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“Insanity is doing the same thing over and over again and expecting different results.” — Albert Einstein
When a company is added to the S&P 500, it is like being drafted by the major leagues. Warren Buffett, for one, invests in the S&P 500 because he sees it as a perfect microcosm of the entire economy.
If you discover, then, women represent only 21% of boards of directors on the list, it starts to sound more like a microcosm of the local sports tavern. If you examine the companies more closely, you may be surprised by some of the biggest gender offenders.
The search engine giant isn’t reticent about embracing diversity, especially in the engineering ranks. But on billionaires row, the status quo is in safe hands. Here it is, 19 years after the company was founded, Google’s board is 77% male, the executive committee is a male trio, and the four senior officers are a male quartet. In the Google orchestra, women play second fiddle.
When the company went public in 2012, angry protesters decried the company’s lack of women on the board. Mark Zuckerberg soon announced Sheryl Sandberg, a stunningly qualified woman, would be its first female. But why did it take four years and why did he choose a subordinate over an independent female candidate?
When the gender rules are ‘for them not us’, it leads to dissent or in some cases, radicalization. Is it any wonder James Damore’s diversity memo sent Google into a social media meltdown? The facts of the memo have been hotly debated, but the ruckus was caused by Google’s clumsy response — firing the engineer out of fear of a gender backlash.
Since 1972, when Katherine Graham was named the first female CEO and director of a Fortune 500 company, boards say they want to vastly increase the number of women. Yes, really.
Based on the GAO’s or Government Accounting Office findings, it’s not going to happen anytime soon. At our current rate, it will take four decades to achieve gender parity. By 2057, Elon Musk will convene a board meeting on Mars and we will still be asking why aren’t there more women on Earth’s boards.
This isn’t a ‘go girl’ program, but a life changer.
Let’s call it the Board Corps, modeled after the Peace Corps. The purpose is to train aspiring and dedicated people to do business in a multi gender and ethnic society, and who can be the global eyes and ears of the boardroom. It is also a solution to the gender imbalance, as you will see.
If we really want to eliminate the bottleneck, start with women from diverse backgrounds and a worldly orientation. Look beyond the Ivy League elite, where women have careers identical to the men, and the result is sameness in a different outfit.
A better future board director might be a woman from the Congo who ran a shelter for abandoned children. She might actually help management in dealing with adversity.
Finally, we need a plan with a bias towards action, because the problem isn’t lack of will, it is lack of urgency.
“The capacity of the mind to solve complex problems is very small compared with the size of the problems.”— Herbert Simon
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.
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 rather than actual directors to try and explain what is going on. Besides promoting the consultant, 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.
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.
Bias: False. Women serve on nearly 100% of big company boards. The challenge is how we go from one woman to many. This should be seen for what it is, an operational problem not discrimination.
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.
Qualifications: False. You don’t need to be an accountant or an MBA. It actually makes recruiting women more challenging because lacking any objective criteria, the board tends to go with people it knows. Men know men.
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.
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.
Turnover: True. The average director serves for 10–20 years, so turnover is slow.
Minority: False. While it’s true that women can be outvoted, boards operate on unanimity. Even as a minority, women have a strong say.
Seasonal: True. Directors are appointed once a year, only so many can be added at one time.
Cost: True. The cost of a single board recruitment can run high as $250,000. Spending a million dollars to recruit 4–5 directors is a nonstarter.
Experience: False. Succession plans and compensation are pre-packaged by consultants. This lessens the need for specific experience requirements.
Regulation. True. After Sarbanes- Oxley, boards no longer allow their lawyers and bankers to serve and women in these professions have been left out.
“Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.”
— Sherlock Holmes
The list above explains why women aren’t joining boards in large numbers, at least in the short term. Think of the boardroom as a small elevator that travels slowly and opens on each floor. It takes forever to get a group to the right place. Yet, if we don’t find a way to speed up the process, gender bias will be with us for a long time. The way to sort out this impossible conundrum is to find an innovative solution.
How can you increase the number of women, train them as directors, and have a ready pool of qualified candidates? Here is how the math works: there are roughly 5,000 public companies and they convene an average of 10 board directors. It amounts to 50,000 directors in America, and parity means we need to recruit 25,000 women into the boardroom.
I propose we create a network across the globe and gather them together as part of a Board Corps that advises the board of directors until the time is right for them to move onto the board.
“In modern society, if managers do not take responsibility for the common good, no one else can or will.” — Peter Drucker
1. Identify disruptive technologies and social trends in their markets.
2. Represent global markets. Because of travel logistics, having far-flung geographies serving on boards has been a challenge, now that’s fixed.
3. After several years, it will be clear which individuals have board potential, and preparations can be made to recruit them.
4. Not all cohort members will be directors, but the experience will make them better business people — a win for society and will help develop long-term networks and relationships for the company.
5. It will have the added benefit of making thousands of global women and minorities better versed in business.
Directors have a fiduciary duty to their companies, but collectively they have a duty to society. Gender fairness in the boardroom is on both of those ‘to do’ lists.
Note: After Per Sarbanes- Oxley, compensating people for advising the company makes them ineligible to serve as independent directors (for a period of three3 years). Once the cohorts are ready to become directors, companies can create a second tier of non-voting board members or appoint them as non-independent directors. (Note: Google’s Eric Schmidt is a non-independent director).
Jeff Cunningham is an advocate for enlightened global leadership, which he calls the most valuable natural resource in the world.
He is a Professor at ASU’s Thunderbird School of Global Management and was the former publisher of Forbes Magazine, startup founder, digital content CEO, and ran an internet venture capital fund.
He travels the globe in search of iconic leaders. As an interviewer/host, he created a YouTube interview series, Iconic Voices, now co-produced by @Thunderbird, featuring mega moguls from Warren Buffett to JeffImmelt. His articles on leadership have been featured in the Arizona Republic, LinkedIn and Medium via JeffCunningham.com.
His career experience includes publisher of Forbes Magazine; founder of Directorship Magazine; CEO of Zip2 (founded by Elon Musk), Myway.com, and CareerTrack.com; venture partner with Schroders. He serves as a trustee of the McCain Institute and previously as a trustee of CSIS and Middle East Institute, and as an advisor to the Nobel Peace Prize Committee.
He has also been a board director of 10 public companies.