The market is demanding increased transparency and accountability. New compliance mandates, regulation and shareholder activism are the drivers. At the same time, boards and their constituencies are clamoring for more strategic engagement and value-add by the directors. Yet, this is in stark contrast to the drumbeat for compliance and regulation. How can boards balance the pressures from their attorneys, auditors and regulators to be risk averse (read: safe) with Wall Street calling for creativity, innovation and job creation?
Myth #1: There are no women who are on a par with our existing members.
Often this is corporate speak for “there are no available women who are CEO’s of the largest multinational companies.” Traditionally, the majority of corporate directors have been drawn from two sources: active and retired CEOs. At the best boards, this model is passé. Diversity encompasses discipline, age, responsibilities, geography, and culture. Almost no board consists only of CEOs — nor should they. I challenge you to name a well thought through profile for a director that cannot be filled by a woman.
Myth #2: The only qualified women are already over committed.
Not true. Those may be the only potential directors known to the board, the directors who tend to be recycled, because they are safe and because they are visible. Too often, women not yet on board are essentially invisible. Carly Fiorina, former CEO at Hewlett-Packard, and now Meg Whitman, is undoubtedly overwhelmed with board offers. Two Hispanics were recruited to the Wal-Mart board, and their board books will fill up quickly. But, many productive, excelling women and minorities tend to be overlooked because they are less visible as a result of focusing on career development and building their businesses. Their relative newness to their position, the fact that they tend to be younger and don’t belong to the same organizations that the men do, the fact that they may have grown their own business, the likelihood that they are not included in the high-powered golf games of directors, all diminish the likelihood that a CEO or director seeking a board member will know them or seek them out. Women with strategic experience and perspectives in numerous companies and industries can be invaluable.
What can we do?
- Learn about governance. Read governance sites and magazines, such as those the accounting firms, law firms, consultancies, and shareholder groups offer online and at www.nacdonline.org. Educate our peers.
- Know who is on the board at your company. Ask who sits on the boards of companies where you invest, where you do business, and where you shop. Are there any women? Is there more than one?
- If not, write a letter as a shareholder, as a customer, as an employee.
- When the proxy comes, ask where are the women?
- Continue to participate in programs like 2020 WOB.
- recognize the boards in our individual states with the most women and publicize the boards with no gender diversity.
- Advocate for director rotation. Ideally, directors are retained on merit. Those who have served well, but can be replaced by someone better qualified and more current, should be thanked and excused. A board seat is not an entitlement in perpetuity. Last proxy season, only 291 new directors joined S&P 500 boards.
- As women, we must commit to bringing other women on board. We also need to make it clear that a single woman on a board is not enough. We must move beyond populating our boards with friends of friends.
- Strongly consider serving on at least one board.
- Explore non-profits and advisory boards. Small private companies.
- Express your interest to directors, officers, bankers, CEOs, investors, corporate attorneys, auditors and search firms. About 80% of board openings are filled by word of mouth.
- Be precise about what you contribute – financial expertise, marketing, software, HR, technology, international. What industry knowledge do you have? Create a resume appropriate to the opportunity.
- Target five companies whose boards you could benefit and would enjoy. Learn who the directors and officers are, who the outside counsel and auditors are. Circulate your list and the names to your network and ask for an introduction. If you don’t find an introduction, make an appointment with the governance committee chair.
- Be particular. Interview the board, just as you expect them to interview you. Most importantly, ask why they want you? Is there D & O insurance? What are its exemptions? Meet with officers, advisors, and the board members. Find out what they can and cannot do.
- Be visible. Speak, write, and encourage others to advocate for you. Find a mentor.
- Once you are on board, be prepared to do more than sit there. Ask the hard questions. Be prepared to keep topics alive to be sure people have really thought them through. Be a constructive skeptic.
Help other women. – Public companies led by women are more likely to have more women directors on their boards. All have at least two (including the CEO herself), and several have as many as five or six female directors. The average number of women directors in women-led companies is 3.7 (including the CEO), versus 1.6 for all S&P 500 companies. The dramatic untold stories are the 100s of companies, public and private, that have avoided crises and have succeeded, because of the advice and counsel of strategic, diversified boards of directors.
If we don’t govern well, government and the regulators will do it for us.
Better boards = better companies.
To learn more an upcoming educational program to support secure corporate board seats, please visit www.sharonlechter.com/2020wob