It’s an old story by now. Although women make up 50% of the labor market, they remain shockingly underrepresented on corporate boards. While there has been some movement recently, it’s been slow going, and will likely continue to be sluggish in the near future.
Board diversity, and specifically gender diversity, isn’t just the right thing to do. Numerous studies from wide-ranging organizations have all found that diverse boards are better boards; especially when the group includes more than one woman. Studies show diverse boards communicate more effectively, make better, less risky decisions, and outperform non-diverse boards in terms of shareholder value. A Credit Suisse report found that large companies with at least one woman on their boards performed better than their all-male counterparts, and boards with three or more female directors enjoyed particular success, according to a report by Catalyst.
While the direct association of increased profitability for diverse versus non-diverse boards may still be somewhat arguable, what is unarguable is that diverse boards better reflect customers and employees, and bring viewpoints that could go unexplored with a more monolithic group in the boardroom. In a report published by international CPA firm Grant Thornton, companies with diverse executive boards outperform peers run by all-male boards. The study covered listed companies in India, the UK and US. Their research estimates the opportunity cost for companies with male-only executive boards (in terms of lower returns on assets) at a staggering $655 billion in 2014.
Still, according to a Fortune study, fewer than 1% of corporate boards in the Fortune 500 have achieved or surpassed gender parity. In the face of such evidence, it’s hard to understand the slow pace to change.
But old stories often contain some portion of misinformation, misconceptions and myths. This one is no different. Take for example, the idea that there are not enough women qualified to serve. According to the Huffington Post, women hold only 4.6% of CEO roles among top corporations but the numbers almost triple if you consider all executive-level positions. The good news is, organizations like Catalyst and Boardroom Bound have been trying to address the issue for 20 years. These groups, and others like them, have answered with the development of board training programs, some of which have been very successful in getting their graduates on boards. Catalyst’s website reports graduates who have been appointed to public company boards at 98 to date, and 28 in 2014 alone. In its December 2015 report, Corporate Boards, the Government Accounting Office cited a growth in the appointment of women on S&P 1500 boards from 8% in 1997 to 16% in 2015, with an increased rate of appointment in 2015 of 22%. However, even if equal proportions of women and men joined boards each year beginning in 2015, GAO estimated that it could take more than four decades for women’s representation on boards to be on par with that of men.
One reason for the glacial pace of transitioning to more diverse boards the is rate of turnover among current board members. With no mandates for term limits or mandatory retirement age, vacancy rates are estimated at about 7% each year. The same GAO report calculates that at the current pace of appointments of women it will take 40 years to reach parity.
Compounding the problem further is the nature of how most board seats are filled. Traditionally, board vacancies are filled by referrals from other board members or CEOs, who are overwhelming white and male. When male-dominated boards start from the premise that few, if any, women are qualified to serve, they may fall even more heavily into the trap of not even looking for alternatives to the usual suspects. They nominate those with whom they are most familiar and comfortable, who also tend to be their male contacts.
A recent survey by Bloomberg found male attitudes about board diversity differ sharply from women’s. In that study, 63% of female respondents–compared with 35% of men–said that having women on corporate boards was very important. Racial diversity was very important to 46% of women, while just 27% of men agreed. And women were also more confident that qualified diverse candidates were available to serve on boards: 46% of women said there were enough qualified diverse candidates, while only 18% of men agreed.
If you are female and a lawyer, getting a seat on a corporate board is even more complicated. Lawyers, regardless of gender, face a separate set of considerations that can act as a barrier to entry. For starters, every corporation has its general counsel. They are likely to have retained outside counsel as well. Executives see these people as their legal experts and problem solvers on specific issues. Lawyers may serve as corporate secretary or board administrators, but they are regarded as fulfilling a legal service. Initial perceptions of putting a lawyer on the board is often “we don’t need another lawyer.” Moreover, lawyers are not generally seen as entrepreneurs or as having lead a company.
Women’s Bar Association President Susan Kovarovics understands that her members seem to struggle with how to get on a corporate board. These are women with strong credentials. They have good relationships, reputations for meeting professional demands, and demonstrate sound judgment. Beyond just being in the right place at the right time and having someone vouch for you, what else could provide the right access? “There’s been a lot of dialogue but not a lot of progress. We have what it takes [to be successful on a board]but we’re not there yet,” she said.
Seeing a lawyer as a business advisor is a leap for many board members. According to Bobbi Liebenberg, who chairs DirectWomen, an organization founded to advocate for women lawyers to serve on corporate boards, overcoming misperceptions about what a lawyer could bring to a board is often the first step. Liebenberg explains that CEOs often think that putting a lawyer on the board will put a “double GC in the room” or that they might “second guess the GC.” But that, she said, is a mistaken view. At the board level, the lawyer is not there to be a nay-sayer, but a creative problem solver, something, Liebenberg points out, that the best lawyers bring to the table. She contends that lawyers bring a unique skill set that boards need: strategic thinking, risk evaluation and corporate governance.
Mary Laura Greely, board member of 2020 Women on Boards, an organization founded in 2008 for the express purpose of accelerating the rate at which women are appointed to corporate boards, and who is a corporate M&A lawyer herself, agrees with Liebenberg. Lawyers are trained in critical thinking, in mitigating risk by balancing goals and objectives. Business lawyers, she contends, also bring skills in compliance, corporate governance, understanding client’s financial statements and how to evaluate a deal. She underscored the difference in the role a lawyer would play as a GC or outside counsel as opposed to that of board member. “You must wear your board hat when you are on the board, not your lawyer hat. You are there in an informative, strategic role, not as company counsel.”
Getting on the board in the first place presents a challenge. DirectWomen began its board institute to help women lawyers more effectively communicate their value to CEOs. The intensive three-day program focuses on coaching, structured interviews with CEOs and executive recruiters, networking and preparation of a board resume—separate and apart from participants’ legal or firm resume. The idea, Liebenberg explains, is to help the participants’ position themselves and repackage their resume for board attractiveness. So far, about 20% of the program graduates are now serving public company boards and 50% of the alumni are in the role of corporate general counsel.
DirectWomen Institute graduates Peggy Heeg and Sylvia Kerrigan, both now serving on boards, agree that the resistance is largely perception—or misperception—about what lawyers do and their role on a corporate board. “No company starts off saying, I want a lawyer on my board,” Heeg laughed. Both women agree that their skills in lawyering per se, were not what landed them on their respective boards. Kerrigan found there was a strong perception that only a CEO will do [for board service]. She said she had to “kiss a lot of frogs” to find her current appointment.
Kerrigan and Heeg came to DirectWomen with board exposure, strong industry backgrounds and years of C-level interface, but no idea of how the process worked to get themselves on a board. What they learned from the Institute was how to think about their skills and experiences outside of the strict sense of lawyering and to express it in ways that resonated best with CEOs. Finally, all of the women we talked to agreed on one critical factor: You have to let people know you are interested.
About the Author
Andi Cullins is a principal in The McCormick Group, a leadership consulting firm. She is a founding member of The DirectHer Network, a group organized to be a proactive referral source for board-ready women. Contact her at acullins@tmg-dc.com.