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GM’s mostly female board shows it can be done

Globally, only 11 of the nearly 2,700 companies in the MSCI index can boast the same
diversity
General Motors CEO Mary Barra at the GM Orion Assembly Plant in Lake Orion, Mich., on March 22, 2019.REUTERS/File photo

By Tom Buerkle

NEW YORK (Reuters Breakingviews) - What’s good for General Motors really could be good for corporate America. The automaker led by Mary Barra is set to have a female-majority board, a rarity among major companies. Gender diversity is improving more quickly in Europe thanks to legal mandates. GM can, at least, lead the U.S. charge by example.

A number of studies have shown that diversity can improve corporate performance. Different perspectives can bring fresh ideas to old problems and spot risks that white males might not see. Despite prodding from big index fund managers BlackRock , Vanguard and State Street, though, progress has been slow.

Women held 23 per cent of directorships at the 583 U.S. companies in MSCI’s flagship global index last year, up less than two points from the previous year. And the United States didn’t place among the top 10 countries for having companies with three or more female board members. That’s universal now in Norway, France and Italy, which require that at least one-third of a company’s directors are women.

Politically, that’s a nonstarter at the federal level in the United States, making GM’s example all the more important. The company already broke one glass ceiling by naming Barra as the first female head of a major automaker five years ago, and it also now boasts Dhivya Suryadevara as its finance chief.

The company will set the boardroom milestone by subtraction rather than addition. Former chairman of the Joint Chiefs of Staff Mike Mullen and retired ConocoPhillips boss James Mulva will step down in June, reducing the board to five men and six women. With no activist waging a proxy contest, it’s virtually certain GM will join Viacom as the only American companies in the MSCI index with female majorities. Globally, only 11 of the nearly 2,700 companies in the index can boast the same.

That number is sure to grow; the question is timing. Equilar says women currently hold just under 19 per cent of director seats in Russell 3000 companies. It projects they could achieve parity with men by 2034. Naysayers often claim progress is slow because there aren’t enough qualified women to fill the jobs. GM’s example shows that’s false — and may even usefully accelerate the pace.

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