As of May 2018, with the retirement of some high-profile female CEOs (among them, Meg Whitman of Hewlett-Packard), women hold 24 of the CEO positions in the Fortune 500, down from 27 at the start of the year. Not surprisingly, these top female leaders find themselves inundated with multiple requests to serve on company boards. Clearly, when companies want to add a female director, the first thing they typically look for is a woman who is a CEO.
But the fact is, there are many men serving on boards who occupy senior leadership positions other than CEO. So why, then, are women held to a different, higher standard when it comes to board service? One reason may be the unfortunate fact of corporate life that men are often promoted based on their potential, while women are promoted based on their accomplishments. So, if women have not first proven themselves as CEOs, they may be less likely to be considered as director candidates.
This thinking excludes many talented and qualified women who might be senior vice presidents or hold C-level positions other than CEO. Applying the same qualifying criteria to both male and female directors would increase the pool of executive women who bring talent, experience, and a diverse perspective to board service.
Companies Need Patience and Persistence to Change Board Composition
Changing a company’s board composition takes time. That’s not an excuse—it’s a fact. For companies within the S&P 1500 Composite Index, average director tenure is 8.7 years. While board diversity initiatives are closely watched by investors and activists alike, it can take several years of concerted effort before a board’s composition looks appreciably different.
This slowness, however, masks what I believe to be real progress. In 2010, women held 15.7 percent of board seats at major companies; today, that has grown to about 20 percent. But there has been a much larger increase in female directors than the numbers might reveal at first glance. A decade ago, it was not uncommon for directors to serve on as many as six or seven boards. The women who also served on multiple boards were, in effect, being counted multiple times (as were their male counterparts). Now, because of more stringent regulatory requirements, such as Sarbanes-Oxley, directors are serving on fewer boards. This means there are far more individual women directors in the mix, which indicates an encouraging trend in board gender diversity.
Women Need to Develop Their Value Proposition for Board Service
As board recruiters will readily report, companies are eager to add female directors. Yet there are many qualified women executives who wonder, “Why doesn’t my phone ring?” This is the part of the process where women can be proactive. Unless a woman is a sitting CEO—a highly desired experience that speaks for itself—being considered as a director candidate requires honing a “value proposition,” which is the unique value she brings to a board.
It is important to note that there is a key difference in networking for a job versus positioning oneself for a directorship. At the executive level, getting a job is about being a leader. But as a board member, it’s all about expertise—in cyber security, digital marketing, emerging markets, or other sought-after specialties. In their oversight role, board members focus primarily on strategy, CEO succession and planning, and fiduciary responsibility.
One high-level executive I know shared her story of being very successful when it came to securing corporate roles; she had vast experience, incredible skills, and a huge network. When contemplating board membership, she thought it would be the same: just a little communication within her network and the phone would ring. But when nothing happened, she realized she needed to reach out strategically to an even broader range of people to communicate the value she could bring to particular types of boards and seek their advice. She ultimately secured a seat not only on the board of one company she admired, but a number of others as well.
Read the full article at insight.kellogg.northwestern.edu