What We Must Do to Further Gender Equity on the Boards of Corporate America
By Gloria Feldt and Kathleen Duffy
“Remember the ladies,” future First Lady Abigail Adams implored her husband, John, in March 1776 as the Continental Congress was crafting the U.S. Constitution.
“All men would be tyrants if they could,” she wrote. “If particular care and attention is not paid to the ladies, we are determined to foment a rebellion, and will not hold ourselves bound by any laws in which we have no voice or representation.”
We’ve come a long way. But we still have a way to go — in equal pay and other gender parity indicators, in electing women to public office, and in recruiting them to leadership positions in corporations and on boards of directors.
With last year’s election or appointment of a record 117 women to Congress — 36 of them new members — and five women running for the Democratic nomination for president, a rare moment of momentum and opportunity is upon us. This a strategic inflection point, a convergence of the business case and the justice case on why corporations large and small need more women directors.
Currently, fewer than one in five corporate board seats are held by women.
The case for business
There’s plenty of research about the benefits of gender-balanced boards, from improving boardroom dynamics and reducing governance-related controversies to lowering volatility and achieving better financial performance.
For example, among the nearly 850 active companies on the Fortune 1000, women hold 18.8 percent of all board seats, according to a report by Harvard’s T.H. Chan School of Public Health. About 45 percent of these companies have 20 percent or greater women on their boards. But more than 55 percent of companies that became inactive on the index had only one or no women as directors.
Additionally, when Fortune 500 companies were ranked by the number of women on their boards, those in the highest quartile in 2009 reported a 42 percent greater return on sales and a 53 percent higher return on equity than the rest, Harvard noted.
Women not only are the primary consumers of products, more than 40 percent also are the primary breadwinners for their families, according to a Center for American Progress report. It doesn’t take an economist to know that if you don’t have those consumer voices, those leadership voices helping make decisions for your organization, you’re missing out.
The case for justice
To channel Abigail Adams, if all men are created equal, then all people are created equal, and that includes women. Giving women a chance to prove themselves, first in the home, then the workplace and now the boardroom, is the fair thing to do.
Don’t we all want our daughters, sisters, nieces and granddaughters to succeed? Of course we do.
Two women, Stephanie Sonnabend and Malli Gero, in 2010 launched a national campaign to increase the percentage of women on company boards to 20 percent or greater by 2020. Motivated by the lack of representation, Sonnabend and Gero started 2020 Women on Boards to mobilize all stakeholders, consumers to CEOs, to become involved and raise these numbers.
Their goal is in reach, according to the 2020 Women on Boards Gender Diversity Index report, an annual review of gender diversity of companies on the Russell 3000 index. The average number of corporate board seats held by women in the 2018 Russell 3000 Index is 17.7 percent, up from 16 percent in 2017.
Some of the report’s key findings:
- Large companies get it (on average, one in four board seats are held by women), while small companies don’t (averaging just 13 percent).
- From 2017 to 2018, women gained 469 board seats, while men lost 382 board seats (net).
- The services and utilities sectors show the most progress, with more than 20 percent of seats held by women.
- Four states — Connecticut, Michigan, Minnesota and Washington — have exceeded the 20 percent goal.
- Board diversity at IPOs is disappointing, with only 9.2 percent of board seats held by women.
To further its mission, 2020 Women on Boards is hosting a National Conversation on Board Diversity this November, with more than 30 cities around the country and around the world presenting daylong events. There, C-Suite and senior executives will gather to listen to, learn about and discuss the topic, “Now is the time: How can we help each other and seek allies to find a corporate board seat?”
Planners of the Phoenix event, for example, are striving to have a corporate director seated at each table. There, they want to lead productive conversations to remove the mystique of the process and start building the pipeline for women on boards.
The case to be made
If you’re a woman who’s never thought about putting herself out there for a board seat (because women don’t) and haven’t the slightest idea how to start, you’re not alone. Here are some ideas:
- Who do you know? Most board seats are secured through networking, so think about your professional contacts and how their work aligns with your passions. Consider looking first at nonprofit organizations working on issues you care about and desperately needing board members with solid skills.
- What are your skills? A resume for a board position isn’t a job resume; rather, it’s a document that demonstrates your relevant expertise with board work. Are you a big-picture thinker, a fiduciary expert or someone who’s dealt with governance issues? Have you travelled or worked globally? More, now than ever before, corporations are searching for directors with experience in cybersecurity, human capital, emerging markets and digital marketing.
- Where can you find and lend support? Use the resources of 2020 Women on Boards and think about registering for an event in your community.
- What’s happening in public policy? The gains in putting women on boards is happening because organizations are conducting research, preparing women, lobbying shareholders and doing the heavy lifting. In 2018, California passed a law mandating all companies principally located in the state have at least one female member by the end of this year. By 2021, companies with five-member boards will need at least two female members, while those with six or more members will need three in order to remain compliant. Other states are following suit.
If you’re a company executive:
- Include in your strategic plan a goal of placing or adding women to your board.
- Resist the urge to recycle your friends for board seats. New ideas and more opportunities are needed, and people with too much on their plates may struggle to be effective board members.
- Build your pipeline by using industry associations, professional contacts or executive searches to find passionate, qualified people in mid-career. Think carefully about where to find these thought leaders.
There are two more things all of us can do. First, support public recognition of companies with women on their boards. Buy their products, use their services, tell your friends. Secondly, help women start businesses, lending expertise and financial support where you can, and helping them grow these companies so that they, too, will get to shape the membership of their boards.
There’s nothing in the hardwiring of men and women that brings inherent differences to the boardroom. But there are differences in the ways women have been inculcated — in how we have been socialized to read the room, to pay attention to who else is there, in how we learned to not be bombastic about our accomplishments, and in how we have been cautioned all of our lives and, therefore, are less likely to take risks.
These are our superpowers. And they benefit any boardroom.
Gloria Feldt is co-founder/president of Take The Lead, a mission to achieve leadership gender parity by 2025, and former president/CEO of Planned Parenthood Federation of America.
Kathleen Duffy is president of Duffy Group, Inc., a global recruitment firm headquartered in Phoenix, Ariz., and co-chair of the Nov. 21, 2020 Women on Boards event in Phoenix.