No Seat at the Table

How Corporate Governance and Law Keep Women Out of the Boardroom

Douglas M. Branson

• Publisher: NYU Press
• Year: 2006
• Print ISBN: 9780814791059
• eBook ISBN: 9780814789643
• Topic: Law
• Subtopic: Corporate Law
• Index: Law

Women are completing MBA and Law degrees in record high numbers, but their struggle to attain director positions in corporate America continues. Although explanations for this disconnect abound, neither career counselors nor scholars have paid enough attention to the role that corporate governance plays in maintaining the gender gap in America's executive quarters.
Mining corporate governance models applied at Fortune 500 companies, hundreds of Title VII discrimination cases, and proxy statements, Douglas M. Branson suggests that women have been ill-advised by experts, who tend to teach females how to act like their male, executive counterparts. Instead, women who aspire to the boardroom should focus on the decision-making processes nominating committees—usually dominated by white men—employ when voting on membership.
Filled with real-life cases, No Seat at the Table opens the closed doors of the boardroom and reveals the dynamics of the corporate governance process and the double standards that often characterize it. Based on empirical evidence, Branson concludes that women have to follow different paths than men in order to gain CEO status, and as such, encourages women to make flexible, conscious, and often frequent shifts in their professional behaviors and work ethics as they climb the corporate ladder.

PART I

Glass Ceilings, Floors, and Walls

1

Restraints on Advancement

It always happens at [conferences of businesswomen]. I speak, I listen, I hear the same words over and over—”baffled,” “angry,” “lost,” “trapped,” “stuck,” “overwhelmed”—as each woman tells me she feels that she’s gotten only so far in business and can’t get any further.

—CNN executive and author Gail Evans, in Play like a Man, Win like a Woman (2000).¹

Donna Zahorik taught psychology at Cornell University in upstate New York. After several years of teaching and publishing, she applied for tenure but was denied. A colleague had introduced into faculty deliberations comments that Zahorik was “too feminine,” “too unassuming, unaggressive, unassertive, and not highly motivated for vigorous interpersonal competition.” The courts denied her claim of discrimination, finding that the comments related not to her gender but to the effect of Professor’s Zahorik’s personality on students.²

Sue Margolis, an engineer/manager at Tektronix, Inc., in Portland, Oregon, had fifteen years’ experience. Performance reviews reported “results consistently met and sometimes exceed expectations.” In a mini-reduction in force, Tektronix senior managers telescoped eight managerial jobs into seven, terminating the only woman manager, Margolis. Her supervisor rarely would recognize her in meetings. He told Margolis that he and others considered her to be “pushy” and “aggressive.” “Sexual stereotyping … can serve as evidence that gender played an impermissible role in the employer’s [adverse] decision,” noted the federal appellate court.³

Employment of stereotypes, in which appearances rather than actual achievements matter, materially aids in keeping the glass ceiling in place. Senior managers rate one woman, such as Zahorik, as lacking in assertiveness, marking her low on “leadership potential.” Managers rate another woman, such as Margolis, as “too pushy” and “overly aggressive,” marking her low on “interpersonal skills.” Neither woman advances and, in fact, both watch in horror as their careers shatter before their eyes. The glass ceiling endures.

Numbers

The glass ceiling is firmly in place. By 2005, only eleven women had become directors of Fortune 500 corporations by climbing the ladder at the corporation that employs them. Many of the rest bumped into the glass ceiling somewhere in their climb up the ladder.

Combined, the academic, not-for-profit, and governmental sectors provide the largest percentage of women directors, 37.2 percent of the 480 women holding board seats in 2000, as chapter 7 elaborates. In organizations in these sectors, the glass ceiling does not exist, or is more permeable. From them, some women then sidestep onto the boards of major corporations.

Many social psychologists, career counselors, and others who write “how-to” advice books for women in business assert that a glass ceiling exists. “Smashing the Glass Ceiling” or “Breaking the Glass Ceiling” are recurring titles.⁴

In May 2004, the Boeing Company paid $72.5 million in settlement of a class action brought by women who alleged that the company paid them less than men and promoted men more quickly to higher level positions. In July 2004, Morgan Stanley paid $54 million in settling a case that made similar allegations. Previously, Home Depot had paid $104 million and, in 2002, American Express had paid $42 million in settlement of sex discrimination claims.⁵ Similar class actions are pending against other large corporations. Although women hold almost half of lower-level management positions overall, they account for only 8 percent of executive vice-presidents and above at Fortune 500 companies.⁶

Thus, the evidence supports the view that women in business “face a ‘glass ceiling’ that allows them to see, but not to obtain, the most prestigious jobs” within corporations.⁷

The Glass Floor

A related concept is the “glass floor.” When they fall out of favor, or are actually demoted, men in the ranks of higher management frequently do not fall far. They rebound off the glass floor. Senior managers retain the underperforming manager in some nook or cranny within the executive suites from which the fallen executive crawls back to respectability and another senior management position. Time after time this occurs, as the court cases in the next chapter demonstrate.

A “glass floor” also exists for, and protects, CEOs. Much like major league baseball managers who, no matter how badly they perform, seem always to get rehired, so, too, have male CEOs who have been forced out found positions at other corporations. William Agee destroyed Bendix Corporation by making an ill-advised takeover bid for Martin Marietta. After the Bendix board deposed him, Agee found employment as CEO at Morrison Knudsen, the international engineering and construction firm, which Agee proceeded to mismanage into bankruptcy. The labor unions and employee-owners of UAL Corp., United Airlines’ holding company, forced Stephen Wolf out as CEO. He left UAL, only to resurface as chairman and CEO at U.S. Airways. Many other badly performing CEOs nonetheless rebound off the glass floor.

Pundits hypothesize that female CEOs who have lost their high offices will bounce back up as well, but so far they have not. Although the numbers have been small, the deposed women CEOs (Jill Barad at Mattel Toy, Carleton Fiorina at Hewlett Packard, Linda Wachner at Warnaco Group) have been high profile. They have yet to reappear in other organizations.

The glass floor’s existence, and the “pronounced trend” to replace CEOs with CEOs, of which it is a part, affects women in business if only because the phenomenon of men rebounding within the clubby ranks of upper management results in fewer openings for women to occupy and in which they could prove themselves.⁸

CEOs’ and Economists’ Views

Three-fourths of male chief executive officers of major corporations aver that no such thing as the glass ceiling exists, or so they opined to the Federal Glass Ceiling Commission in the mid-1990s.⁹ According to Catalyst, over 80 percent of the CEOs they interviewed had an alternative explanation about why women have not advanced to the very top in their organizations, namely, women’s lack of experience in line positions and with profit-and-loss responsibility.¹⁰ Of course, CEOs themselves must bear a portion of the responsibility for women not being given line positions in which they could gain the requisite experience.

CEOs with those views find succor in the claims made by some that the glass ceiling, if it did once exist, is “cracking.”¹¹ They find further succor in the work of conservative economists who have spawned a “human capital” literature.

Economists assert two propositions. One is that women have disadvantageous workforce positions because they “self-select” into jobs that require less education and lower levels of skill.¹²

The other is that labor markets, including markets for managers, and product markets are competitive. Gender discrimination, and the glass ceiling that is a component of it, does not exist because it could not survive in a competitive labor market. It is inefficient to exclude managers on the basis of sex. Firms that did so would not survive in product market, the Darwinian, dog-eat-dog world of business competition.

Instead women do not rise to the very top for other reasons: they self-select; lack line experience; allow themselves to get “stuck” in dead-end positions or positions with short promotion ladders; prefer to go onto the “mommy track” to raise children, and so on.¹³

Professor Richard Delgado has disputed the efficacy of labor markets. Not efficiency alone but baser motives, including destructive and/or oppressive tendencies, drive markets as well. Free markets are not likely to eradicate unfair discrimination. In fact, given the play for revenge, spite, prejudice, and the like to operate, the free nature of labor markets may aid in perpetuation of discrimination.¹⁴

Many women in business agree with a vice-president of NOW: “Women have been climbing the corporate ladder for thirty years now. We’re well groomed for the executive suites, but too often we’re all dressed up with no place to go.”¹⁵ “Everybody expected a lot more progress by now,” echoed Irene Lang, president of Catalyst, Inc., in late 2004. “There are so many women in the work place. You just assumed this [cracking the glass ceiling] was a 20^th-century battle, and by the 21^st-century it would be over.”¹⁶

Title VII Gender Discrimination Court Cases

Each year, in the federal courts of the United States, approximately twenty-five thousand women file claims of gender discrimination under Title VII of the Civil Rights Act of 1964.¹⁷ Many of those cases involve out-and-out sexual harassment in the workplace. They have only tangential relevance, at best, to the glass ceiling and the glass floor. Further evidence of the glass ceiling’s existence does come from a subset of those court cases in which women have bumped up against the glass ceiling, come away with contusions, and then sought redress in the courts. The cases are not plentiful, however, for at least three reasons.

One is that the procedure is cumbersome. Under federal law a woman, or any job-discrimination victim, must first make a complaint to the Equal Employment Opportunity Commission (EEOC), which only after an investigation issues a “notice of a right to sue” under the Civil Rights Act of 1964. Then, and only then, can plaintiff proceed to court, where she awaits further delays.

Second is that court cases are notoriously difficult. There is the further delay, which can mount up to three or four years, as understaffed federal district courts must give precedence to criminal cases. Even if a woman wins her court case at trial, in a Title VII case, on appeal a defendant corporation is seven times more likely than a plaintiff to overturn the result in the court below. Of any category of case filed in federal courts, the “most dramatic gap,” by far, between plaintiffs and defendant corporations exists in employment discrimination cases, as an exhaustive recent study by law professors Kevin Claremont and Theodore Eisenberg at Cornell University demonstrates.¹⁸

The nature of discrimination cases themselves makes them “difficult to win.” According to Stanford University law professor Deborah Rhode,

“Disparate treatment” cases require proof that the employer intentionally treated similarly qualified women and men differently, and that the woman otherwise would have obtained particular jobs or benefits. For example, a female manager might attempt to demonstrate that she was left out of informal business networks and that she lost a promotion to a male colleague with lower performance evaluations….¹⁹

Another principal category of court case is the “disparate impact” case, which requires “[p]roof that practices having an adverse effect on women are not job related and are not justified by business necessity. For example, a female applicant might show that qualifying tests disproportionately excluded women and demanded more physical strength than the position in fact required.”

The cases require expert witnesses and have other costly features that quickly run into multiple tens of thousands of dollars that the plaintiff herself may have to advance because of ethical proscriptions on attorneys paying such costs themselves.

Third is simply that, at any level of management, such an EEOC complaint or court case constitutes professional suicide. That is doubly true at the upper levels of management with which this book deals. There are simply no court cases at that level because any aspiring woman who brought one would be labeled a troublemaker, blackballed, excluded for life from the corporate world.

For those reasons (cumbersome procedures, difficulty, expenses, adverse effects on jobs and careers), accounts of bumping up against the glass ceiling are underreported, at least in judges’ opinions.²⁰ Accounts of bumping up against the ceiling once a woman has climbed a good way up the corporate ladder are rarer still, or simply do not exist.

Stereotypes

One element of the glass ceiling that results in wage discrepancies and other forms of disparate treatment before the fact, and may make discrimination cases more difficult to win after the fact, is the “secondary earner bias” under which women are stereotyped. Many men in power view married women’s earnings as “somehow coming after that of her husband.”²¹ As they move up through the ranks, women may be perceived as not being as needy as men, who often, in the reverse of the stereotype, are viewed as the primary breadwinner for their households, whether that is true or not. Women may, therefore, consciously or subconsciously, be graded lower in the evaluation process leading up to a possible promotion or elevation to fill a higher-level vacancy.

Management scholars find that the “male breadwinner model” has been “outdated” for a number of years.²² The AFL-CIO reports that 62 percent of working women contribute half, or more, of their households’ income.²³

Although it should have been relegated to the trash heap, the secondary-earner bias continues to operate, at all levels. One classic study of blue-collar women found that “[r]egardless of a woman’s real contribution to the family, the husband is defined as the main breadwinner.” The women in the study realized “that their husband’s sense of manhood is contingent on the shared belief that his paycheck is ‘supporting the family,’ so [the] women define their work as ‘helping their husbands.’”²⁴

Subjective Promotion Processes

Another reason for fewer court cases is that as job candidates compete for high level positions, the process becomes more subjective: “[w]hich job candidates have the most impressive leadership skills, artistic creativity, or intellectual promise is often open to dispute. Because subjective criteria are particularly significant in allocating upper level positions, women are particularly likely to be under represented at the top,” Professor Deborah Rhode has found.²⁵ Subjective criteria leave more room for unconscious prejudices to operate.

“Criteria for ‘good decisions’ or good management performance get less certain closer to the top. The connection between an upper management decision and a factor such as production efficiency several layers below or gross sales is indirect, if it is even apparent.”²⁶ One executive termed this the “Law of Inverse Certainty: the more important the management decision, the less precise the tools to deal with it … and the longer it will take before anyone knows it was right.” As a consequence of the subjective nature of the evaluation of management skills and performance, at the top corporate promotion processes “put trust and homogeneity at a premium.” This accounts for the social homogeneity of business leaders for much of the twentieth century: “largely white, Protestant men from elite schools,” concludes Harvard sociologist Rosabeth Moss Kanter.²⁷

From a litigation perspective, it is much more difficult to challenge a “one off” selection for a high management position, laden as it is with subjective evaluation. There is no dependable yardstick. With sales persons or plant managers, ev...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Acknowledgments
• Introduction
• Part I: Glass Ceilings, Floors, and Walls
• Part II: Climbing the Corporate Ladder: Myths and Realities
• Part III: Corporate Governance and the Keeper of the Keys to the Boardroom
• Part IV: Getting a Seat at the Boardroom Table
• Appendix A: Fortune 500 Corporations with No Women Directors
• Appendix B: Fortune 500 Corporations with a Single Woman Director
• Notes
• Bibliography
• Index