Female CEOs pushing for board equality
Women lack seats at executive tables at many companies
As local business leaders who have become friends, Kim Sponem and Marsha Lindsay talk about their experiences. One day at lunch, the two Madison women realized they kept hearing the same refrain from male peers.
“For so many years, we’ve heard well-intentioned folks say, ‘Well, I’d like to have more women on my board, but I just can’t find any,’ ” said Lindsay, founder and chair of the marketing firm Lindsay, Stone & Briggs.
That excuse, say Sponem and Lindsay, can
— and should — go away. But it likely will take some innovation by existing members of corporate boards for the underrepresentation of women to fade at a faster pace, said the two chief executives.
“There’s this misunderstanding that’s lingered from 20 or 30 years ago that it was difficult to find qualified women,” said Lindsay, who joined with Sponem in researching the issue and conducting interviews with leaders in a variety of industries in the hope of offering ideas to help.
That most corporate boards lack gender diversity isn’t in question. Females account for about 16% of board members nationally, according to the U.S. Government Accountability Office. That’s up from 8% in 1997, but still a slow evolution, Lindsay and Sponem say.
The GAO concluded that if females joined boards as often as men beginning in 2015, it would take more than four decades for women to reach parity with men. “That is laughable,” Lindsay said. Added Sponem, CEO of Summit Credit Union, Wisconsin’s second-biggest credit union: “Yeah, we can’t wait that long.”
More-recent data from the executive compensation research firm Equilar showed that as of March, 15.9% of Russell 3000 board seats were occupied by women. That was up from 15.1% in all of 2016.
While women accounted for nearly one-quarter of new directorships in the quarter, the Equilar data showed about 22.5% of boards in the Russell 3000 — an index including the 3,000 largest companies traded in the U.S. — had no women at all.
The situation in Wisconsin is roughly the same as nationally. In a report last fall, the advocacy group Milwaukee Women inc found that women constituted 16.9% of the members of the state’s top public company boards. That was an increase from 15.8% in 2015 and 12.3% a decade earlier.
Milwaukee Women inc also reported that the percentage of females on the boards of 47 of Wisconsin’s 50 largest private companies was 15.7% last year. That was unchanged from 2015. Forty-five percent of private companies in Wisconsin had no women in the boardroom.
Progress is slow
One reason for the turtle-paced progress on board gender diversity is that some boards aren’t aware of or don’t contact organizations that keep databases of women who are qualified and interested in joining a corporate director panel, Sponem and Lindsay said.
In metro Milwaukee, the Greater Milwaukee Committee said it keeps a list of women and people of color who are qualified board candidates. About 75% of the people on the list are women, said Julia Taylor, president of the GMC, a privatesector civic organization that includes many top business leaders.
Taylor said women or people of color who belong to the GMC are on the list, and members recommend others. The database, which consists mostly of leaders in Wisconsin, isn’t tapped very often.
“We get probably three or four calls a year from different board nominating committees,” Taylor said, noting that there typically isn’t a lot of board turnover.
Local women’s professional networking groups, chambers of commerce and larger accounting firms also may have people in their networks interested in directorships.
Some corporations use search firms to identify board candidates, and companies increasingly are putting pressure on those firms to offer diverse choices, said Lindsay Hammerer, an audit partner in KPMG’s Milwaukee office and a member of Milwaukee Women inc.
“The old process was one of ‘Who do I know?,’ whether it was board members or CEOs or companies,” Hammerer said. “It was, ‘Who do I know, who do I golf with, who’s in my network?’ And more and more companies are saying, ‘That’s not in our best interest. Our best interest is to really figure out who can add the most value to the dynamics of our board.’”
The pool of corporate board candidates needs to be expanded beyond typical female CEOs, said Sponem and Lindsay, who talked with male and female chief executives to put together ideas for increasing the percentage of women on boards. Among them:
Corporate board search committees need to look outside their mostly male networks of people with finance backgrounds and consider women who may have risen to top non-CEO levels, such as in human resources or marketing or information technology. Women working in government and nonprofits also should be given consideration. “There are a lot of really great qualified women to serve on boards, but I do think they’re not all in the traditional roles that companies are used to searching,” Sponem said.
For every open board position, search for three qualified candidates, two of whom are women. That approach squares with a recent study by Stanford School of Business professor Charles O’Reilly. His research found that simply increasing the number of women candidates improves the chances that a woman will be selected to a board seat, regardless of whether a man or woman is being replaced.
Leverage the “old boys network” by recommending a company’s best females serve on a buddy’s board. As Sponem and Lindsay see it, the buddy would get vetted female talent, and the person making the recommendation would in return get free executive development of women already in their own organization — in essence, future candidates for their top management and board.
If a company’s board has little to no board turnover, expand the size of the board.
Hire a woman as CEO or appoint one to a board or governance committee. She’ll know other qualified women and will be motivated by her own professional success to recruit only the best.
“One of the things I’ll occasionally hear is, ‘Well, we want only the best-qualified person,’ ” Sponem said. “What I’ll say back is, ‘Yes, we absolutely want the best-qualified person. I don’t know any women who would want to be selected for anything just because they’re female.’ But I think the important piece is to make sure women are in the mix of candidates and potential adds.”
While the immediate goal is to diversify boards, the result can be an improved company, Sponem and Lindsay assert. They cite studies that indicate better financial performance by companies that have gender-diverse boards and leadership.
Other trickle-down effects
Not everyone sees better financial performance as a slam-dunk outcome of having more women on boards, however. In a report last year, gender and leadership expert Alice Eagly of Northwestern University questioned the academic quality of some reports and said research findings actually are mixed.
Lindsay said, though, that there are “soft” and well as “hard” reasons for adding women to corporate boards. One soft reason: a growing number of female graduates entering the workforce are taking notice of women in leadership roles at companies.
“Millennials tell us they want to see people like them in the corporate suite and on the board,” said Lindsay, whose own company board has a 50-50 split of men and women and who is one of two females on the board of Church Mutual Insurance. “Because we have a workforce shortage — the U.S. and Wisconsin — we need to make sure executive ranks and boards have people that the current and future workforce can identify with.”
In addition, Sponem and Lindsay say, most consumer buying decisions are made by women, including choices of autos, homes, vacations, health care, banking and electronics. So why not have knowledgeable marketplace participants well-represented in the boardroom?
Sponem, who serves on several boards and also is on the Community Depository Institutions Advisory Council of the Federal Reserve of Chicago, said she knows that women who see her in the top role at her business view Summit Credit Union as a place where females can advance.
“Women today in college and the graduates are probably a bit bolder and more confident than some of us were a long time ago when we graduated,” Lindsay said. “If they don’t see evidence of upward mobility they just don’t even take the job. They just go look somewhere else.”
“Millennials tell us they want to see people like them in the corporate suite and on the board.” MARSHA LINDSAY, FOUNDER AND CHAIR OF THE MARKETING FIRM LINDSAY, STONE & BRIGGS