As a high school student, I got a job as a “warm body.” That was the job title, legit. It was at the Rutgers University Tandem Van de Graaf Accelerator, a nuclear reactor of sorts, the law required there be someone there to mind it at all times. I got the lobster shift. My job duties were threefold: be there. Stay awake. Keep the liquid nitrogen canisters full so it didn’t melt down.
It was a great job, really. if you’ve never played with liquid nitrogen, you should. For a dumb high school kid, it was great fun. The rest of my time was spent hitting a tennis ball against the nuclear pile, reading magazines and watching TV. They gave me a radiation badge to find out after the fact whether I would glow in the dark. And they paid me to do this.
California has a new law requiring corporate boards to fill their quota of women. Maybe they have binders. Maybe they’ll find them from the phone book. But the law will require women on the board, and so women they will find the requisite numbers and put them on the board. Their qualifications are less than what was expected of me in high school. They need only have the correct genitalia, unless merely identifying as a woman will do, in which case they won’t even need that.
California recently passed Senate Bill 826, a law requiring all publicly held corporations based in the state to have a minimum number of women on their boards. A corporation with four or fewer directors must have at least one woman on its board. If the board has five members, at least two women must be on it. If it has six or more, there must be at least three women. In his official signing statement, California Governor Jerry Brown praised the law, but also noted that “serious legal concerns have been raised” and that “these potential flaws may… prove fatal to its ultimate implementation.” Governor Brown is right to worry. The law is clearly unconstitutional under current Supreme Court precedent. If it survives the nearly inevitable legal challenges, it is also likely to cause more harm than good.
The rosy description of this law’s purpose is to overcome the “good old boys” network and compel companies to open their boards to women.
Maybe there’s been a woman or two on boards in the last decade or so, but there hasn’t been a push by the C-level poo-bahs to make concerted efforts toward diversity. Female board representation is a little better now, but this legislative kick in the pants may be what’s needed.
But even those who will rationalize anything know that this law is, at minimum, likely to be held unconstitutional, as it mandates facial gender quotas, as well as a variety of lesser legal issues, like the Dormant Commerce Clause. While laws that mandate sex discrimination are subject only to intermediate scrutiny on the federal level, they’re subject to strict scrutiny in California. Even when they benefit women. It’s doubtful this law can satisfy any scrutiny, or satisfy anyone for that matter.
If women get a certain number of board seats, why not gays? And African Americans? And transgender people? And the disabled. And . . . well, everybody? I don’t mean this sarcastically; if they’re going to micromanage identities on corporate boards, they’ve got legitimate gripes. Why women but not them? Are they not underrepresented as well? Are they not the targets of invidious discrimination? They’re not members of the old boys club either. Nor am I, for that matter. What about me?
There are arguments to be made that discrimination against women, not to mention others, is demonstrated by the lack of female corporate board members. There are arguments to be made that it’s not so simple, that it will take time for women to gain the experience, climb the corporate ladder, find themselves in a position where corporate boards want them because they bring talents to boards, not necessarily because they’re women but because they’re good at what they do. But waiting for discrimination to collapse under its own weight, and appreciation of their skills to organically spread, won’t change things quickly enough, and so California’s plan is to force the issue.
A New York Times columnist says that this new California law may be a perfect example of “be careful what you will for,” aka “the law of unintended consequences.” He raises some valid concerns about the efficacy of the law and whether it will have the desired impact, assuming that it passes constitutional muster. He looks at it as one step forward, but two back and thinks that investors, big and small, can use their influence to get corporate boards to diversify. (And I still believe in the tooth fairy.)
Snarky denials are always fun, but aren’t actually arguments. The narrative is that adding women to boards increases diversity, which is an unquestioned virtue to advocates. As it turns out, it’s not.
Finally, there is a practical issue: When a Norwegian law that forced corporate boards to have at least 40 percent female representation took effect in 2006, performance suffered because of the abrupt change in the composition of the boards, according to a 2010 study by the University of Michigan.
“The quota led to younger and less experienced boards,” the authors concluded, “and a deterioration in operating performance.” The study suggested that performance had suffered not as a result of gender, but more because of the upheaval that boards experienced in an effort to comply with the law. That could be a fair cost for accelerating progress, but some investors may struggle to appreciate that point.
The problem isn’t that board members are female, but that they’re not good board members. If there are, as advocates contend, binders full of women fully capable of serving on corporate boards, this wouldn’t be the case, again not because they’re women but because they’re competent.
But when a quota is imposed based on a characteristic bearing no connection to the skills needed for the position, then the slots will get filled with warm bodies. And if it turns out that putting warm female bodies on boards causes a deterioration in operating performance, there is no snark that will add a few zeroes to the bottom line.