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A Legacy Worth Leaving: Dropping Old Thinking Key to More Women on Boards

Posted on Tuesday, Mar 27th 2018

By Guest Author Anita M. Sands

When contemplating the challenges of gender diversity and board refreshment, I often recall George Bernard Shaw’s words: “Progress is impossible without change, and those who cannot change their minds cannot change anything.”

Over the past few years, I have been uplifted by the growing number of efforts contributing to the gender equality movement around the world. When it comes to corporate boards, however, the momentum behind these efforts has been little match to the formidable inertia that encompasses the board recruiting process. While gender equality advocates have made admirable efforts to increase awareness and push for change, the truth is in the numbers. From 2016 to 2017, the number of female directors on Fortune 500 boards grew a mere 1.2% to 22.2%.

We must face reality:

“the status quo will not change unless we change the way in which the status quo is reached.”

That endeavor starts with all of us, as board directors, taking an objective look at ourselves and challenging our traditional ways of thinking.

Not a supply-side problem

Achieving greater gender diversity on boards is not a supply-side problem. In fact, I’m convinced it’s a demand-side process problem. As long as boards churn out the same old specifications and go through the same old recruiting processes, it’s little surprise that we end up with (quite literally, in some cases) the same old directors!

If increasing gender representation is the objective, then we must begin by addressing the two fundamental flaws inherent in current recruiting processes:

  • Despite the best efforts of recruiters, most board searches begin by asking current directors to suggest potential candidates. Naturally, we tap into our own networks. Given that we often tend to know people with similar backgrounds, it’s little surprise that the “network approach” perpetuates the problem. This trend is particularly evident in tightly-networked ecosystems like Silicon Valley where it’s common to see director overlap across boards or to hear the same names suggested time and again.
  • Board searches often begin with two criteria which dramatically reduce the number of potential director candidates: (a) they must be a former or current CEO, and/or (b) they must have prior board experience. Given that only 4.2% of F500 CEOS are female (21 women) and 22.2% of F500 board members are women, these restrictions—especially if both criteria are applied—reduce the potential pool of female candidates to the size of a wading pool.

Re-engineering the process

With this baseline in mind, I believe that the first and most vital step to improving gender representation on boards starts with re-engineering the way we approach recruiting. Generating a more diverse slate requires tapping into new and larger pools of potential candidates, which can be accomplished by:

  • Leveraging your own network to connect with female board directors you know. Like myself, these women have undoubtedly attended female networking events where they broadened their network of female candidates and directors, but more importantly, they have likely been contacted by other women who are interested in pursuing board roles and who otherwise wouldn’t be on your radar.
  • Retaining a specialist recruiting firm that makes it their mission to discover untapped female talent, as these companies are often magnets for female executives and leaders who are looking to take the next step towards becoming board directors.

Start with women

Personally, I was recruited to all three of my public boards by Trewstar, a boutique search firm that focuses only on board searches for companies looking to recruit female directors.

Trewstar was founded six years ago by Beth Stewart, a former Goldman Sachs banker and a prior public company board director. Building upon the awareness that many not-for-profit organizations created around the lack of board diversity, Trewstar provides full-service recruitment and placement services for boards that want to add women.

Trewstar’s thesis matches my belief that finding qualified women is not a supply-side problem. Their approach is to start by producing a slate of outstanding, qualified female candidates who meet the search criteria. If the board cannot find a suitable candidate from that slate, Trewstar expands the search to include male candidates. To date, Trewstar has filled over 65 seats with 90% women. 60% of these women had no prior board experience, and only one was a CEO. Interestingly, 95% of them were not known to anyone on the board.

Incidentally, two of the board searches in which I was a finalist candidate ended up appointing both women when they couldn’t decide between us. While this situation may be more the exception than the rule, I believe it’s a testament to Trewstar’s unique approach.

The lesson here is simple: dropping legacy criteria opens up a far greater pool of potential candidates, and adopting an alternative process to recruiting—simply by interviewing women first—may well be what’s needed to break the status quo stalemate.

In all the searches she’s undertaken, Beth has developed some consistent observations regarding the characteristics of the senior women she’s appointed and the traits which make great board members. As she explains, “Among the hundreds of candidates I’ve interviewed, I’ve observed almost without exception that C-Suite and otherwise successful women tend to have three things in common: they’re intelligent, diligent and collegial.”

Why does that matter? Because, as any director will tell you, finding candidates that are outstandingly competent and fit the board’s culture is a critical component to a successful appointment. Trewstar’s experience negates the unsubstantiated “fear” of disruption and is a strong endorsement for a process that breaks with tradition.

Quality and quantity

Speaking of unsubstantiated arguments, another source of frustration for us advocates of greater gender diversity has been the age-old maxim of “not wanting to compromise quality for the sake of diversity.”

For starters, I doubt you’ll find a single competent and qualified female board candidate who would wish for anyone to compromise their standards in the effort to increase female representation. Tokenism, after all, helps no one.

Recently, one of my fellow (male) directors outlined a compelling concept for negating the “quality” concern:

  • Assume that the normal distribution of qualified male directors follows a typical bell curve, as does the distribution of qualified potential female directors.
  • Simply by virtue of the numbers themselves (notwithstanding the nominal size of each pool), we have recruited far more into the normal distribution of the male curve than the female curve. After all, if 83% of (Russell 3000) directors are men, then there’s still a lot of room to recruit from the highest percentiles of potential female candidates.
  • Assuming the criteria used for the x-axis of both curves is the same, recruiting from the upper echelons of normal distribution for women will likely result in a higher quality candidate than recruiting from the median of the male bell curve.

Of course, many counter arguments to that model can exist, including that if prior board experience is one of the qualifying (x-axis) criteria, then the median of the male curve could be demonstratively further “to the right” than the median of the female curve. Nevertheless, it’s a powerful concept, and one can certainly argue that today’s 80:20 ratio in representation leaves a sizeable and untapped pool of talented women for board recruitment.

Get out from behind the 20-year eight ball

Like all change, success in re-engineering board recruiting processes starts with aligned, consistent, and determined leadership, along with an open-mindedness to try something new.

In an era where board directors continually evaluate management teams on their ability to keep pace with change, surely it’s incumbent upon us to lead by example. We must assemble the most cognitively diverse boards possible and equip ourselves with the range of skills and experiences required during this transformative and innovative time. Placing undue weight on criteria such as prior board experience is a disservice to the shareholders we are collectively there to represent, especially when it comes at the exclusion of skills in more cutting-edge areas like cybersecurity and digital.

I’ve written before about how gender diversity is indeed a “man’s business”, and I applaud the efforts of companies such as American Water Works Company Inc., Zendesk Inc., Navient Corp, and Alliant Energy Corp, who have taken a visible leadership role in setting a new bar for boardroom diversity in every industry.

However, as much as the latest statistics show positive movement, we won’t reach gender parity in the boardrooms of the Russell 3000 until 2048 if the pace continues as-is. The issue continues to be the low rate of board turnover and the fact that female directors are not being hired into more than half the open positions.

Gender diversity is an imperative that’s only going to move further to the forefront. Efforts by institutional investors such as State Street Global Advisors, Vanguard and Blackrock are significantly increasing the level of attention paid to the leadership, culture, and make-up of organizations—and their boards. Now is the time for us to reframe both our thinking and approach. We should no longer see diversity as a problem but instead as a solution to many of the challenges and opportunities our organizations face today.

So, as we look ahead, let’s continue to push for new approaches and more concerted efforts to ensure that we reach gender board parity long before 2048. Thirty years is decades too long to wait for the valuable contributions and perspectives that talented executives, who happen to be women, can bring to every board room.

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