Board Diversity: Get Key Stakeholders Involved

The common hot-button issues for corporate boards worldwide — including stricter regulatory requirements and lingering economic uncertainty — are uniting male and female directors, according to a 2012 global survey of more than 1,000 directors. But one issue in particular is still dividing the genders in the boardroom: diversity.

While the topic of diversity in the boardroom is gaining interest globally, male and female directors disagree on the reasons why diversity still lags, as well as what to do about it.

The global 2012 Board of Directors Survey — conducted by WomenCorporateDirectors, Heidrick & Struggles, Harvard Business School professor Boris Groysberg, and researcher Deborah Bell — reveals that men and women have differing perceptions of the factors contributing to women’s under-representation on boards.

While 45 percent of men surveyed believed that the “lack of women in executive ranks” is the primary reason that the percentage of women on boards isn’t increasing, only 18 percent of women surveyed agreed. As the top reason why there were not more women on boards, women respondents cited that “traditional networks tend to be male-oriented.”

Quotas have become increasingly discussed — and implemented — worldwide as vehicles to enforce board diversity, and this, too, is causing somewhat of a gender division. Just more than half the female directors surveyed (51 percent) believe that quotas are an effective tool for increasing diversity in the boardroom, but only 25 percent of men agreed. When directors were asked whether they personally supported boardroom quotas, 39 percent of women and just 18 percent of men said they did.

These numbers show that even though female directors show greater support than their male peers for quotas, most do not support them. As mentioned, directors as a whole — men and women — are concerned about regulation. They are looking for a solution that works better than a regulatory hammer. The fact is that the individualized needs of different companies demand a complex and nuanced set of tools to improve diverse representation in the boardroom.

As the link between board diversity and company performance becomes clearer, the issue is drawing the attention of groups beyond regulators. Shareholders, business partners, employees, customers and other stakeholders are demanding action. Given the performance and potential as well as regulatory mandates on corporations today, boards around the globe can’t afford to push this issue aside.

So, how can stakeholders influence boards on the diversity question? Incorporating the perspectives and insights of female board leaders and CEOs around the world, WomenCorporateDirectors has identified specific roles for various stakeholders that can have measurable impact on diversity in the boardroom. These include:

Search firms and nominating committees, which can ensure that every director slate includes at least one woman.
Academic institutions, research groups and the media, which can devote more research and resources on the business case and business issues related to board diversity.
Investors and shareholders, who can demand that their boards select the best board members, period, and not just those who are best friends with the CEO.
CEOs, who can act as change agents in their companies, both by influencing the board and by actively sponsoring female executives up through the leadership ranks.
Diversity executives, who can identify women and other diverse talent and make sure these individuals are visible to senior management and outside networks.

Building a diverse bench of executives who can fill future board seats across corporate America and worldwide requires action from key stakeholders. The “push” from below — diverse candidates coming into the executive ranks — must be matched by a “pull” from above — the board nominating chairmen and CEOs driving this change as they seek to improve corporate performance through greater diversity.

An internal mandate and business case for diverse leadership in governance allows for an organic change to occur without regulation. Diversity executives can contribute to this by finding senior diversity candidates and helping to open networks to the boardroom through the leadership of their companies.

Susan Stautberg is co-founder and co-chairman of WomenCorporateDirectors, a global membership organization and community of female corporate directors. She can be reached at editor@diversity-executive.com.