Businesses are operating in a volatile global marketplace amid increasing regulation, disruptive technologies, and economic and political uncertainty. In the face of such challenges, boards are under immense pressure to ensure the appropriate governance and management of the organization — and top companies realize that having diverse board members is a critical component. As a result of increaseddialogue and media attention, board diversity is alsotop of mind more now than ever before.
This is creating opportunities for women contemplating board membership.
The Business Case for Diversity
In 2012, women held a mere 16.6 percent of board seats at Fortune 500 companies. In a year’s time that number had barely budged, increasing to only 16.9 percent. During that same time period, less than one-fifth of companies had 25 percent or more female board directors, while one-tenth had no women serving on their boards.
According to studies by Catalyst and McKinsey Consulting, companies with more female directors rank higher on a number of performance measures. Specifically, companies with the highest percentages of female board directors have realized more than 50 percent higher return on equity, more than 40 percent higher return on sales and more than 65 percent higher return on invested capital. In short, board diversity is good business.
Yet even as boards look to bring on more women, they may struggle to find candidates, reluctant to look outside the C-suite. About half of the Fortune 100 companies seek to bring on CEOs or retired CEOs to serve as directors, and 25 percent seek out CFOs or retired CFOs. This CEO/CFO-only model can be limiting, especially for women. Companies looking to diversify their board should look beyond the C-suite, turning to presidents of universities, entrepreneurs of private companies and leaders in the federal government. In addition, female executives with expertise in global branding, supply chain management, strategic talent, risk, IT, digital and social media, and other areas can offer a fresh perspective to the board and should be considered.
However, the key to diversifying the board lies not only in companies changing their search criteria, but also in women changing their outlook and knowing they are viable candidates for board membership. Preparation also is paramount for those who want to be considered for opportunities.
Opening Doors and Preparing for Opportunities
The race to board membership is a marathon, not a sprint; it is a career-long pursuit that requires a strong network of contacts and supporters; it also requires confidence and courage.
While it might seem like a no-brainer, the first step women should take toward board membership is deciding whether they want to be on a board. In that spirit, investigating companies whose boards they would like to join and researching their members is a good way to determine potential connections, such as nonprofit alliances or alma maters.
Becoming a board member of a not-for-profit organization can help women demonstrate their talents and obtain valuable experience, especially if the board is structured like a corporate one. The connections made with other board members can open many doors to more formal board positions.
Companies also are taking active steps to groom the next generation of female board leaders by developing a diverse pipeline that relies on formal mentorship and sponsorship programs. Such programs create opportunities for women, providing growth or “stretch assignments” and giving them exposure and opportunities with individuals they might not otherwise interact with. Women considering board membership should have mentors and sponsors throughout the course of their careers.
Mentors are a tremendous resource for overall development and act as a role model and close adviser, providing a helpful perspective on how to invigorate one’s career, achieve internal recognition or navigate professional relationships. The role of a sponsor differs, however, because they will use their political capital to advocate for that person's career growth and advancement. A sponsor will promote a protégé’s visibility, and will strongly recommend her for strategic opportunities.
In addition to finding the right mentor and sponsors, women should seek challenging roles within their existing company’s structure. By seeking out projects that provide more visibility to leadership, women can build their credibility and brand. Other ways women can prepare for board membership are to inquire about getting involved with at-large committees to position themselves to work with and then present at the company’s full board or board committees, so as to establish relationships with board members who can help them get placed. Getting a recommendation for an advisory board position and securing one is a great opportunity to increase visibility and can pave the way for a future director role.
The Role of Leadership
Leaders at large companies need to be “change agents” who drive strategies to propel and promote diverse candidates, particularly women. Board nominating committees, executive search firms, succession planners and boards themselves also must commit to ensuring a woman is considered any time there is an open board position.
To build a pipeline of qualified, diverse talent, corporate leaders should adopt the following four steps: identify, coach, promote and advocate. Formalized mentorship and sponsorship programs are a good way to engage women early in their careers and help executives to identify leadership potential. Creating networking and leadership opportunities for midlevel executive women and even one-day board preparation classes for executive female leadership may inspire top-performing individuals to consider board membership and rise to the occasion.
Beyond programming, leaders must push for change at the top of the house, shifting the dialogue from strictly “diversity” to a conversation about inclusivity to ensure that the entire pool of qualified individuals are considered for open board positions.
There is no doubt the desire exists for women to lead, but expediting the process toward board membership will require thoughtful and continued effort.