There aren't many women on the boards of directors of big American companies, and there are relatively few at top levels of management -- no surprise there, right? But let's spend a little time examining why that is, and why it's not ideal.

Why have women?
Well, an obvious reason is that women make up a huge chunk of the workforce and the consumer force, and there's little reason why they shouldn't make up a big chunk of various companies' upper management. But there's more.

As I reported in 2004, women on a company's board might lead to greater profitability. A study by the research organization Catalyst had found:

  • "The group of companies with the highest representation of women on their senior management teams had a 35% higher ROE [return on equity] and a 34% higher [total return to shareholders] than companies with the lowest women's representation."

  • "Consumer Discretionary, Consumer Staples, and Financial Services companies with the highest representation of women in senior management experienced a considerably higher ROE and [total return to shareholders] than companies with the lowest representation of women."

For some newer insights, check out a 2006 study by Vicki W. Kramer, Alison M. Konrad, and Sumru Erkut titled "Critical Mass on Corporate Boards: Why Three or More Women Enhance Governance." They explain that in recent years, due to various corporate scandals, companies have been under pressure to improve their corporate governance. But with the demand for more independent directors and a new inclination by many CEOs to serve on fewer boards, the net is being cast wider in order to find new directors. Women are among the beneficiaries -- though according to a recent Catalyst report, "women held only 14.7% of all Fortune 500 board seats. Among the Fortune 500 companies, 53 still had no women on their boards, 182 had one woman, 189 had two, and only 76 had three or more women directors."

The study found that "a critical mass of three or more women can cause a fundamental change in the boardroom and enhance corporate governance." How? Well:

Women bring a collaborative leadership style that benefits boardroom dynamics by increasing the amount of listening, social support, and win-win problem-solving. Although women are often collaborative leaders, they do not shy away from controversial issues. Many of our informants believe that women are more likely than men to ask tough questions and demand direct and detailed answers. Women also bring new issues and perspectives to the table, broadening the content of boardroom discussions to include the perspectives of multiple stakeholders.

The authors explain why three is the magic number:

The magic seems to occur when three or more women serve on a board together. Suddenly having women in the room becomes a normal state of affairs. No longer does any one woman represent the "woman's point of view," because the women express different views and often disagree with each other. Women start being treated as individuals with different personalities, styles, and interests. Women's tendencies to be more collaborative but also to be more active in asking questions and raising different issues start to become the boardroom norm.

So why are there so few?
The folks at the InterOrganization Network, a group of seven organizations of female executives, published a report a while back that offered a rather logical explanation for the dearth of women on boards of directors: "The key to getting more women on corporate boards is getting more women on board-nominating committees."

In The Philadelphia Inquirer, Jane von Bergen covered the report and cited a quotation by Princeton University's first female president, Shirley Tilghman, who said, "The world works on lists. ... If a woman is involved in constructing those lists, the likelihood of selecting really terrific women goes way up."

The InterOrganization Network examined the boards of 536 companies in five regions of the country and found that only about one in four companies had women on their nominating committees.

Some stats
We can grumble about the paucity of female board members and corporate bigwigs, but we can also celebrate that there are some companies with more than one or two female board members, and some companies with female CEOs and CFOs. For example, here are some firms with three female directors:

  • Merck
  • Western Union
  • Hershey
  • PepsiCo (four women on board and a new female CEO)
  • New York Times (five women on board)

And here are some companies led by women:

  • PepsiCo, led by CEO Indra Nooyi
  • Lucent, led by CEO Patricia Russo
  • Xerox, led by CEO Anne Mulcahy
  • Reynolds American, led by CEO Susan Ivey
  • New York Times, led by CEO Janet Robinson
  • eBay, led by CEO Meg Whitman

Even at the Fool
You'll find plenty of female voices here in Fooldom, too. One of our newest newsletter services, for example, Motley Fool GreenLight, is overseen by Dayana Yochim, along with Shannon Zimmerman (she's a she, he's a he). (Try it for free for a whole month, during which time you can access all past issues in full. It focuses on personal finance topics, helping you save more, spend less, and make more via investing.)

Among our article writers, you'll find yours truly, along with folks such as Alyce Lomax, Elizabeth Brokamp, Mary Dalrymple, Hope Nelson-Pope, Shruti Basavaraj, and Zoe van Schyndel, along with others. (If you'd like to join our ranks, drop by And since 2005, Fool online editor Carrie Crockett has co-chaired our annual Foolanthropy charity drive with Fool co-founder David Gardner.

The bottom line
The upshot of all this for us as investors is that we may want to spend more than a nanosecond glancing at the boards of directors of companies we own or are considering buying into. If you see three or more women there, it could be a promising sign.

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Longtime Fool contributor Selena Maranjian'sfavorite discussion boards include Book Club, The Eclectic Library, Television Banter and Card & Board Games. Sheowns shares of eBay, a Stock Advisor pick, and PepsiCo.For more about Selena, viewher bio and her profile. You might also be interested in these books she has written or co-written:The Motley Fool Money GuideandThe Motley Fool Investment Guide for Teens. New York Times is a Motley Fool Income Investor pick, while Merck was a former selection of that newsletter. The Motley Fool isFools writing for Fools.