Survey Supports Board Quotas
Written by Jan Jaben-Eilon Thursday, September 08 2011
As an increasing number of countries set quotas for females to be appointed to corporate boards and offices, a larger percentage of women believe that these laws requiring corporations to add more women may be the right strategy.
The latest research conducted by Heidrick & Struggles, WomenCorporateDirectors (WCD), and Boris Groysberg of the Harvard Business School indicates that 41 percent of female directors polled think there should be quotas, up from 25 percent in last year’s survey. Why? They think quotas are successful. This news comes despite the fact that 59 percent of female directors polled don’t personally support quotas.
“This is a dramatic shift from last year’s survey (which included nearly 400 female and male directors mostly in the United States), where far fewer women and men supported quotas,” says Henrietta Holsman Fore, co-chair of WCD and director of Theravance Inc. “As we’re learning from Norway and France, quotas, and even the threat of quotas, can be effective in increasing board diversity; to really work, they should be accompanied by preparatory measures, smart guidelines, and implementation plans, along with databases of qualified women and corporate governance training.”
WCD, the only global membership organization of women corporate directors, comprises more than 1,000 members serving on more than 1,200 boards in 32 chapters around the world.
Perhaps not surprisingly, only 13 percent of male directors surveyed support quotas, but that number is up from only 1 percent in 2010.
The survey discloses that, globally, women and men on corporate boards appear to disagree on several issues, including the importance of diversity, measures of board effectiveness, and the reasons why fewer women are represented on boards.
“Women and men have differing points of view as to the reason why there are fewer women – both nominated and sitting on active corporate boards today,” says Bonnie Gwin, vice chairman and managing partner of Heidrick & Struggles’ North American Board of Directors Practice. “About one third of women directors globally believe that closed-off traditional networks are the primary reason women aren’t considered for director positions, whereas men believe there are fewer women currently in executive leadership roles, creating a smaller talent pipeline for entrance into the board room.”
The study, now in its second year, includes responses from 721 male and female board members in 26 countries and provides insight into how women and men view board composition worldwide. “Not only do women and men disagree about the reasons why fewer women serve on boards and if quotas are effective, but they also hold disparate views on whether increasing the number of women in the boardroom will actually improve overall board performance,” Groysberg says.
In May, WCD held a two-day forum during which it issued a call to action to increase the number of women on corporate boards. The 10-point program challenges leaders to:
1. Build the Pipeline through Advocacy and Mentorship. Each board director and corporate leader should help identify senior women in their companies and help them gain the visibility and responsibility necessary to become a board director: identify; coach; promote; advocate.
2. Assure Every Director Slate Includes at Least One Woman. Board nominating committees, executive search firms, succession planners, and boards themselves must commit to including at least one woman on every slate. The plan suggests learning from the NFL’s “Rooney’s Rule,” which assures an African-American coach is considered in each coach search.
3. Declare Board Diversity a Necessary Component of Good Governance. Regulatory agencies, stock exchanges, and governance communities around the world should encourage nominating committees to secure diverse directors and to explain their board selection process in their proxies.
4. Turn CEOs into Champions and Change Agents. Engage the men and women who run companies to champion and promote the business case for women on boards and in senior positions.
5. Expand the Pool. Even while developing clear and consistent methodologies for evaluating the potential of board and executive candidates, companies should look beyond sitting or retired CEOs for directors. Executives with expertise in global branding, supply chain, strategic talent, risk, IT, and manufacturing in China or India can make excellent directors.
6. Provide Specific Board Training. Encourage qualified women to participate in board training programs and then move through the pipeline of advisory board service to director positions.
7. Sponsor More Research. There should be more research on the performance of global companies with diverse boards and with women leading in the boardroom – how they can outperform their peers, connect their strategies to their communities, and create innovative strategies.
8. Report and Write about the Issue. More media and op-ed attention should be focused on the business case for women on boards and in the executive suite, domestically and globally.
9. Refer Women to Board Seats. Every woman and man who chooses not to accept a board position that has been offered should recommend women with the needed expertise for the seat.
10. Exercise all of your Rights as a Shareholder. “Placing qualified women on boards is a win-win for the boards of directors, the companies they serve, and ultimately the shareholders,” said Stautberg, speaking to women directors from around the world at the first-ever WCD Visionary Awards Dinner in May. “The future of diverse corporate boards can no longer be some place we are going, but one we create together now. If each of us takes action there will not only be more qualified women on corporate and large privately held boards, but they will make a difference around the table, in the world, and for the world.”
One of the panels held in May was called “How does having three or more women on a corporate board make a difference?” One of the panelists, Eileen Kamerick, a director at Associated Bancorp, a large regional bank holding company headquartered in Wisconsin, noted that it was in part the three women on Associated’s board that helped the bank navigate an extremely difficult set of circumstances during the financial crisis, when the bank took TARP funds and slashed the quarterly dividend.
“The circumstances at the bank were such that it required courage, candor, and cohesion among the directors, and the three women directors played a very significant role in pulling together the board in order to make key decisions at a critical time,” she said. “The role of the women directors was crucial at a point when the board not only had to pull together, but also be candid with each other in talking about some very difficult issues.”
She added that women directors are able to counteract the “go along, get along” thinking common to boards. “Women coming into the room are not part of the old boys’ club and have an ability to raise topics in a way that people find less threatening.”
Since it’s unlikely that the United States will set quotas for women on corporate boards, the question is, how will their numbers increase? “I don’t believe that quotas solve the problem,” said Maggie Wilderotter, chairman and chief executive of Frontier Communications, who spoke on the panel. What companies must do instead, she suggested, is help build the pipeline of women in the operational roles that are so attractive to board nominating committees. “We don’t have enough women in operating positions, and affording women that opportunity in the pipeline is critical,” added Wilderotter, who sits on the boards of Procter & Gamble and Xerox.
Stautberg says it’s frustrating that in the United States, enough women are not being named to corporate boards. She says that as boards are expanding, they are looking for experts in marketing and supply chains and “there are more women in these areas. They are choosing not just CEOs, but C-level board members with expertise in these areas.”
Finding women for these boards is where organizations like InterOrganizationNetwork (ION) come along. Formed in 2004, ION consists of 14 regional organizations in the United States representing more than 10,000 women in business across a wide range of industries. Through ION, these women combine their energies in advocating the advancement of women to positions of power in the business world, especially to boards of directors and executive suites.
Jan Jaben-Eilon was a founding staff writer of the Atlanta Business Chronicle. Since then, she has been the international editor of Advertising Age magazine and has written for such publications as The New York Times, International Herald Tribune, Washington Journalism Review, and Consumer Reports. She is the author of soon-to-be-published (There is) Life After Cancer. Jan and her husband have homes in Atlanta and Jerusalem.
