01 Sep 2016
Ask the Expert: How to Build a More Diverse Board
Diverse boards build better businesses. But where to start?Re: Caroline Pan (MBA 2001); Laurence Batlle (AMP 186); Maggie Pax (MBA 1989); Janelle James (MBA 2008)Topics:
Recent studies have found that gender diversity in the corporate boardroom can enhance dialogue, curb excessive risk-taking, and boost both performance and share price. And yet, women still hold only about 19 percent of S&P 500 company board seats. Beth Stewart (MBA 1982) has been tackling this issue as the founder and CEO of the executive search firm Trewstar, which places experienced and accomplished women on corporate boards. She offers her advice here.
What tips do you have for senior female executives looking for a corporate board seat? What are the best strategies for networking and positioning yourself?
—Caroline Pan (MBA 2001)
STEWART: There is no one answer to this question. The advice is not different from what men do, by the way. Unlike almost everything else a successful person does in his or her professional life, it is somewhat difficult to “decide” to become a board member and then plan for it to happen via networking and repositioning your career on your résumé.
Part of the problem is not with the qualifications or networking skills of people who want to be board members. It is about how few spots are open and how random the process can be. My recommendation is to pursue your business career as aggressively and professionally as you can so that when and if the opportunity arises you will be recognized for your expertise and interpersonal skills. It does not hurt to make sure you have developed some sponsors along the way who can speak on your behalf—behind the scenes or as formal references.
In many European countries, some strong regulations have been adopted to force this diversity in recent years. Do you see an opportunity here to support diversity through regulation?
—Laurence Batlle (AMP 186, 2014)
STEWART: Quotas, which are what you are talking about, are one of the third-rail topics in the world of women and boards. I do not support quotas even though I acknowledge that more women are on boards in many European countries as a result of those regulations.
If you go to our website, you will see that the first words are “Trewstar is a search firm that cares about good corporate governance.” I believe the way to good corporate governance is to add only the highest quality individuals to boards. In some ways, we used to have an unspoken quota system for boards. It was that men always got the spots, and the standards for joining a board were often, let’s say, flexible. I do not want to be a party to adding women because there is a rule that says that’s the first criterion. In some situations, the danger is that we will add mediocre women. That helps no one. In other situations, the issue is that we perpetuate the unintended bias that women are not as qualified as men and are only on boards thanks to the quota. Once in the boardroom, a variety of problems can develop if there is a perception that there are two types of directors. That, once again, helps no one.
Corporate board members are typically recruited from the ranks of CEOs or former CEOs. As women are underrepresented in the corner office, to what degree are corporate boards considering other leadership experience as relevant for candidates?
—Maggie Pax (MBA 1989)
STEWART: We place only outstanding board candidates whose backgrounds meet the specifications of our clients, and not one candidate has served as a CEO. We have placed a two-star Air Force general on two different boards. She clearly had many CEO-like experiences, but I believe it was her role as a cyber-expert that was most compelling to the boards.
How are executive education programs like Kellogg’s Women’s Director Development Program or participation in associations like the Latino Corporate Directors Association weighed when considering candidates for board roles? Are educational and networking opportunities something women and minorities should consider if corporate governance is a long- or short-term goal?
—Janelle James (MBA 2008)
STEWART: It is hard to say because I cannot evaluate the subtle impact that the various training programs have on the development of business executives. All I can say is that by the time a female reaches the C-suite of a Fortune 500 company or becomes a partner at a well-respected professional services or private equity firm, she has excelled beyond the need for a training program. That is not to say that these programs aren’t useful for developing executives as they move up the corporate ladder. But once in the C-suite, it is a nonissue. No one ever asks me if a candidate has been to a training program.
Class of MBA 1982, Section I