The Financial Times recently reported that the number of female executive directors on FTSE 350 boards has slipped in the past year – all this after significant work to raise awareness of the benefits of board diversity in the UK following the release of the Lord Davies Report.
In fact, wrote Elizabeth Rigsby, the FT’s Chief Political Correspondent, “89 per cent of FTSE 350 companies have no female executives on their boards.”
Prospective female directors in the US are faring better – but not by much. According to Catalyst research released late last year, women occupy only 16.1 percent of Fortune 500 board directorships. That means over four out of five board seats belong to men. And, the report said, about one in ten Fortune 500 companies had no women on their boards.
Why is it that, despite all the research pointing to the business value of boardroom diversity, companies still stubbornly refuse to open the boardroom door to diverse candidates? Here are three convenient non-excuses that boards make for their lack of business-building diversity – and to counter them.
1. “There just aren’t enough women with C-suite skills.”
In a recent FT article, Rebecca Knight writes that the lack of women on boards is frequently related to the lack of women in the C-suite, as many companies view C-suite experience as a critical qualification for board directorship.
“But that is just an excuse,” she says. She quotes Lucy P. Marcus, professor of leadership and governance at IE Business School in Madrid on why only pursuing candidates who’ve been in the C-suite can create a shallow, homogeneous board. Marcus says:
“There are countless talented women who can and do serve very ably on boards, and they can even bring a bonus of adding much-needed diversity of other kinds as well, be it entrepreneurial, international, functional, or cross-sector experience. The important thing is not to be wed to a cookie-cutter image of what makes a strong board candidate.”
By looking beyond C-suite experience as a prerequisite for board service, companies can gain diverse and qualified director candidates who have skills and experience that better serve the reality that today’s complex, global corporations face on the ground.
2. “Women don’t stay in the game long enough to get to the boardroom.”
At a time when women surpass men in almost every field of education at almost every level, it’s worth pointing out that if companies are really having that much trouble finding qualified women to serve in their boardrooms, and if they really are dedicated to the long term success of their companies, then they should allocate more time and resources toward retaining women at the mid-level, since that’s when the pool of female talent often begins to thin out.
By keeping women in the management pipeline to the top, companies would benefit from the kind of diversity that makes companies stronger and more profitable. As Busniessweek’s Kevin Crowly reported last fall, according to the Association of British Insurers, “promoting women to the higher echelons of management will improve firms’ risk management, encourage debate around strategy and help them focus on longer term objectives.”
This will take some rethinking of the corporate ladder. Women leave the workforce more often than men and face challenges getting back in at the same level – which often keeps them from returning – but companies with a keen understanding of the value of diversity are working to fix this structural imbalance. For example, Goldman Sachs’ Returnship program works to inject women back into the workforce who have taken time out, and Deloitte’s lattice initiative acknowledges the many offshoots and sidesteps people take modern career.
Any company that uses this excuse for its lack of women in the boardroom should be working hard to retain talented women – or else they’re just grasping at straws.
3. “We hire from our directors’ personal networks and they didn’t know any women.”
Unfortunately this boneheaded response to the lack of women on boards still persists – and this excuse should be frightening. If a board director has no skilled women in his pool of contacts, that should be a red flag. Knight quotes Marcus again:
“It is easy to go with who you know, who’s in your club and who you went to school with. Intuitively, we all feel comfortable with people who are like us. But we need to look at new ways to find different people… When I see an organisation with a board that has a preponderance of people with similar – if not identical – profiles, it makes me wonder about the business as a whole.”
The marketplace is changing – for example, note the recent HSN report that reveals women do more technology purchasing than men – and so are workforces. Purchasing power and top performers are becoming more diverse than ever before. How can companies with boards composed almost entirely of white men expect to compete with companies led by the individuals who reflect today’s diverse reality?