Fewer women named as board mem­bers in 2016

Fe­male di­rec­tors filled 27.8% of seats turned over or added.

Los Angeles Times - - WORK LIFE - By Jena McGre­gor McGre­gor writes a col­umn an­a­lyz­ing lead­er­ship in the news for the Wash­ing­ton Post.

The push to get more women onto cor­po­rate boards of di­rec­tors is get­ting a lot of at­ten­tion lately: In­vestors have been urg­ing com­pa­nies to make it a pri­or­ity, Uber came un­der fire after a di­rec­tor cracked a joke about more women in the board­room and a Wall Street statue of a lit­tle girl aimed at pub­li­ciz­ing the lack of women di­rec­tors be­came a vi­ral In­ter­net sen­sa­tion.

But de­spite the spot­light, the per­cent­age of fe­male di­rec­tors ap­pointed to For­tune 500 board seats de­clined in 2016, re­vers­ing a trend that had shown seven years of growth. Ac­cord­ing to a new re­port from ex­ec­u­tive search firm Hei­drick & Strug­gles, women were ap­pointed to 27.8% of di­rec­tor seats that turned over or were added to the board­room ros­ter in 2016, a 2-per­cent­age-point de­cline from the year prior.

“I was ac­tu­ally very sur­prised,” said Bon­nie Gwin, co-man­ag­ing part­ner of Hei­drick’s CEO & Board Prac­tice, “be­cause there’s a lot of con­ver­sa­tion about the im­por­tance of di­ver­sity, and I think there’s a lot of com­mit­ment to it. But at the end of the day, boards lean to­ward ap­point­ing CEOs and CFOs [to fill di­rec­tor po­si­tions], and there’s not a lot of di­ver­sity in that pool of can­di­dates.”

Boards also tend to lean to­ward adding op­er­at­ing skills, she said, such as di­rec­tors who’ve run busi­ness units or held oper­a­tions posts, which again means a pool of fewer fe­male can­di­dates.

The prob­lem with that ra­tio­nale is it can cre­ate a vi­cious cy­cle that keeps women from mak­ing fur­ther board­room gains, said Natasha Lamb, man­ag­ing di­rec­tor of Ar­juna Cap­i­tal, an in­vest­ment man­age­ment firm that has pushed com­pa­nies to re­port on their gen­der pay gap through share­holder pro­pos­als.

For one, com­pa­nies of­ten se­lect chief ex­ec­u­tives who have served on an out­side board to broaden their gov­er­nance ex­pe­ri­ence. Yet re­search also shows that hav­ing more women on the board makes it more likely that the com­pany will hire women ex­ec­u­tives.

“It’s a chicken-and-theegg is­sue,” Lamb said. “We can keep run­ning around this same ham­ster wheel, say­ing, ‘Oh there’s not enough women,’ but that’s not true. Boards just need to change their think­ing.”

There were bright spots for di­ver­sity in Hei­drick’s new re­port: For one, His­panic di­rec­tors made gains, par­tic­u­larly at con­sumer­fac­ing com­pa­nies such as re­tail­ers and con­sumer pack­aged-goods firms. And tech com­pa­nies, per­haps more sen­si­tive to the scru­tiny they’ve re­ceived over their low num­bers of women in lead­er­ship roles, moved in the op­po­site di­rec­tion: Forty per­cent of new di­rec­tors at tech com­pa­nies were women, 13.5 per­cent­age points higher than the year be­fore and well above the over­all num­bers.

The de­cline in new women ap­point­ments over­all in 2016 is es­pe­cially no­table be­cause ex­perts say adding a dis­pro­por­tion­ate num­ber of women when op­por­tu­ni­ties for change oc­cur — a di­rec­tor retires, say, or a board ex­pands its size and fills a newly cre­ated seat — is the only way that the to­tal per­cent­age of women on boards will ever grow sub­stan­tially. While many com­pa­nies have manda­tory re­tire­ment ages, the num­ber with term lim­its cap­ping how long di­rec­tors can serve re­mains rel­a­tively small, and av­er­age di­rec­tor ten­ure is still more than eight years.

In 2016, 20% of board seats at For­tune 500 com­pa­nies were women, only a slight change from 16% in 2010, a study by Deloitte and the Al­liance for Board Di­ver­sity found. Based on the most re­cent data, Hei­drick pushed out its fore­cast of when a 50-50 gen­der split will oc­cur among di­rec­tor ap­point­ments to 2032, six years later than its last pre­dic­tion.

“In or­der to move the nee­dle, the per­cent­ages would need to be much higher than where they’re track­ing to­day,” said Gwin, not­ing that in some of the changes, women are re­plac­ing women, which would have no net ef­fect. “Cer­tainly, go­ing back­wards isn’t go­ing to move it either.”

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