The year was 2000: We were at the peak of the first Nasdaq 5000 era, and around the corner from the Enron and WorldCom scandals and, consequently, Sarbanes-Oxley. Corporate America’s boardrooms were overwhelmingly male; of all the directors on Fortune 500 company boards, only 11.7% were women.
“Sixteen years ago, every board was looking for a sitting CEO for their director seats,” says Julie Hembrock Daum, who heads the North American Board Practice at Spencer Stuart. For women, directorships were concentrated among a select few. “The same names were always on the candidate list,” observes Jill Kanin-Lovers, a board member of Heidrick & Struggles. While some women were being brought onto boards, nominating committees usually reverted to the perceived “safety” of the traditional male CEO as director.
There was a group of us back then who knew each other professionally in New York City — all high-level women executives who were also corporate directors at companies ranging from Nordstrom to Publishers Clearing House. The circle included Julie and Jill, as well as Alison Winter, Barbara Colwell, Elaine Eisenman, and Edie Weiner, and we began to have gatherings around my dining room table to talk about how to be the best directors possible. We saw that women’s voices weren’t that strongly heard in the boardroom. Nor was there a way for women directors to really connect with each other and learn from each other’s often-tough experiences.
Around the table, we began to ask ourselves: How can we help get more qualified women onto boards? And how can we support them in the director role once they get there to be the best directors possible?
Knowing that there is power in numbers, we began to invite other women directors into our fold. Then, after Alison made a professional move to Chicago for a position at Northern Trust, we expanded our network beyond New York, which led to the idea of establishing different “chapters” around the country. Alison and I became co-chairmen of the new organization called WomenCorporateDirectors. From there, our membership took off, with chapters opening in Washington, D.C., and Boston, and then all over the U.S., supported by our now long-standing sponsor KPMG.
As the push for gender diversity on boards gained traction globally, WCD began to expand overseas, starting in London. Henrietta Holsman Fore — former U.S. Undersecretary of State and, later, director at ExxonMobil, General Mills, and Theravance Inc. — joined as global co-chairman. Today, the 75 chapters across six continents represent thousands of WCD members who work with their own boards and CEOs to open their companies to a much broader range of diverse board directors than they considered even a decade ago.
Slowly moving the dial. . .but promising trends ahead
Corporate ocean liners turn very, very slowly: the percentage of women on Fortune 500 boards has gone from 11.7% in 2000 to slightly over 21% today (although, it must be noted, many women serve on three or more boards, which may mean that the absolute numbers of women serving are not as high as they seem). Declining board turnover, as directors stay around longer, as well as the trend to smaller-size boards, create precious few spots up for grabs. For those open seats, many board members want people that look like them. And, as Edie Weiner observes, “So long as shareholder activists [who have growing influence on board seats] are mostly men concerned about the bottom line, the spotlight will remain on cementing comfort within the old boy’s network.”
While there hasn’t been huge jump in 16-plus years, it is a growing movement. More significantly, several distinct trends bode well for an increase in women’s representation in the future, as well as a gain in younger board members:
• Demand for specific board skills. Hypercompetitive global markets and accelerated technology developments have caused boards to wake up to the need for diversity. Companies are looking for specific finance, digital, social media, marketing, and global backgrounds, and many of the best candidates emerging are women from around the world.
• Movement away from sitting CEOs as the default board choice. According to the Spencer Stuart 2016 Board Index, only 19% of new independent directors at S&P 500 companies are active CEOs, chairs, presidents, and COOs, compared with 49% in 1998. Boards are prioritizing specificity of skills versus someone’s being in a high-profile CEO role.
• Drop in CEOs serving on outside boards. Spencer Stuart also reports that not even half of the S&P 500 CEOs serve on even one outside corporate board today (companies are limiting outside board service for CEOs) — a big drop from 1998, when the average CEO served on two outside boards.
• Rise in qualified female candidates. As more women rise through the executive ranks, there are many more women now who are qualified for board seats, and who are smarter about networking and what it takes to get on a board.
• Growing push from diversity “allies.” WCD and other organizations are having more influence in boardrooms to diversify candidate pools.
All of these shifts are opening the aperture for women seeking board seats; in fact, this past year, women accounted for 32% of new independent directors in the S&P 500. There are also more women helping each other, referring qualified candidates to CEOs and, if they get a call from a board that’s not a fit, making sure they refer another woman to the role.
“Leadership and learning are indispensable to each other,” said President John F. Kennedy. Changing times means that boards must constantly learn and evolve and be open to new ideas, and we see women helping drive this best practice around the world.