On Yellen, Summers, and Being Part of The Club, The Wrap-Up

In this series of posts, I’ve been detailing some of the ways in which the gender undertones of the Yellen-versus-Summers-for-fed-chair debate resemble discussions we've heard about corporate board diversity.  In this wrap-up post, I want to return to a theme I mentioned in my first post – the criteria that the Obama administration says will dictate the choice, which will not include gender, but will include the President’s comfort with the candidate, how well he believes he or she will do the job, and how successful the new chair will be in dealing with the market and with Wall Street.

But these criteria, depending as they do on subjective assessments, may not be separable from gender, which is rather the point made by some of Yellen’s supporters when they label Obama’s economic policy team a boy’s club.  And this, at bottom, is part of the tension we have noted in the board diversity debate.  In neither case –the fed chair nor the corporate boardroom -- is anyone arguing that more-qualified men should be passed over for less-qualified female candidates in the name of “diversity.”  But in the contest for fed chair, at least, most seem to agree that both candidates are highly qualified for the job. (Though, as always, some believe one candidate is more capable than the other).  As former Obama administration economist Jared Bernstein describes it: “It’s an embarrassment of riches. . . .He’s weighing who would do the best job at a sensitive time, and the differences here are nuanced.”

And those nuances are, I assume, what concern some of Yellen’s supporters, because they often involve the type of subjective criteria that our respondents sometimes refer to as “fit.”  Do incumbent directors and the CEO click with the new candidate?  Have any of them worked with him or her in prior positions and developed a relationship (or not)?  And similarly, whom does the President (or his economic advisors) trust and feel comfortable with?  Who does “the market” favor? 

The tension here, it seems to me, is that these assessments may not be gender neutral, and yet at the same time are not irrelevant to the selection process.  It really is important that a group work well together and have confidence in each other.  It really does matter whether key constituencies have confidence in the selection.  And separating proper from improper reasons for discomfort with a candidate is not always easy. 

In the boardroom context, our respondents emphasized the importance of collegiality and consensus in the board’s interactions with the CEO. Indeed, this relationship is so important that many of our respondents characterized the role of the CEO in selecting board members as something approaching a veto power, despite recent corporate governance interventions that emphasize the board’s independence from the CEO. 

As stated by one white female director: 

Text

A: And the way we did [director selection] is the CEO and I interviewed the candidates together . . . And I think if the CEO truly disliked the person we wouldn’t go forward because you don’t want to do that. You want good chemistry. You’ve got to be focused on the end game. What do you want to occur? Do you want to have better results than you would have had before? And say if you’ve got at the very beginning the CEO doesn’t like how someone combs their hair, you’re probably better off to go find someone else. But, if you’ve got the CEO trying to veto everything because it’s another strong CEO and they just don’t want to deal with the person, that’s a different scenario. (emphasis added)

Another white female director emphasized the same point: 

Text

Q: What role do the CEOs now play in board selection?

A: They’re in there, but they’re not the sole source any longer, in most companies that I’ve been engaged with. I think they’re still. . .

Q: Do they have a blackball?

A: Probably they could veto, yeah. I’ve not seen it happen, but yeah, I think so. But it’s not...Well, I should . . . It’s not that they choose the board members the way—in this clubby fashion that used to go on, but I think they all would like to. Well, their opinions count, but you need more opinions than just the CEO’s opinion. And I think that’s far more commonplace, even in smaller companies, than it used to be.

Perhaps not surprisingly, given these statements, nearly all of our respondents cite the "tone at the top" -- i.e. the CEO's commitment to a diverse board -- as the primary driver (or, in some cases, impediment to) board diversity.

That’s it on this topic for now.  Thanks for reading!

 

Related Posts:

On Yellen, Summers, and Being Part of The Club, Part 3

Yellen, Summers, and Corporate Boards: On Being Part of the Club, Part 2

California Girls and Rubin Boys: On Being Part of the Club

Comments

[TJ]

I think it a pretty implausible statement that "[i]n neither case –the fed chair nor the corporate boardroom -- is anyone arguing that more-qualified men should be passed over for less-qualified female candidates in the name of 'diversity.'" In a literal sense that is true: virtually no one ever says out loud that a less qualified candidate should be taken. But if you mean that no one ever invokes "diversity" as something that should have weight, with the unspoken but unavoidable logical implication that, in some marginal case, it should be determinative over other criteria, then I think it is flatly not true. See, e.g., http://www.motherjones.com/politics/2013/08/janet-yellen-chair-federal-reserve-woman-summers (which begins its argument by noting how much Obama has professed to value "diversity"), and this is just one of the numerous links that I found by a simple Google search.

You might say that Yellan supporters are really concerned about invidious discrimination against her in the form of "fit" and "comfort," and that since that argument is not easy to put on a bumper sticker they invoke "diversity" instead, and that they would take a magical deal where there is no invidious discrimination and no affirmative action either. But you can't say they are not invoking the diversity argument. They very plainly are.

[Kim Krawiec]

Thanks for your comment, TJ, though I’m not sure that I follow your argument. I did not say that no one is invoking diversity arguments. Of course they are – that is the point of these posts and of the five articles and book chapters I’ve written on this topic. Rather, I said – as you correctly quote -- that no one is arguing that more-qualified men should be passed over for less-qualified female candidates in the name of “diversity.” Thus the argument – from both Yellen’s supporters and most board diversity supporters – is really three-fold: (1) they are just as, if not more, qualified than their male counterparts, (2) they are subtly disadvantaged by their “outsider” status, and (3) in any event, diversity brings additional benefits that should weigh in their favor. (The various tensions in this last point are the subject of the paper that I mention in the post)

“You might say that Yellen supporters are really concerned about invidious discrimination against her in the form of "fit" and "comfort,"”

Yes, that is exactly what I’m saying. I think we're on the same page here, though perhaps I misunderstand your comment.

[TJ]

I guess my problem is that I think a "diversity argument" is point (3) and only point (3) in its analytical content, and points (3) and (1) essentially contradict each other--if premise (1) is true, then one does not need argument (3). The only time argument (3) does any analytical work is if premise (1) is not true. For this reason, I had read your statement that "no one is arguing that more-qualified men should be passed over for less-qualified female candidates in the name of 'diversity'" as stating that argument (3) was not being made.

If I now get you clearly, you are not saying that. You are saying: (a) in public discussion, all three points are being made when someone says "diversity" (regardless of the logical tensions between them); (b) the real motivation for Yellan supporters and similar proponents of board diversity are really points (1) and (2), even though "diversity" sounds a lot like point (3).

And if that is what you are saying, I have no enormous disagreement on the substance. But it strikes me as an excessively charitable reformulation of what Yellan supporters are saying, more a matter of what they ought to be arguing rather than what an observer would think they actually are arguing. Their ultimate motivations might be points (1) and (2) (though on this point I'm am skeptical--it strikes me that for many supporters the symbolism of a female fed chair really is a huge factor that would make them support her even if she was less qualified), and points (1) and (2) might be less politically controversial and thus a better case for them to make, but that is not the best interpretation of what they are saying as a matter of text.

[Kim Krawiec]

Lol -- understood and I made a similar point in conversation with someone just this weekend: "why are we talking about 'diversity' if what we mean is 'discrimination'?" I do think that there are some relevant differences between the corporate board and fed chair contexts on this point, but I realize I'll never get any work done if I don't get off the internet.

Thanks for the feedback.

[Marcia Narine]

Perhaps you may want to do an additional post to clarify what you mean by discrimination vs diversity- as an employment lawyer and employment law professor I know the difference but these comments may leave some confused, and I think it's an important distinction. I think your insights on the feeling of otherness that female board members express are spot on and those who dismiss the issues of gender and focus only on "qualifications" miss an important point because those subtle and not so subtle cues that Yellen will receive if she were chosen may affect her effectiveness in the job, thereby possibly affecting the timing and possibly the substance of policy. That doesn't mean that she's better or worse for the job, it means that it's something that I am sure that she is aware of and would need to deal with as all successful women in her position have in the past, and as your respondents told you. If she's chosen and she's been in enough clubhouses, she can hit the ground running faster than others.

[Kim Krawiec]

Thanks for your comments, Marcia. And I’m glad that our respondents’ statements on this point ring true for you, especially as I can see from your bio that you’re quite familiar with this world. You might also be interested in another paper of ours, “Does Critical Mass Matter?,” which has detailed stories from our respondents about what it’s is like to be the “first and only” female or minority. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1781064
The short answer – most of our respondents, by the time they reach the boardroom, are used to it because they’ve been in that position their whole lives.