In September 2018, California became the first state to enact a law requiring publicly traded companies with principal executive offices in their state to have at least one woman on the board of directors by the end of 2019. The law is the first of its kind on either the state or federal level mandating female representation in corporate boardrooms. Since its introduction, the law has faced criticism.
Champions of the law assert that it is a critical next step in accelerating the elevation of women into corporate leadership positions. Critics assert that it is, at best, a confusing and burdensome law that merely checks the box on diversity and that, at worst, it is unconstitutional and likely to have unintended consequences on corporate diversity efforts overall.
While California is the first in the United States to attempt to regulate gender parity in the boardroom, a handful of states have adopted non-binding resolutions that try to achieve the same purpose. Countries outside the United States, that do not contend with the same equal-protection limitations, including Norway, France, and Germany, have found success in regulating the representation of women on corporate boards.
The case for diversity in the boardroom is clear. Companies are financially stronger, more innovative, and better attuned to the needs of their consumer base when they have a diverse set of interests represented in the organization and in the boardroom. The “why” is debated far less than the “how.” Yet, despite widespread acknowledgement that diversity at all levels of management benefits organizations, businesses in the United States still struggle to implement diversity in their boardrooms.
Achieving boardroom diversity in ways that are authentically embraced by corporations, as well as by their leaders, employees, and shareholders, is complicated. Legislation, like the recently passed California law, is not the only answer, although it may be a good first step. The long-term solution, however, is much broader and more holistic.
United States corporations, including those in California and Minnesota, must proactively provide leadership training, mentorship, and sponsorship to advance women and other diverse candidates into their leadership ranks in ways that authentically and sustainably recognize the contributions of women and other diverse candidates in those spaces. United States corporations must also be creative and innovative in acknowledging their own shortcomings and eliminating the barriers that women and diverse candidates experience in accessing those training, mentorship, and sponsorship opportunities.