Building diverse companies has always been an HR best practice. With a proposal introduced in the California state legislature, it could be a legal requirement.
SB826, first introduced in January, would require public companies to maintain a certain gender ratio on their company board. It’s an approach that has been taken in a number of countries, including Germany and Norway. The latter’s version is the most robust, requiring boardrooms to be at least 40 percent female.
The California requirements would be based on board size. For companies with four or fewer board members, at least one must be a woman. For those with five members, two. Any higher than that and there must be at least three women. Companies would demonstrate compliance to the state by reporting on boardroom demographics starting in 2020. Noncompliance would result in a minimum fine of $100,000.
Gender Diversity Beyond the Boardroom
The lack of gender diversity on company boards is well known. A study recently found that women held only 10 percent of board seats at Fortune 500 companies. As dire as that sounds, the percentage has gone up nearly 20 percent since the 1990s. Namely’s 2018 Diversity Report found similar disparities when looking at U.S. companies’ chief executives and founders.
Bad as the status quo is, can you legislate gender diversity? We’ll leave that question to lawmakers, but it’s no secret that companies still have a long way to go. Namely’s employee data, which includes over 1,000 companies, shows that gender ratios remain highly skewed within certain industries. Men make up 60 percent or more of workers at construction, energy, sporting goods, and technology companies. At energy companies, men account for as much as 80 percent of staff.
Conversely, we also found that the reverse is true in other industries. Female professionals make up 60 percent or more of the workforce in the insurance, fashion, public relations, education, and non-profit industries.
Andy Przystanski is Content Marketing Manager at Namely, the all-in-one HR, payroll, and benefits platform built for today's employees. Connect with Andy and the Namely team on Twitter, Facebook, and LinkedIn.
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