Last week’s blog focused on the need for providing mentorship to professional women. Since we just celebrated International Women’s Day on March 8th, it seems timely to address an area of inequality that still needs significant improvement: increasing the percentage of qualified women who serve on company boards. Although women currently account for about 48 percent of the work force, they have nowhere near that representation at the executive levels or on corporate boards. The Bureau of Economic and Business Affairs reports this month that fewer than three percent of Fortune 500 CEOs are women and only 26 percent of Vice Presidents and Senior Managers are female. A recent study by The Conference Board, a global, independent business membership and research association, found that the percentage of women on Fortune 100 public company boards has risen painfully slowly in the last 15 years, from 9.6 percent in 1995 to 15.7 percent in 2010.
For nearly every board and C-level executive search we conduct, we try to present a diverse slate of qualified candidates. Although companies are rightly concerned about board and management competence, and financial and regulatory compliance, they also want their boards and management team to reflect the diversity of their customers, partners and the world. Progressive companies strive to foster collaboration among disparate but worthy ideas, and acceptance of different but valid viewpoints; and if their board and executive team is not representative of the organization and its values, then there is a huge disconnect, not only in how they will make decisions but also in the eyes of their shareholders, customers, strategic partners and employees. Although lack of diversity impacts the public perception of the company, its bigger impact is on the company’s strategic vision and tactical execution of that vision.
Diversity of thought leads to better outcomes; open exchange of ideas expands and enhances board discussion and deliberation.
Companies will benefit from focusing on increasing diversity at the board and executive levels, not just for the purpose of increasing female participation out of a singular focus or political correctness, but because it makes good business sense: it increases the diversity of input from intellectual equals. There is still a residue of unconscious bias (men’s club comfort) that exists among decision-makers that influences the recruitment of women to senior positions. Men have historically held a majority of board seats and executive leadership positions, and people tend to hire in their own image, fostering linear thinking. We need to address head on that while although Men are from Mars and Women are from Venus, there is a wonderful dynamic of appreciating and learning from differences of thought processes, opinion and communication style. From birth through adulthood, women are socialized differently from men: generally, they tend to listen more and talk openly about their issues and challenges, which is not typically within most men’s comfort zone. Women also tend to ask different questions than men, and they generally approach problem-solving differently than their male colleagues.
One approach to increasing the percentage of qualified women serving on boards is championed by Viviane Reding, the senior justice official in the European Union. With continued disappointing results notwithstanding tenacious efforts for increasing women’s representation in European boardrooms, Ms. Reding is seriously considering legislation that would require a gender-diversity quota system for corporate boards; specifically, that women constitute up to 60 percent of corporate boards. “There is plentiful evidence from business consulting firms including McKinsey & Co., and from Catalyst, a nonprofit research group, that companies with gender-diverse management teams experience higher growth in their share prices, better-than-average operating profits, and outperform their rivals in terms of sales, return on investment capital and return on equity,” according to the report. That research showed women asked more questions and made fewer reckless decisions, evidencing that “women are not a cost, women are a benefit,” Ms. Reding said.
Sylvia Taylor, Executive Vice President, Human Resources of The Weather Channel comments:
“In today’s global marketplace where every competitive edge counts, the ability to innovate and problem-solve by leveraging diverse perspectives, thinking styles and experiences is an obvious competitive advantage to any organization. Frankly put, talent does not come in one gender, ethnicity or set of experiences. The Company that has the ability to pull from diverse talent pools, positions itself to better anticipate, understand, meet and create the needs of a diverse marketplace. Having Women and People of Color not just in your organization, but adequately represented at the Board and at the Executive Levels, positions a Company to eliminate blind spots and discern opportunities that the Company may not have otherwise recognized. I firmly believe that companies that are the first to fully capitalize on this talent lever are the companies that over the long haul will outperform their peers in our dynamic global market place.”
The business case is clear, so what advice can we offer companies to improve diverse representation at the board level?
1. Stretch beyond your comfort zone and embrace distinct points of view.
2. Build a pipeline of female talent through advocacy and mentorship, targeting high-potential leaders early in their career development and incorporating board training as part of the leadership curriculum.
3. Always present a diverse slate of qualified candidates and consider candidates with relevant functional expertise, other than exclusively current or past CEOs.
4. Make board diversity a necessary component of good governance and tie it to performance and incentive compensation.
5. Educate corporate leaders with current research, data and metrics that reflect the positive impact a diverse board can have for the business and transform CEOs into champions and change agents.
January 22, 2013 AT 3:39 PM CST
Dan Bowling wrote:
What a great post! I can't agree more (speaking as a fifty-something white WASP male). We need fresh voices at the highest levels, and women can provide a perspective beyond that of the Men's Grill atmosphere of many boards.