Women have infiltrated all the major professions of law, medicine, accounting, and even academia, now that they earn over half the Ph.D.s. So why are they having trouble getting into the boardroom?
As with everything else these days, there is fake news about the boardroom, too. As a director of 10 public company boards and a media background as publisher of Forbes and founder of Directorship, I have learned the importance of separating myth from reality.
The media is clueless
There are three reasons everything you read about the boardroom should be taken with a heaping spoonful of salt. To a business journalist, writing about corporate governance is like a muscle car nut writing about the Prius.
At those times when it is absolutely necessary to write about governance, usually around proxy season, an article is assigned to a female junior reporter — by a male senior editor. The reporter then uses a sleight of hand, relying on consultants to identify the problem rather than actual directors. That’s like asking a Miami real estate broker whether land is going to go up in value. Besides promoting the consultant’s business, the story rehashes tired statistics that point a generic finger at the men on the board, who dutifully say they will try harder next time. Rinse and repeat.
And we wonder why nothing changes.
“IT CAN TAKE A YER TO VET A CANDIDATE AND INTRODUCE THEM TO ALL THE DIRECTORS. That’s a very slow turnstile if your goal is to increase the flow of women.”
That is why I want to be clear about the actual vs. alleged challenges to women in the boardroom. It always helps to know who the real enemy is.
Here are the top 10 reasons that play a role in why women are a minority on corporate boards — some genuine, others not so much.
1. Bias: False. Women serve on nearly 100% of big company boards as the boardroom recognizes diversity is a hallmark of a high functioning board. But the challenge is how do we go from one to many. That is where the items below cause a bottleneck, so please read on. The gender imbalance in the boardroom should be seen for what it is, an operational problem, not discrimination.
2. Time: True. By the time a candidate is through the vetting process and meets all the directors, it can take a year. That is a very slow turnstile if your goal is to increase the flow of women.
3. Qualifications: False. You don’t need to be an accountant or an MBA, which in theory opens the boardroom doors a bit wider. Ironically, it also can cut the other way. Lacking objective criteria, the board tends to go with people it knows. Men know men.
4. Hierarchy: True. If a CEO is rated superior to a CFO or a computer expert is rated higher than a marketer, more men will serve on boards.
5. Litigation: True. With unlimited liability for directors, any sudden change, for instance, in the way a board is comprised, catches the watchful eye of the plaintiff bar.
6. Turnover: True. The average director serves for 10–20 years, so turnover is slow.
7. Minority: False. (As in a voting minority). While it’s true that women can be outvoted, boards operate on unanimity. Even as a minority, women have a strong say.
8. Seasonal: True. Directors are appointed once a year, only so many can be added at one time.
9. Cost: True. The cost of a single board recruitment can run as high as $250,000. Spending a million dollars to recruit 4–5 directors is a nonstarter.
10. Experience: False. Succession plans and compensation are pre-packaged by consultants. This lessens the need for specific experience requirements.
11. Regulation. True. After Sarbanes-Oxley, boards no longer allow their lawyers and bankers to serve, and women in these professions have been left out.