AS PREPARED FOR DELIVERY
Tuesday, September 16, 2014
CONTACT OFFICE OF PUBLIC AFFAIRS
Today, U.S. Secretary of Commerce Penny Pritzker delivered remarks at the Global Conference on Women in the Boardroom, hosted by the Johns Hopkins University’s Paul H. Nitze School of Advanced International Studies (SAIS). In her remarks, Secretary Pritzker addressed the urgent need to boost our companies’ economic competitiveness by bringing more women into corporate leadership. The SAIS Conference brought together business leaders, academic experts, advocates, and government officials to discuss best practices in promoting boardroom diversity, and to identify the most effective path forward to bringing more women into corporate leadership.
Remarks As Prepared for Delivery
Thank you, Governor John McKernan, for your kind introduction and for hosting us today at the Chamber of Commerce Foundation. I want to thank Susan Ness for her relentless advocacy on behalf of greater diversity in corporate leadership and for the invitation to address the 5th SAIS Global Conference on Women in the Boardroom.
And I want to recognize Dr. Vali Nasr, everyone at SAIS, and all of the experts and advocates here for convening this annual conference. The pressing challenge in American business of a lack of women in corporate leadership is nothing new.
Let me begin with a story about my grandfather, who was a legendary figure in Chicago. He was the son of Russian immigrants who became an entrepreneur, building a successful business empire. For my grandfather’s 80th birthday, my mother told me I could give him anything I wanted as a gift. So, at the age of 16, I decided to write him a note on my green stationery. In it, I asked my grandfather why he only talked to the boys in the family about business when I was just as interested. He replied, “Penny, I was born in 1896 – how am I supposed to know that young women are interested in business?” He then offered to teach me accounting, which he felt was foundational to understanding business.
I know that I have been very blessed in life, with a family and resources. And I was raised to embrace the statement: “to whom much is given, much is expected.” I have also been lucky to have good mentors like my grandfather, my parents, my uncle, and others throughout my career; in my case, most of my mentors have been men.
It is that platform and foundation that has allowed me, over the course or 27 years in the private sector, to start five companies, hire thousands of workers, sit on corporate boards, and help lead businesses. However, too often, I have entered the boardroom or the corporate dining room, and realized that I was the only woman there. I am sure many of you have had similar experiences. That must change – and it must change right away.
I am disappointed that the facts today paint a bleak picture:
- Female advancement in corporate America is stagnant.
- Women hold less than 5 percent of Fortune 500 CEO positions.
- Women hold less than 17 percent of board seats at Fortune 500 companies.
- And 10 percent of these companies have no women on their boards at all.
To change these facts, we must make the case about why the presence of more women in leadership is good for business. We must state firmly and clearly: diversity in corporate leadership is not solely a women’s issue. It is an issue of economic competitiveness. And the presence of more women in the boardroom and in the corporate suite is critical to companies’ creativity, performance, and ability to thrive in the 21st century.
I understand the merits of diversity from firsthand experience: different backgrounds typically mean more creativity, fresh ideas, and better outcomes.
- I know that every employee, properly empowered, will be more productive to their employer.
- I know the best way to handle a diversity of business challenges is with a team that brings a diversity of skills and perspectives.
- And therefore, I believe that embracing inclusiveness is a smart business strategy to achieve a competitive advantage.
Now, consider another set of statistics:
- Today, 73 percent of buying decisions in the United States are made by women; and
- Women control $12 trillion of $18.4 trillion in consumer spending globally.
Think of this last point another way: women control two out of every three dollars spent in the world. Let me repeat that: two out of every three dollars spent worldwide are controlled by women. Why wouldn’t you want more women in the boardroom? The more a company’s leadership reflects the reality of its stakeholders, the better it will understand its customers, employees, and shareholders.
The case for diversity does not end there. More diversity will enable businesses to attract the best talent. Data from Catalyst show that women, as a group, are increasingly better educated than men and comprise almost half of the American workforce. And it is common sense: to be globally competitive, boards must tap the most capable individuals for senior posts, regardless of gender.
More diversity will help companies expand the pool of future leaders. In the United States, women make up nearly 47 percent of workers – and any successful business should be interested in drawing talent from 100 percent of its workforce. That means businesses need to create a strong, diverse pipeline today, to create greater leadership opportunities for all employees in the future.
More diversity will improve organizational performance. Studies by McKinsey and others demonstrate that companies with gender diverse leadership outperformed their sector across a broad range of metrics, including return on equity, operating result, and stock price growth. Make no mistake: with more women at the table, outcomes improve and the whole company benefits.
Finally, more diversity can enhance corporate culture and reputation. There is a positive correlation between the number of women on a company’s board and improved governance and oversight, and greater corporate social responsibility. And those factors are key to any successful business.
We know why diversity matters. Now, the question becomes how we change the face of corporate leadership. To start, leaders must embrace a basic principle: gender diversity must become part of the corporate DNA. We should never see this effort as a zero-sum game – what is good for women is good for men and is good for the company as a whole. The private sector needs to take ownership over this challenge and the solutions. And today, I want to recommend five steps to alter the trajectory.
First, change must start at the top, which means we must engage men and senior leadership, who set the tone of their companies. Without their personal investment, the culture is unlikely to improve. Too often, I have seen male colleagues, with the best intentions, run up against a familiar challenge: they simply do not know women leaders of the next generation.
However, they do know that a fellow board member is a long-term partner, who a CEO wants to be constructive in good times and reliable in a crisis – and it is far easier to pick up the phone and tap into your own network; to elevate a person similar to yourself – which, in most cases, is another man. Put simply: corporate leaders and CEOs tend to choose people they know, that are familiar, and they can trust. And women have to figure out how to penetrate those networks and the trust barrier.
Second, boards should develop deliberate strategies for recruitment. This can be done by making diversity one of the considerations to fill board vacancies and taking gender diversity into account in succession planning. Some boards even have a minimum target for gender diversity. Overall, here is a straightforward way to begin: establish a rule that a board’s nominating committee must consider at least one woman per opening. This will not fully solve the problem, but it can be an essential step forward to the board getting to know more qualified women and expanding its network.
Third, businesses should review the impact of internal policies on female employees – including sick, family, medical, and maternity leave – and alter them where appropriate. For example, one of the biggest hurdles to retention of qualified women is their need for more flexibility at certain points in their career. I have seen this problem –and a clear solution – firsthand: in one of my businesses, a senior woman working on our team wanted to leave because she did not feel she could go to “Moms ‘n Tots” with her children once a week. When I heard this, I told her that was crazy; she should just go. I knew she would find a way to get the work done. It is that permission and flexibility that need to be part of our working lives, especially given the connectivity we all enjoy today. More recently, we saw how this can work in a major company: when Google changed its maternity leave policy, it saw the rate of women exiting the company after childbirth drop by half.
Fourth, companies should ensure equal opportunities for mentoring and professional development. I was blessed with a series of mentors who were available to me both inside and outside the office; almost all of them were men. Today, we not only need more female mentors in corporate America, but we also need leaders to be more creative and more inclusive in offering new chances for mentorship to their employees. We need to give all workers, women and men, the opening to show up – because these young people can learn things just by being present.
Last, it is time for companies to measure and disclose their diversity statistics – because we cannot address the problem unless we fully understand it. In Silicon Valley, we have seen growing momentum on this front, with leading enterprises like Twitter, Apple, Facebook, and dozens more measuring and publishing their numbers. We need to create a safe environment for more companies to follow suit, and we should applaud these tech titans for taking these initial steps. But we should not let them off the hook just yet: disclosure must be coupled with action. The face of Silicon Valley – and of corporate America as a whole – must change.
As I said at the outset, the challenge of gender diversity in corporate America is not new. I told the story about changing the view of my grandfather earlier, but that was not the last time I encountered and experienced the full scope of this problem.
When I was about 30 years old and still relatively new to the business world, I was invited to join the top 100 real estate industry leaders at an annual conference at a ski resort. I remember being excited to be included, but terrified to walk in the room – because I was one of only two women. When I assumed the position as Secretary of Commerce last year, I was struck by the large number of talented, powerful women in leadership roles across government. In this regard, I believe the private sector has a lot to learn from its counterparts in the public sector.
Many of you are standing on the front lines in addressing this challenge. In some respects, you have seen the boardroom change for the better; yet you know that we are still a long way from equality of opportunity in corporate leadership.
Today, I will make this personal commitment to you: in my role as Secretary of Commerce, I will do everything I can to highlight the issue of women in corporate leadership, tout solutions, and advance diversity. I will continue to call on leaders to act – in government and in business. I will highlight companies that set the example and recruit more women to join their boards. And I will reiterate the message wherever I go: by embracing diversity, corporations make themselves – and our nation – more competitive.
As President Obama has said, “When women succeed, America succeeds.” To that, I would add: when women have a voice in corporate leadership, American companies thrive and the American economy prospers. When women have a seat in the boardroom, American business succeeds.
Thank you all for your leadership.