After battling for years to increase their numbers on corporate boards, new research suggests that women directors are gearing up for a new offensive—appointment as board chair.
The number of women appointed to corporate boards has increased significantly in recent years. Every U.S. Fortune 500 company now has a woman on its board, and according to executive search firm Heidrick & Struggles, in 2018, 40 percent of all new board seats at Fortune 500 companies were filled by women. These improvements are laudable, but women still only account for 22.5 percent of Fortune 500 board seats. Even fewer women hold the coveted position of nonexecutive board chair. Last year, there were only 30 female nonexecutive board chairs in the Fortune 500 and FTSE 100 combined. Some female executives are calling for more diversity in board leadership.
Leading a board is a much tougher job than serving on one – no matter your gender, In general, corporate boards appoint chairpersons who have exhibited leadership ability in the toughest of circumstances. But what qualifies as “leadership” is often subjective since each corporate board is different and not every leadership style will be effective for each individual board. However, there is one quality that boards favor when selecting a chairperson.
“In our experience, in a non-crisis transition, many nominating committees are reluctant to appoint chairs who have not been CEOs or held similar roles,” a recent report from Heidrick & Struggles states.
While it’s understandable why boards would make serving as CEO a major criteria to ensure that a candidate is battle-tested, this bias can place women at a disadvantage to being appointed nonexecutive chair because a smaller number of women have been promoted to CEO. Heidrick & Struggles interviewed female board chairs to elicit their advice on how to ascend to board leadership. Those interviewed included Wells Fargo & Company chair Elizabeth Ashburn Duke; Elaine Rosen, chair of Assurant; Marjorie Magner chair of Assenture; Sheila Penrose chair of Jones Lang LaSalle; Anthem chair Elizabeth Tallett and May Tan, chair of CLP Holdings and MSIG Insurance, among others.
The chairs give excellent advice for any board member seeking appointment as chair. A great deal of the advice focused on leadership skills, personal style and people management. However, the selection of board chair is the nominating committee’s responsibility, so if the committee is going to focus on CEO experience, moving women into the board chair role will continue to be difficult. Women’s advocates point to studies that claim female leadership is correlated with high corporate performance as a key reason companies should look to diversity the board chair position. That message has not gotten through.
However, in an atmosphere where disruption of current business models is becoming an everyday occurrence, boards should consider “broadening” their definition of what “CEO experience”, can mean. For example, perhaps candidates who have run significantly large and important subsidiaries, or the CFO of a complex multinational corporation could garner serious consideration. Success in those types of circumstances would surely show that the candidate was battle-tested. Additionally, as technology continues to be the main driver of disruption in many industries, perhaps a person who has overseen a corporate transformation to incorporate artificial intelligence into its business model might qualify as CEO level experience. Broadening the criteria in these ways would open up opportunities for everyone and provide the added benefit of allowing the board to see how deep the corporate director talent pool really is.
But perhaps the most important thing for boards to implement is to create a nominating process that ensures that any woman who steps up to vie for the nonexecutive chair position receives fair and equal consideration. Leadership positions are always going to be fought over, so eliminating any biases in the process will benefit the board and the company in the long run.