August 15th, 2012 | 6:00 am

Women in the Boardroom: Moving Critical Mass Forward

filed under Featured, Industry Leaders

Business People Applauding In a MeetingBy Melissa J. Anderson (New York City)

The first time I heard the phrase “critical mass,” it had nothing to do with boardroom gender equality. I was a student at the College of William and Mary, and Critical Mass was an event where cyclists would attempt to clog the streets of my tiny college town to kindly encourage automobile drivers to share the road. While I generally supported my two-wheeled classmates, I wasn’t altogether clear on their event’s apparent link to nuclear physics. I later learned they were inspired by much larger demonstrations in San Francisco, which, in turn, were inspired by a 1992 documentary on bicycle transportation around the world.

In an interview in the film, American bicycle designer George Bliss describes his observations of traffic in China, where cyclists had an unspoken method of crossing busy intersections, which often had no traffic signals. More and more cyclists would collect along one side of the intersection, until their group reached a certain understood size (“critical mass”) when it was safe to cross the road together, as automobile traffic would have to stop and wait for the cyclists to pass.

We can draw inspiration from the critical mass metaphor for gender diversity as well. As the number of women in boardrooms and on executive committees increases, there reaches a point where women feel safe to speak up, get enthusiastic, take risks, and make waves – without being seen as a threat to the status quo, as overemotional, as a risky hire, or as a token place holder. Critical mass is the notion of safety in numbers.

And “safety in numbers” means better business. Recent research by Catalyst suggests that companies with three or more women directors outperform those with all-male boards. “When you reach a certain critical mass, the board starts to behave differently,” said Joe Keefe, President and CEO of PAX World Mutual Funds and a founder of the Thirty Percent Coalition. “Conversations are richer, decisions improve, women bring different perspectives to the table, and performance improves.”

Indeed, a new Credit Suisse study of almost 2,400 companies suggests that boardroom diversity improves corporate performance. In fact, companies with more than one woman on their board performed 26% better over the past 6 years than those with no female directors.

Imagine the impact on gender diversity if the conversation around critical mass were one that appealed to both women and companies? The Thirty Percent Coalition intends to do just that.

Where Did Critical Mass Come From?

Much of the research on this sense of critical mass is settled on 30% or three out of ten (since ten is roughly the size of most boards of directors in the US). One of the earliest notions of critical mass was described by Rosabeth Moss Kanter, the Ernest L. Arbuckle Professorship at Harvard Business School, although she didn’t use the term “critical mass” specifically.

In her groundbreaking 1977 article “Some Effects of Proportions on Group Life: Skewed Sex Ratios and Responses to Token Women,” Kanter proposes that as the percentage of women in a group increases (past about 35%, she suggests), the women can, first of all, form coalitions, support one another and “affect the culture of the group.” Secondly, she says, at around the 65:35 ratio, women are perceived as “individuals differentiated from each other,” rather than mere representatives of the stereotypical female.

Based on her research, she says that two women aren’t usually enough to break through the notion of perceived tokenism on teams, and more are necessary to bring women out of perceived token positions and into true leadership.

In a 2008 article [PDF] in the journal Political Studies, Sarah Childs, University of Bristol, and Mona Lena Krook, Washington University in St. Louis, say that it wasn’t until the ‘80s that the term “critical mass” began to enter into common parlance in reference to gender – particularly by women in politics.

It may be a bit depressing, actually, that we’ve been discussing the importance of critical mass since the ‘80s, and yet the percentage of women in both Congress and corporate leadership has barely changed, hovering between 15% and 20%. In fact, according to Google’s Ngram Viewer, the usage of the term “critical mass” in books has dropped off significantly since the mid-2000s. What can we do to energize the conversation?

Thirty Percent Coalition

Fortunately, a new group has organized to ensure the idea of critical mass is front and center, and it intends to speak in terms that companies will listen to. The Thirty Percent Coalition, a group of advocates, corporate leaders, institutional investors, and state treasurers, is working to encourage companies to appoint more women board members, with the goal of reaching 30% women by 2015.

Charlotte Laurent-Ottomane, leader of the group, explained that the coalition came together last November, wanting to do something to move gender diversity forward. “With all the action, events, and talking, little was being accomplished,” she said. “The 16% was not moving.”

Within the space of a few hours, the group was formed and created its 30% goal and timeline. “It’s an aggressive goal,” she noted, but many think it’s achievable. In fact, she continued, “Our membership has grown by 60% since that initial meeting.”

Keefe said that the focus on shareholders will make a difference – the group has already contacted each of the 41 companies on the S&P 500 with no female board members to encourage them to hire more. “What I think is unique here is that this is the first time a lot of major women’s organizations have gotten together with major institutional investors,” he said.

“There’s been a lot of work on the supply side,” Keefe explained, “like making sure qualified women are visible to boards. But the fact of the matter is that the needle hasn’t moved for many years. It’s time to tackle the demand side. All the research says that your company will perform better with more diversity on the board and in senior management.  We’re approaching a tipping point on this issue.”

Laurent-Ottomane added, “The value proposition we’re bringing is that together we can be a voice more powerful than one voice by itself.”

And, Keefe said, now that there is a growing body of research that shows gender diversity pays off, investors are beginning to get more involved. “Institutional investors have a fiduciary duty to clients to achieve healthy financial returns,” he noted. Since the research shows that boardroom diversity pays off, they may have a responsibility to push for it.

The group said they’ve gotten eight responses so far – which doesn’t seem like many, they say, but is a lot better than previous attempts. “The responses have been uniformly positive. Before they would be a polite ‘thank you’ or they would be defensive. Now, they’re more proactive, asking what they can do. It’s a shift in the issue,” Keefe said.

Also, the group is working to be collaborative, Laurent-Ottomane pointed out. “We’re not being perceived as aggressive or bothersome, but that we have a valid point. Doors are opening for us and they see that [gender equality] is mutually beneficial.”

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  1. Cindy Burrell

    Great article and very timely! My company, Diversity in Boardrooms, is a Thirty Percent Coalition Member.

    With substantial research that proves that “Diversity is good business” at the board level, companies are starting to pay attention. We all need to keep this issue at the forefront to improve the performance –and diversity at the top–of America’s companies.

    Cindy Burrell
    President, Diversity in Boardrooms
    847-807-5334