06 Sep 2016
The Solution That Doesn’t Get Discussed About How to Get More Women On Corporate BoardsTopics:
By Beth Stewart (MBA 1982), CEO Trewstar Corporate Board Services and Ilene H. Lang (MBA 1973), retired CEO, Catalyst and senior advisor to Trewstar
We take as given that modern, well-run boards recognize myriad reasons to include diverse skills, ages, genders, and corporate backgrounds in the boardroom, so this article is not a discussion about why to add female directors. The focus here is on a solution to the slow pace of women joining corporate boards.
In 2016, women occupy only 19.9% of S&P 500 boards, a modest step up from 19.2% in 2015. Despite the seemingly intense, decade-long focus on the topic, corporate boardrooms are stuck. The first challenge to adding women to boards is that there are just not enough open board seats to fill and the second is that of the very few open spots (7% of the S&P 500 or about 380), women get only 31% of those seats.
Here is an idea that will get women 100% of the open seats and potentially create more openings: Interview the women first.
It doesn’t need to be tested by the FDA before corporate boards across America try it. Trewstar has done it over 30 times, and it always works. The key ingredient is having multiple female candidates who fulfill, with no compromises, both the skill set and personality fit requirements of the board.
For people who like to stick with traditional methods, this is traditional. For centuries we have interviewed one group of individuals exclusively before others. All we are doing is switching the group. For people who are concerned about fairness, it is fair. Just like it has always been: Men are still part of the process, but now, the second part.
One of the reasons this approach succeeds is that most of the work is done before the search even begins. By the time an all-women slate is presented to a nominating and governance committee, everyone on the board is on board, so to speak, with the concept.
It is amazing that when the existing board starts to interview the female candidates—correctly screened and selected female candidates, by anyone’s definition, a constellation of stars—the challenge (or as we might more aptly call it, the opportunity) becomes how many to add to the board, not which one.
There is a logic to this. It is not easy for women to rise through the corporate or partnership or government or academic ranks to reach an experience level appropriate for a board position. To paraphrase Jane Austen, it is a truth which should be universally acknowledged: a woman with a significant career in a traditional male field has to be smart, hard-working, and able to get along with men. If selected for the requisite set of skills, why wouldn’t a board want such a person to join its ranks? Yes, there are many women who will not fit or do not have the skills to be in a boardroom. But there are hundreds (if not thousands) of women who do. In our experience, one hundred percent of boards that are presented with appropriately skilled women candidates first never find the need to interview the men.
Shaking up the board selection process has unintended consequences, too— including the joy from the male board member who tells us he can’t believe there are so many qualified female candidates. There is also the glaring comparison between a new board member with 21st century skills (cyber security, technology, global, social media, modern HR practices, etc.) versus a long-standing board member with dated experience. This can help activate the difficult discussions about board member retirement, which in turn opens more spots for new board members.
Many wonder why traditional search firms have not adopted this proven approach. The reason is simple and makes sense—just follow the money. Board placements are not a significant source of fees for search firms whose main line of business is executive placement and leadership evaluation/consulting assignments. For them, board search is a loss leader for building the connections and relationships needed to support the traditional search firm’s primary revenue stream. We designed Trewstar not to compete with or disrupt the search firm industry, but to fill a gap that other firms could not afford to resource appropriately.
Trewstar works with male and female boardroom leaders every day who set out on a different but effective path to add outstanding female candidates to their boards. These board members are willing to take a modern approach—first by socializing the notion of hiring a search firm that specializes in female board candidates, and second by trying the new and creative concept of interviewing female candidates before any male candidates.
The arithmetic behind the opportunity is easy. Women currently hold 950 S&P 500 company board seats. If every board opened two spots—the first by not re-nominating one male director and the second by expanding the board by one in anticipation of further retirements—that would solve the supply problem by creating 1,000 new board seats. The 19.9 percent quickly becomes 40 percent if women are considered first for those new openings. The ripple effects to smaller companies and the world of private equity and venture capital would create a tsunami.
Class of MBA 1982, Section I
Class of MBA 1973, Section F