Why women still aren't making it into the boardroom
Editor's Note: More women than men earn college degrees, and increasingly, advanced degrees. Notably, they earn almost half of advanced business degrees. And yet, they still represent a small minority of the business leadership. Women are just 16.9 percent of board directors at Fortune 500 companies.
Last month, Paul Solman spoke to former banking executive Sallie Krawcheck, the head of the women's index fund Pax Ellevate, which invests in women-led companies (watch below). That's one way of supporting the women already in the boardroom.
But what's even more discouraging than women's current dismal representation at the top of corporate America? Not much progress has been made over the last decade or so. Men still run the show, and just "giving it time," Brande Stellings says, hasn't been enough. Stellings is a vice president at Catalyst, a non-profit founded to advance women in business – specifically Fortune 500 companies.
The big questions are why progress isn't being made and what can be done to change the culture of companies that haven't yet opened their boardroom or executive suite doors to women.
Read Paul's conversation with Stellings, edited and condensed below, to learn why, as Stellings puts it, "We're just treading water," and what can be done about it.
— Simone Pathe, Making Sen$e Editor
How does Catalyst advance gender diversity in the boardroom?
We do it through a variety of ways. We're probably most well-known for our research tracking the representation of women on corporate boards. And what we found, after many years of doing our annual census of Fortune 500 board directors, was that there's been no progress. In fact, we've had about eight years of no progress. We've gotten pretty tired of writing the same headline every year when we release the study.
Catalyst has been tracking and bringing attention to a lot of the problems, but we really want to get into the solution business to show that this can be done. So my organization, the Corporate Board Services group, is really the place where we're trying to make a difference moving more women into the boardroom. We do this through a couple of mentoring and sponsoring programs. We also do it through our corporate board resource, where we ask the CEOs of our member companies to sponsor women that they know who are ready to join a board now and add real value to the boardroom.
But when you say no progress, you don't mean no progress over the entire 52 years of the organization…?
That's absolutely right, and we do have to take the long view. But we're looking at say, the last eight, 10 years. The numbers have not moved up in any way that's statistically significant. So, for example, in our 2005 census, we found that women represented 14.6 percent of corporate board directors. In the census we just released this last December, women represent 16.9 percent. We're talking about very incremental change.
But at least it's moving in the right direction.
It's moving in the right direction, but not enough to be statistically significant.
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What do you tell a CEO? Please be more receptive to women managers?
Many of the CEOs that we know actually see this as a business imperative. They see that adding women to their top leadership teams, whether it's their board of directors or in their executive office suite, is crucial to improving their business performance. So a lot of the CEOs that Catalyst knows, they already get it. Part of the challenge is making sure that the rest of the world gets it, too.
Why do you suppose you haven't seen the progress that you want to see?
Well that's a $64,000 question. There are a couple of different theories about that. One, if we're talking about the board of directors, it's a small group. It's a very rarified world. There's not a lot of turnover of seats each year, so it can be hard to make progress year over year.
But what we've also found when we've done our research on the Fortune 500 was that, still, over 80 percent of those new seats from 2009 to 2011 went to men. And that's part of why we're not seeing progress, because we're recreating the pool that already exists; so we're really just treading water.
But why? What's going on?
With respect especially to boards, so much of it is about who you know. You need bonds of trust within the boardroom, and when you're thinking about that, your thoughts go to your network. And you think about who's already in that boardroom. Eighty-five percent or so are men. So when thinking about who they're adding to the board, they're going to go to their comfort zone, or to the usual suspects. That's one explanation.
I do want to address another explanation that we hear, which is that many searches for board members start with CEOs. And we know from our Catalyst statistics that women are very under-represented in the CEO ranks.
But we also looked at all sitting directors on the Fortune 500. And we found that about half do not have CEO experience. So, although we hear that [the need to hire a CEO for the board] as an excuse, we really need to dig a little underneath, because that's not keeping a lot of the men out of the boardroom.
The standard story about the "board search" is that the CEO – "he" — is looking for people; it's almost never a "she"…
Almost 95 percent of the time
So might CEOs feel, I don't know if intimidated is the right word, but more likely to be challenged by women than by men?
I'm not in a position to say. I think it's a little bit of unconscious bias in terms of who you know and what you're comfortable with. There's a lot of research saying that it may not be so much discrimination against women, but rather a bias or preference for men, if you're a man making that decision. I think also it's partly who's in your network, who you feel you can vouch for, and who are the people you know that will vouch for them. That's part of why we started this corporate board resource, because we know that having a CEO say about a woman, "I've seen her in action in the boardroom; I know that she can add value," that's really powerful. And that's a piece that's missing.
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So, what do you do with a CEO to get him to take a woman under his wing for the purpose of getting them on a board?
Some of the CEOs see an advantage to building the leadership talent within their own organization. So for example, if you look at many CEOs before they were CEOs, they actually served on outside corporate boards. And that was part of their training to become CEOs and their succession. So some of the CEOs of our member companies think about [bringing in more women] from the perspective of developing the best talent in their companies.
Another way [of bringing in women] that is quite powerful is having CEOs talk to other CEOs. So one of our CEOs, he picks up the phone, calls CEOs or board chairs of other companies, and says, "You know, I've been doing this – how can I help you?" It's kind of a high-touch, network process.
So it's a point of view that's really the key factor here?
Catalyst has been giving out an annual award for over 20 years, awarding exemplary initiatives that advance women. One of our award winners this year was Kimberley-Clark, and they told a story about when they started their initiative to advance women. They were having a meeting of say, the top 100 executives in the company. And a couple of their board members were in attendance, and they looked around the room, and they said, "Where are the women?"
It's interesting to think that boards are getting involved in these conversations about talent within companies. And that was part of the impetus for Kimberley-Clark starting this initiative, where they thought you know, "We really want to be a company that looks, thinks and behaves like our customers." I think about 80 percent of their consumers are women. Fast-forward: they have a gender diverse leadership team.
And that's not to say this is only about companies that market to women. Our other award winner this year was Lockheed-Martin. They're one of the most diverse boards around. They have a woman CEO, and their board has been very involved in developing talent within Lockheed-Martin, and that's partly because they believe there's a business advantage to it.
What's the business advantage?
How much time do you have? There's a few different ways of looking at the business advantage. Catalyst released three "Bottom Line" research reports from 2004 to 2011 showing that companies that had a higher proportion of women in leadership — in the board of directors or the executive officers — financially out-performed companies with fewer women in leadership.
Among comparable companies?
Yes, this is all Fortune 500 companies. We did some breakdowns by industry as well.
I would say the four pillars of the business case for gender diversity are companies with more women in leadership positions significantly outperform companies with fewer women in leadership. We also see that it helps to draw from the full range of talent. We have more women graduating with college and advance degrees. Third would be reflecting the marketplace, or your customers. The fourth would corporate social responsibility. Other studies, including one of ours, have found that companies with more women in senior leadership have stronger corporate social responsibility initiatives and give more money. So the bottom line is that with really having more women in leadership, business wins and society wins.
But Harvard sociologist Frank Dobbin has said that the research on the effect of gender diversity is "weak." In other words, these studies may simply be showing that firms that are growing and successful hire women managers, rather than women managers or board members having anything to do with their prosperity.
Our studies don't say that women are causing the firms to be more prosperous. But what we do find is that there's a very strong, unequivocal correlation between having more gender-diverse leadership teams and better corporate performance.
We have found that companies that had three or more women board directors, if you looked five years down the line, they saw an increase in women corporate officers.
What are the other benefits besides financial?
There is a whole body of research showing that having a more gender diverse research team leads to greater innovation and greater problem solving. You don't want all the same people sitting around the table. Actually for us, hiring men is a diversity hire.
So what do men add to your organization?
Well I don't know if it's so much, what women add, or what men add, it's really that you don't want all the same people around the table. You don't want groupthink. For example, it would be harder for us to run forums about men being gender diversity champions if we didn't have any men to staff it and say what they'd like to see discussed on the forum.
You mentioned that more women are getting college degrees now than men. So isn't this problem just going to go away? It will take awhile perhaps, but if the pool of talent is more female than male, eventually more women will be running things than men?
So far, giving it time is not making any change. You'd think that the progress would be faster than it's been. Take for example the legal profession. Women have been graduating from law school at about 50 percent for over two, three decades. But when you look at the representation of women in the equity partner ranks across law firms, the number that you see there is actually the same number that you see as the number of women in corporate board directors and as executive officers. And that number is in the 15 to 16 percent range.
There's something almost magical – not in a good way – about that number, that we're kind of stuck and we need to figure out how to get past that. I don't think that giving it time will help us push through that; it really takes concerted effort and commitment, and that's a theme we see a lot when we think about CEOs that are getting it done — it's intentional leadership.