This year, Silicon Valley Bank researchers found that 63% of startups have no women on their board of directors, and 47% have no women in leadership positions at all. These are not great statistics, and research shows that female-founded companies generate more revenue than startups that only have men on their founding teams.
These numbers beg the question: If gender diversity won’t come to the corporate world on its own, should governments be taking legislative steps to mandate gender diversity?
In some states and countries, the answer is a resounding “yes.” California requires any publicly traded company incorporated in the state to have a female director by 2019. Italy, France, and Norway have all imposed quotas on the number of women that a company must have on its board.
But these laws and regulations are not without controversy. Men and women alike have been debating their value: Are governments taking a step in the right direction by addressing the issue? Or are they trying to enforce outcomes with a Band-Aid solution, without addressing the root causes of the diversity gap? If we don’t have these laws, what can we do to create change ourselves?
I’ve spoken with several women in corporate leadership to get their opinions on these complicated issues and their potential solutions. Here’s what they have to say.
Quotas don’t always fix the root cause of the diversity gap
Statistics prove over and over again that women leadership positively impacts a company’s bottom line. Including more women on boards also increases firm innovation and board effectiveness. But unfortunately, we have yet to figure out how to achieve diversity on a large scale. While some female founders believe that regulation is indeed the answer to change, others argue that these laws only solve symptoms and not the root causes of the issue.
“In my view, it’s the wrong approach,” said Alexandra Veidner, CEO of Women Startup Competition. “Boards should include the most suitable people. Regulations, social laws, and the corporate environments should support and help having more experienced senior female leaders make it to the board level.”
But Catherine Dahl, CEO of Beanworks, believes that we need legislation to achieve gender diversity in a faster time frame. “The problem will self-correct over time, but at the current pace, it’s taking too long,” Dahl said. “The legislation put in place in Norway in 2003 that required company boards to be comprised of 40% women is a prime example of how such legislation can produce positive change. Since Norway’s law went into effect, 11 other countries have enacted similar legislation, which I believe is progress.”
It starts at the top
Many women entrepreneurs, however, agree that solving the gender leadership gap involves tackling the root cause. To do this successfully, companies need to make it a top-down initiative.
“It’s one thing to mandate or recommend representation from certain groups of people who historically have been excluded from the board level or C-Suite roles,” said Riana Patel, Strategy Committee member of Ada’s List, a community built to support women working in the technology industry. “It’s a much more difficult thing to address the systemic inequality that led to that effect, as it permeates much more than the business world—it’s broader and more complex, and with that comes a lot of polarization.”
Akhila Satish, who serves on several corporate boards across the healthcare and nonprofit sectors, believes that one of the biggest problems facing women seeking leadership positions is the lack of visibility into boards’ selection processes. “Most of the time, selection is network-driven and, critically, a key determinant is if you’ve already served on a board. This can lead to a vicious cycle, because you can’t sit on a board if no one gives you an opportunity to sit on one first.”
The same problem goes for women decision-makers in startups and VCs: Only 9% of women are decision-makers at U.S. VC firms, according to an Axios analysis. And while there’s no proven correlation between the majority-male VC firms and lack of female startup funding, it’s enough to make one wonder how investments in female startups would be impacted if VCs themselves were more gender diverse.
The Harvard Business School offered one explanation: Homophily. This is the concept of people living and working in homogenous bubbles. Because the majority of VCs are white men, they tend to give money to entrepreneurs who look and sound like them. Homophily can also have a similar effect on career choices: If girls don’t know or interact with female entrepreneurs, they are less likely to see themselves as one.
How to take more significant steps toward gender diversity
Many women believe that change must begin not only at the board level but at the C-Suite and middle-management levels.
“The technology industry is not the most inviting place for women, even in 2019. Startups are in the unique position to focus on gender diversity from the start,” said Dahl. “It helps to have female leadership at the C-Suite level. Otherwise, focusing hiring practices around diversity can help women feel more comfortable in these work environments. This may involve ensuring there are female managers in various departments, or striving for gender equality among employees.”
It’s clear that all of us need to take a hard look at how we can address the underlying issues of gender diversity and how we can solve them ourselves. To make any real headway, we need to start early—and take a long, hard at look at the gender stereotypes that we might be perpetuating (whether knowingly or unknowingly.)
It’s this simple: The companies that make it a priority going forward will outperform the companies that don’t. While the implementation of mandates and resolutions are signs of progress, there is still much work for us to do going forward. It’s on all of us to do the hard work. At the end of the day, improving gender diversity benefits everyone.