Gender diversity in the boardroom: Baby steps and the long road ahead
“There’s a long way to go before equal representation becomes reality.”
While some mildly noteworthy milestones were reached last year with regard to gender diversity, I am reminded of recent incidents that tell me there’s a long way to go before equal representation becomes reality.
I’ll quickly tell you of two examples. I was at a private dinner of seasoned corporate board directors. It was a small, intimate affair meant to encourage open dialogue on relevant board-level topics of concern, so everyone felt they could “let their hair down” a bit. With three females and two people of color at the table, it didn’t take long for the topic of board diversity to surface and a lively discussion ensued. When the leader of the board search practice for one of the large “Big 4” search firms was asked point blank, “Why aren’t there more female board directors? Why isn’t the search community pushing this?” I was dumbfounded by the answer. “Well, there are only 24 sitting female CEOs of the Fortune 500 today” (an all-time high, by the way), “and they all already have board positions, so there just isn’t enough talent,” he said.
Rarely at a loss for words, even when faced by such an incomprehensible lump of stupidity as that, I felt compelled to respond. “So, do you consider yourself an “order taker” or a consultant to your clients? I find that a true consultant needs to guide and direct the client, not simply take instructions. I assure you there are plenty of qualified female directors with real talent that would add value to any board, even if they may not now or ever be a Fortune 500 CEO.”
You could hear a pin drop.
It wasn’t long after that evening when I found myself part of the NACD Directorship 20/20 effort. NACD Directorship 20/20 is a multi-year initiative designed to help directors and boards identify and prepare for emerging issues and opportunities that will impact boardrooms in the future. At a meeting held in New York and attended by some 200 board directors, again the topic turned to board diversity, and specifically gender diversity. And again, to my amazement, the exact same words were parroted by yet another “Big 4” search consultant. Now, I felt like a man on a mission. I stood up and introduced the woman sitting to my left. “The Major General in the U.S. Air Force sitting next to me has over 30,000 souls under her command, is a leading expert in supply chain and operations and has given 35 years of dedicated service to our country. I would suggest she would make an EXCELLENT board director for many, many companies!”
The crowd erupted, and I was later approached by many of the female members of the audience, thanking me for my vocal retort.
These and countless other incidents highlight the deeply ingrained bias that still exists in the male dominated corporate world, even though many, if not most, would profess to be big supporters of gender diversity.
Yet, we have made strides. Strides I consider to be very small, baby steps.
Take the findings of the most recent iteration of the Chicago Network’s annual census, as outlined by Crain’s Chicago Business. In 2014, there were more female leaders at the Windy City’s 50 largest publicly traded companies than ever before. Nationally, the S&P 500 now boasts 24 female CEOs, up from 20 a year ago, and more than at any point since executive gender data monitoring began in 1998.
That still is only 4.8 percent… not exactly a number to herald as a breakthrough!
If the current rate of improvement in diversity continues, women won”t achieve 50 percent representation in boardrooms and executive suites for another 65 years. Talk about slow progress.
Achieving gender diversity in the C-suite
Every single company chairman and CEO has a role to play when it comes to improving gender diversity in the C-suite and on the board. A 2014 E&Y report entitled “Women on boards: global approaches to advancing diversity” took note of several approaches intended to help organizations bolster the number of women in their executive ranks.
- Corporate transparency: In some countries, companies are required to disclose their diversity-related efforts and policies to investors. In lieu of a national mandate, shareholders at some enterprises in the United States have pushed for changes in board composition and recruitment criteria. Investors tend to embrace these calls to action, increasing the pressure on businesses to make real, lasting changes in the name of gender diversity.
- Diversity-focused recruitment: There is no shortage of women with executive leadership skills, but companies do not always know where to find them. This is where taking the time to do proactive research comes in. With the help of an executive and board search and leadership consulting firm, businesses can develop diverse candidate pipelines before a position even opens up. Imagine no longer having to race against time to assemble a viable pool of replacements after a high-ranking member of the company announces his or her intention to leave the enterprise – or, even worse, is forced to step down unexpectedly.
- Quota introduction and enforcement: In nine short years – from 2003 to 2012 – Norway went from having just 9 percent female representation on corporate boards to having more than 40 percent. How? A government-enacted quota. More than 20 other countries have adopted similar measures to underscore the importance of gender diversity in the corporate realm and accelerate progress toward equality. Thus far, the U.S. is not among them, but this may change in the future. For now, many experts are of the opinion that taking such a step is drastic – Beth Brooke-Marciniak, E&Y’s global vice chair of public policy, called it “a sledgehammer of last resort” in an article she penned for Forbes.
Instating gender quotas certainly is a “sledgehammer of last resort,” and I am calling upon all board chairs and CEOs to wake up and start taking action!
The whys and wherefores of gender diversity
Aside from the obvious altruistic motive of helping female professionals further their careers and ascend to positions of leadership, what do companies stand to gain from increasing their focus on gender diversity? First and foremost, numerous studies have found that gender-diverse companies tend to outperform their less diverse counterparts.
- Risk management benefits: In 2013, an American research team found that companies with women on their boards are less likely to overpay during the process of making acquisitions. A couple of years earlier, British analysts determined that companies with even just one female director on the board enjoyed a 20 percent lower risk of bankruptcy.
- Increased consumer insight: Consumer-facing organizations with female executives at the helm enjoy a unique advantage. Boston Consulting Group acknowledged female shoppers” immense purchasing influence and power, estimating that women drive approximately 70 percent of consumer spending, and other studies put this figure even higher, according to The Female Factor.
- Reputational advantages: Enterprises with women in the C-suite or on the board swiftly become gender diversity role models, which is looked upon favorably by all constituents. It raises brand credibility across the board. Often, the appointment of a company’s first female executive blazes a trail for future recruitment, as these senior female executives are a beacon for others to join the company.
- Enhanced analytical capabilities and preparedness: E&Y’s research revealed women often ask more challenging questions, tend to be more prepared for board meetings, and less willing to accept the status quo than their male counterparts.
- Fair and ethical operations: E&Y also found that women typically display high levels of empathy, a greater willingness to understand others” perspectives and more concern about respecting the rights and meeting the needs of others.
What’s the bottom line? Women bring a different set of qualities and characteristics to the boardroom table than men, including, but not limited to, those listed above. And in so doing, they enhance the brand reputation and ultimately shareholder value.
Considering the benefits of increased female representation in the boardroom and C-suite, as well as the general climate driving change around the world, you might wonder why progress is so slow going. Unfortunately, the workplace challenges many women experience, from balancing familial obligations with their career ambitions to adjusting their leadership style in male-dominated offices, have made cracking that glass ceiling a painstaking task.
Further, the most recent executive compensation survey, conducted by AESC’s BlueSteps and published by Epsen Fuller Group, showed a significant and widening gender pay gap at the $250k base salary level and above. Karen Greenbaum, AESC president and CEO, notes, “Organizations risk losing top talent to their competition if they don”t clearly demonstrate that they value diversity and inclusion at all levels of the organization.”
Ultimately, making an effort to increase the number of women on boards and in C-suites isn’t just good for diversity – it’s also good business sense. Developing a strategy and proactive plan for recruiting female board directors and C-suite executives, as well as building a strong pipeline of diverse candidates are critical steps to winning the talent war.
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