by Congress in 1972, now known as Title IX of the Educational Amendments Act, which forced colleges to create equal opportunity for women athletes.

I think we need a Title IX for Boards of Directors.

Last month, the business group CED issued an urgent plea for increasing representation of women on corporate boards. The blue chip panel wrapped its message in God, Flag, and U.S. Competitiveness. But the organization pulled its punches when it comes to getting the job done. Rather than call for a clear test, like the Title IX equivalent of equal expenditures, we are left with the hope that enlightened boards will lead the parade. Meanwhile, we are being beat to a pulp by our competitors -- France and Norway, among others, require boards to step up their game. To make their numbers, corporations in these countries have begun to poach the U.S. field of experienced, board-ready women. It's a little like American women moving from California to Rio to get a chance at beach volleyball.

Ironically, choosing members for boards, unlike sports, can be an idiosyncratic process, or even a bit mysterious, with no clear standard. Merit? There is no clear definition of what boards do, and no performance test. One curious fact borne in research is that until you have three women, you might as well not have any. But when you make the plunge, the results accrue to the bottom line.

Last week, a new study issued by Credit Suisse examined the financial performance of 2,360 companies across the globe. The upshot is that companies with women Directors outperform -- they deliver high average returns on equity, better growth and better multiples.

There is nothing in these findings that will move the ball -- the Credit Suisse report is intriguing but hardly a comprehensive study of what makes for effective governance. But what's the harm if we err on the side of moving more quickly? The CED report documents the lack of change in recent years -- why not force the issue through a real test -- like a minimum of three women per board as a listing standard? There are strong head winds in business and a need to understand complex social and market forces to stay sharp. It's common sense today: diversity of perspective in business is a competitive strength.

I was in high school when Title IX passed and in college when the rules were issued. Back then, cheerleading was the best outlet for women seeking teammates. Title IX took women off the sidelines and we are the better for it. Let's do the same for American business. We will not regret it.

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