Why Corporate Boardrooms Need More Women
The topic of women in leadership often comes up when I do interviews. It’s an ongoing conversation that I hope, one day, will not be among the things I get asked about.
Why? When that day comes, it means we’ve reached parity and don’t feel the need to address leadership diversity as an issue. Unfortunately, that day has not yet arrived.
In 2013, just 16.9% of Fortune 500 board seats were filled by women–and women’s representation on boards has stagnated, gaining just two percentage points from 2006 to 2013.
Locally, we’re not doing much better: 128 Silicon Valley companies representing $1.2 trillion in shareholder value have just 6.6% of their highest-paid executive positions filled by women, and only 8.4% of Silicon Valley board members are women.
It’s a shame when you consider that companies with sustained high representation of women on their boards significantly outperformed those with sustained low representation by 84% on return on sales, 60% on return on invested capital, and 46% on return on equity.
In fact, international executive search firm Spencer Stuart did a survey in 2012 of U.S. corporate board members, in which 80% agreed that diversity in the boardroom “generally results in increased value for shareholders.”
Dana Kunz, CEO of MktLaunch and the executive director for the Watermark Institute Board Access Program, a nonprofit community of women executives, suggests that “activist board members” paired with “activist candidates” are the two primary forces that will create change. C-level executives may be able to influence the process, but ultimately it’s the board that searches for and selects candidates.
Organizations like Watermark and Catalyst, a nonprofit organization that aims to expand opportunities for women, are doing important work in encouraging greater board diversity. Both groups are very active in helping board-ready women secure corporate director positions both locally and nationally.
In addition they provide critical research that looks at the status of women in leadership positions. For example, Watermark sponsors the UC Davis Study of California Women Business Leaders, an annual report on the status of women in top positions at the 400 largest companies in California. Among its copious research, Catalyst publishes the Catalyst Census: Fortune 500 Women Board Directors.
There are also a few initiatives afoot, such as 2020 Women on Boards, which encourages publicly traded and private companies to sign a pledge to reach the goal of 20% of their board being women by 2020. California recently became the first state to pass legislation, Senate Resolution 62, that formally encourages corporations to voluntarily add more women to their board of directors.
In addition to supporting the initiatives underway, business leaders and community influencers should consider how to engage companies and encourage an increase in boardroom diversity. Here are a few ideas:
ENCOURAGE LEADERSHIP INFLUENCE
Use the influence of industry associations to encourage more women to seek out positions on boards and connect them to board programs.
Encourage activist board members who are willing to find and support exceptional candidates for board seats (both gender and racially diverse).
Make use of our most connected industry groups as a sort of “clearinghouse” where board openings and the names of women who are qualified to serve on a corporate board can be exchanged.
ASK THE MEDIA TO DO MORE
Encourage media to give more coverage to the contributions of women on boards and the best practices of companies with diverse boards.
Give more attention to the data and research our academic institutions and think tanks are publishing.
BUILD KNOWLEDGE
Hold panel discussions and keynote talks with influencers and leaders in the region through groups like the Churchill Club.
Most importantly, more women need to take things into their own hands. This means asking to be considered for a board seat on the companies they help create, build, and acquire. It also means not shying away from giving a voice to their professional desires, ideas, opinions, and even objections–and especially not selling themselves short.
Getting more women in executive and board positions will do more to bring other women into leadership roles than almost anything else. It’s self-perpetuating: When women see others achieve and be successful, they can envision themselves doing the same, and that accelerates change.
We have three women among our nine board members at Technology Credit Union, and 55% of our managing committee is female. In addition, 25% of Tech CU’s C-level executives are women. We work very hard to ensure our employees have a better understanding of and sensitivity to their colleagues through programs that focus on diversity training for things like race, gender, religion, and sexual orientation. As the CEO of Tech CU, it’s my perspective that a diverse workforce makes for a stronger, more open organization.
I encourage my executive colleagues to join me in shedding light on the issue of board diversity in 2014. Among the many issues we face today, this seems to be one that has a fairly straightforward solution.