By Andrea Newell (Grand Rapids, Michigan)
As we have previously reported, a 2004 study by Catalyst, a global non-profit organization dedicated to expanding opportunities for women in the workplace, showed that Fortune 500 companies with more women board directors performed significantly higher than the companies with the least number of women board directors: 53% higher return on equity, 42% higher return on sales, and 66% higher return on invested capital.
As employees, consumers, investors, and voters, women play a significant role in the workplace and have a substantial impact on our economy. According to the 2008 article, Getting from a Good to a Great Board, “women make or influence 80% of consumer decisions and occupy more than 50% of managerial and professional positions.” Despite this huge consumer presence, women only represent 15.1% of corporate board directors, and that number drops to 3.2% for women of color.
So why don’t all boards just add a token woman and reap the rewards? A study by the Wellesley Centers for Women reports that “the magic seems to happen when three or more women serve on a board together.” One woman can have a strong impact, and two women are better than one, but “increasing the number of women to three or more enhances the likelihood that women’s voices and ideas are heard and that boardroom dynamics change substantially.” One woman is seen as having a “woman’s point of view,” but three women might have differing viewpoints on an issue – effectively negating that argument. The higher the number of women serving on a board, the more they are treated as individuals.
Adding women board directors can bring a fresh attitude to stagnant boards. The Wellesley study says that women tend to be more collaborative than men, yet actively ask questions and raise different issues. It also states that women bring new perspectives and a new leadership style to the table and demonstrate a willingness to tackle tough issues.
In light of all this evidence, why are the numbers of women on boards still so low? Changing the composition of a Fortune 500 corporate board is a very slow process that requires planning and a top-down, long-term commitment. Getting from a Good to a Great Board lauds the efforts of Tom Engibous, chair of Texas Instruments from 1998-2008. Engibous made a concerted effort over that decade to increase the number of women on the board by widening the candidate pool to include women, as well as candidates from privately-held companies, academia and public service – rather than confining the search to CEOs from publicly traded companies as was the norm. During his tenure, the number of women board directors increased from one out of ten, to four out of ten. “TI has benefitted from this diversity as the board helped navigate the transformation of the company into one of the best performing and most admired semiconductor companies.” During that same period, TI also posted considerable financial gains.
In another Catalyst study, data determined that “women board directors are a predictor of women corporate officers: the more women board directors a company has in the past, the more women corporate officers it will have in the future.” Why?
“Increasing the number of women on corporate boards is important for both financial performance and gender diversity in the corporate officer ranks. Besides giving voice and power to smart, experienced women, it signals a commitment to inclusion that is essential to hiring – and keeping – women and men with leadership potential. When companies can demonstrate that they value women at the top, employees will know that they have the potential to be leaders in the future, and companies will know that their talent pool is rich enough to enable continued success.”
So where do you sign up? It is definitely an opportune time to explore the option of serving on a board. The economy is causing board shakeups. Current directors are limiting the number of boards they sit on, and newly-instituted term limits are generating openings. There are many boards that could benefit from new insight. But don’t be fooled into thinking that boards are accepting women simply for the sake of gender diversity. Stringent requirements are still enforced. Women need high-level corporate experience and the requisite knowledge and skills to contribute to board discussions.
Ready for leadership experience, but haven’t reached that top-tier yet? Don’t be discouraged. If you want to serve on a Fortune 500 board, it’s never too early to start planning. You can begin by serving on a local corporate or non-profit board. Lynn Shapiro Snyder, an attorney and board recruitment expert, offers advice in Answering the Call, a book about the rewards and pitfalls of board service. For a crash course, her Washington Post article, Expand Your Leadership: Join a Corporate Board leads you through the corporate board search with tips on how to stand out to board nominating committees. But, before you begin your campaign, be sure your employer is aware of, and stands behind, your endeavors. Most employers welcome the extra experience you’ll be getting, but there are some who prohibit outside board service. Snyder has a form you can use to approach your employer for permission.
Isn’t getting onto a corporate board all about who you know? Yes, and for good reason. Much of business is about networking, and board service is no exception. Snyder calls it “horizontal advancement” – increasing your profile with your peers so that you know more of them and more of them know you. This can prove to be more difficult for women who lack natural networking activities, like golf. However, a new generation of professional women’s groups (like Snyder’s Women Business Leaders of the U.S. Health Care Industry Foundation) is filling that gap and encouraging women from different companies to get to know each other.
In addition to networking, more and more board seats are being filled by board search firms – but even then you need a personal touch. “Search firms need to personally know you.” Snyder says. “Or else someone they know needs to recommend you firsthand.” And don’t forget the most important asset you need to have when seeking a board seat: your reputation. Snyder affirms that in addition to your unique skill set, leadership abilities, and any industry accolades – your credibility and strong reputation are a large part of the value you bring to the boardroom table.
Is career advancement the only reason to serve on a corporate board? Not according to Snyder.
“The reason to serve on a corporate board is to have the unique opportunity to help another management team run a successful business. To be the ultimate executive coach. You can be more strategic, and less hands on – think, instead of do. You can help people do a better job,” Snyder says.
As women are rising in the corporate ranks and are responsible for an overwhelming majority of the consumption of services and goods – it only stands to reason that more women should represent that perspective in the boardroom. TI’s Engibous demonstrated that boards need to broaden their definition of board members and look for women in places other than just the CEO seat. As the corporate board culture evolves, you might make the list sooner than you think.
Define your passion and identify some organizations that could use your skills. Polish your reputation and start meeting people – there is a corporate board out there that needs you.