Women on the Board

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Gender diversity is good for business. A global study by the Petersen Institute/EY across 22,000 publicly traded companies and 91 countries confirms that adding women to the corporate boardroom and the C-suite increases profits. A company which transitions from having no women to a 30% share of women “is associated with a one-percentage point increase in net margin – which translates to a 15% increase in profitability for a typical firm.”

Transitioning from no women to a 30% share of women increases profits by 15%.

According to Credit Suisse, companies with women on their board have outperformed those with only men by 3.5% on a compound annual basis since 2005. They’ve also shown better sales growth, higher cash flow returns on investment, and less leverage.

As female participation increased in senior management, so did performance, providing more quantitative evidence of the enhanced decision-making and governance that diversity enables within an organization.” – Credit Suisse

Experts theorize that having women in leadership roles increases the diversity of skills, and helps to recruit, promote, and retain talent – which leads to better financial performance. Having three or more women changes boardroom dynamics substantially, and is needed to create a “critical mass” of women which “enhances the likelihood that women’s voices and ideas are heard.” Despite this, on a global basis, only 15% of firms have women on their boards, and only 20% of those firms have three or more women on their boards.

Having 3 or more women changes boardroom dynamics substantially and “enhances the likelihood that women’s voices and ideas are heard.” – Catalyst

Tell that to embattled Uber CEO Travis Kalanick. Had he the good fortune (and good sense) to hire a COO (and board member) like Sheryl Sandberg as his #2, Uber may have steered clear of their boy’s club sexism scandals and controversies, and their talent may have stayed and grown in their roles. (It’s noteworthy that Uber ranks lowest among its Silicon Valley peers for women – at just 15% of its workforce. Further, until a year ago Uber’s board was all-male. Uber just tapped Huffington Post co-founder and editor-in-chief Ariana Huffington as the first woman to join their board in April 2016, as they continued to suffer PR troubles and missteps.)

“If some firms discriminate against talented, hardworking, effective women, then they will be outperformed by rivals that don’t discriminate.” – Marcus Noland, EVP, Petersen Institute

Fortune found that the number of women in CEO positions in America’s Fortune 500 decreased from 24 to 21 companies between 2014 and 2015, and that only 4.2% of America’s Fortune 500 companies had women in CEO positions in 2015. When it comes to board seats, the U.S. lags behind Europe – just 20% of S&P board seats are held by women.

While the use of quotas to increase diversity is a controversial subject in the U.S., Europe introduced quotas for female board members, and it seems to be working. Norway was the first country to introduce quotas in 2003, requiring companies to fill at least 40% of their board seats with women. Now, over 46% of Norway’s board members are women. In Iceland, it’s 44%, in France 46%, and in Germany 26%.

“The goal of quotas is to get enough women in board positions that they help steer the hiring and promotion of women in their companies, and eventually the changes will ripple across the economy. Norway offers some evidence that it is working, albeit slowly.” – Quartz

In an interview for International Women’s Day, Kirstine Stewart, chief strategy officer at Diply and former Twitter VP, talks about her disappointment with gender diversity in the tech industry, which as the “new frontier” had the opportunity “to break all the rules” and hasn’t – so far. She addressed the use of quotas, and the possibility that they could lead candidates to feel stigmatized, lonely, and wondering if they are there because they “ticked a box.” A more moderate approach between quotas and “comply and explain” rules is to directly incentivize individuals throughout the entire organization to increase diversity. This overhaul needs to be systemic, benchmarked and measured.

“The Fearless Girl” statue which stares down the Wall Street bull in the accompanying image was installed by State Street Global Advisors and its agency, McCann for International Women’s Day. Conceived, created, and sculpted by women, (senior copywriter Tali Gumbiner, senior art director Lizzie Wilson and sculptor Kristen Visbal), it quickly became an overnight sensation. After conducting studies that found companies with gender-diverse leadership, and women in leadership are more lucrative, State Street started SHE, an ETF (exchange-traded fund) which only invests in companies with women in leadership. Their goal is to increase the number of women on their clients’ corporate boards.

The hunt is on for the next generation of female leaders, with companies and recruiters eager to find, nurture, develop, and guide talented women. According to Anouk Pappers, founder and brand anthropologist for CoolBrands, an international firm which helps executives with their online positioning and reputation, 70% of their clients are women – and their numbers are growing. Many are seeking help in repositioning themselves within the C-suite, toward entrepreneurship, or to transition to move from a corporate career to board membership. They recognize that they “need a ‘wing woman’ to better position themselves for the future.

Warren Buffett, chairman, and CEO of Berkshire Hathaway, and one of the world’s most successful CEOs didn’t need quotas to realize that women were good for business. He’s already invested in six companies with CEOs who are women, and is “looking for more.” Berkshire Hathaway has three women on its board and is looking to increase that number.

“What makes me even more enthusiastic about the future, is that 90% of that time [in the past] we were only using half of our talent. Think about what would happen if we used all the talent for 100% of the time. It’s like having one hand behind your back.” – Warren Buffet

MSCI research estimates that, at the current pace, it could take companies to 2027 to achieve directorship numbers of 30%. Asset owners and advocacy groups like the Thirty Percent Coalition are working to accelerate this to 2020. The case for having women on the board is clear, with Uber’s missteps serving as a cautionary tale, and Warren Buffet as an enthusiastic indicator that women leaders are good for business.

Millennial Mania – Why are Automakers Ignoring Most Car Buyers?

“Mature drivers are bucking conventional wisdom about their taste in rides accelerating purchases of pickups, utility vehicles and funky compacts once designed for the college crowd.  You can no longer typecast the kind of cars you’d expect them to gravitate toward.”     Chris Sutton, VP U.S. Automotive Retail Practice, J.D. Power

“Youth does not own Cool. Youth does not own Growth. Youth does not own Innovation or Disruption. Older People are a Growth Market too.” Mark-Hans Richer, CMO, Harley Davidson, ANA, “Fake Fight Millennials vs. Boomers”

For the first time in history, more women than men have driver’s licenses. Women are buying 68% of new cars and play a leading role in 85% of car purchases. 65% of service requests at dealers are by women.

Another first – Generation X began to turn 50 this year. (35-50) (Think Sandra Bullock, Viola Davis, J.K. Rowling…) Meanwhile, Baby Boomers (51-69) continue to be “the most valuable generation”. They’re vibrant, living longer, adaptable, rebellious and have more money, leisure time and technology than any other generation in history.

According to JD Power, Boomers buy 38% of new cars, while the combination of Gen X and Boomers are responsible for 62% of all new cars sales. On top of that, over half of Boomer parents helped their Millennial children buy a car in 2015.

Boomer women account for 26% of car sales – the same share as Millennials. In the case of affluent Boomer women, they hold 75% of the nation’s wealth, and make 95% of all purchasing decisions for their household – which includes automobiles. Luxury brands are on a roll largely driven by this influential group of women. Over 5084% of Mercedes-Benz, Jaguar, Volvo and Lexus sales are from Boomers.

Combined Gen X and Boomer women account for 42% of auto sales. Factor in the “multiplier effect” of women’s buying and influence on their children, spouse and parents, and this share is probably much higher, with overall influence on vehicle purchases at 70-95%.

Meanwhile, Millennials’ share of market is up 18% this year to 26%, but they’re still 29% less likely to buy a car than Gen X and Boomers. (And half of them had help from their parents in buying the cars they did buy.) As they hit their stride and have families, they’ll start to buy more vehicles, but Millennials have less wealth, are underemployed and saddled with educational debt, and unlike the generations before them, 30% of them say they have no interest in owning a car. Many Millennials are rethinking car ownership altogether, gravitating toward car sharing instead.  Author, social theorist and economist Jeremy Rifkin predicts:  “25 years from now, car sharing will be the norm, and car ownership an anomaly.

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According to Automotive News car buyers are gettingolder and richer“.  The average new car buyer is 52 and earns $80,000 per year vs. the population average of 38 and $50,000. Makes sense, when according to Nielsen, half the population will be 50+ by 2017 and will control 70% of disposable income. According to Steve Szakaly, Chief Economist, National Automobile Dealer’s Association:  “It will take four Millennials to replace the spending power of one Boomer in the automotive-retailing marketplace.”

Boomers will remain in the driver’s seat for a long time to come. “76% in the 50-68 bracket plan to drive well into their 80’s or 90’s — or simply never stop.”  (With the advent of self-driving cars in the next decade, that will probably be a reality.)  Passionate about cars, they’ll purchase an average of 13 in their lifetimebuying 5 or more cars over the next 30-50 years – 5X more cars than Millennials.

Despite their vital importance to the auto industry, less than 10% of auto marketing dollars are directed toward Boomers. (For CPG it’s 15%). According to a Nov 2015 analysis from advertising technology company Turn, marketers are now spending 500% more to target Millennials than they spend on advertising to reach all other demos combined! “That’s 4X as much on display, 4X as much on social, 4.5X as much on mobile and 6X as much on video advertising.”

It’s mystifying that automakers are spending over 90% of their ad budget or more – 500% more – to reach one-quarter of their buyers, while leaving the majority of car buyers to their own devices. Why is there such a fixation on Millennials?

According to Sucharita Muluru, Forrester Research:  The Kids Are Overrated:  Don’t Worry About the Millennials

“It is human nature to be fascinated by youth….Misleading media and hype lead eBusiness executives to believe that these changes are somehow different from anything that’s happened before, and that they must address these generational variances immediately or perish. That perception is misguided at best, false at worstMarketers salivate over Millennials in the mistaken belief that they can “hook” them on their brand for life.  That’d be nice, but unlike the generations before them, Millennials will need to be sold throughout their life. The idea that brands can instill lifelong brand loyalty is flawed. When such companies do pine for twenty-somethings, they resemble the desperation of a nerdy teenager who, smitten with a prom queen, forlornly asks, ‘Why doesn’t she love me back?

As John Morel, Honda America tells it: “One of the dirty little secrets of the auto industry is all these cars are positioned in advertising and public relations as something a 25-year-old will buy,…but your propensity to buy a car at 25 is roughly a quarter of what it is at age 65. By definition, very few cars sell in high volume to 20-somethings.”

Light truck, SUV, luxury SUV and CUV sales are booming thanks to Gen X and Boomers. According to Edmunds, SUV’s reached their highest market share ever in 2015 at 35.5%  and are expected to reach a 40% market share by 2020.

Since 2009, Ford found that retail registrations of the Ford Escape were up 81% in the 54-64 age group as Boomers downsize to premium compact crossovers. Ford also discovered that half the buyers of its highest trim level of the Escape (the Titanium) are older than 56.“In response to demand from older consumers,” Ford made the Escape more convenient. Then in 2015, Ford released the MKC, a more upscale version through its Lincoln division. Despite its beginnings, the MKC’s target group is adults 35-49 and (hmhmm):  “Millennials – entering the premium segment”.  

According to Sheryl Connelly, Ford’s Futurist and Specialist in Global Consumer Trends: The Boomer population has always set the trends. Now they’ve set a course for a more streamlined life that doesn’t sacrifice style and comfort.”  In February 2016, Ford Motor Company’s VP Marketing, Sales & Service, Mark LaNeve, announced that Ford will launch four new SUV nameplates to appeal to Boomers and Millennials, saying: “80 million aging baby boomers continue to prefer their SUVs. It’s a demographic double whammy and it all points to one thing – more SUVs for the foreseeable future.”  The average age of the Escape buyer is currently 53.  Despite this, Ford does not target Boomers with their advertising.

While the Buick Encore was designed for both “young professionals and empty nesters”, in a drive to shake its “geriatric reputation,” the self-deprecating ad campaign for “That’s a Buick?”pokes fun at Buick’s longtime association with the senior set“. The move to discard their core buyer could be working, as the average age of a Buick’s buyer is now 57, down from 66.

The Kia Soul was designed for young hipsters, but it’s a Top 10 hit with Boomers. Great design and features appeal to all ages, crossing demographic boundaries to shared passion points and interests.

Dr. Michael Sivak, author of the University of Michigan Transportation Research Institute study said:  “You shouldn’t be chasing the younger people, you should be looking at the older people. Baby boomers are trying to extend their youth as long as they can, both in terms of taking care of their bodies and in their expenditures.”  The 55- to 64-year-old age group has become the cohort most likely to buy a new car.

Meanwhile, industry insiders rationalize that they’re reaching the 50+ demo with their TV/mass advertising, which targets Millennials and 18-54’s, and therefore, substantially over-delivers the Boomer market. It’s fairly clear, however, that the majority of the content that has been created to win over Millennials (sometimes at the expense of Boomers) will probably not resonate with the over 35 crowd.

 

How to Reach Non-Millennials:

Mostly ignored, non-Millennial car buyers are going online to gather their own facts, research, recommendations and opinions. Most consumers are researching products online before buying. Over 8 million adults 50+ browse online to gather facts about buying cars every month. When we polled Vibrant Nation’s audience we found that 90% believe recommendations from women their age is most influential source in final purchase decision. For automakers, user-generated online reviews and opinions are paramount from consideration to conversion. The value of online sharing consistently outperforms both consumer ratings and reviews, and an online share carries essentially the same value as in-person recommendation. Positive online recommendations are more important that price and brand in motivating consumer purchasing, adding, on average, $3,700 to the purchase price of a new car.”

It’s understandable to concentrate on future buyers, but there’s a disconnect where automakers are designing features to appeal to mature consumers but ignoring them in the advertising equation. The terror of appearing “uncool” to Millennials is leading automakers to gamble with billions in potential sales from their core buyers who are not brand loyal. As Julia Roberts’ memorable character said to the dismissive salesperson in “Pretty Woman”:  “Big mistake. Huge. I have to go shopping“.