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Women On Board: The Global Solution

October 2, 2017
“Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.”
— Sherlock Holmes

Every board is different in its own way. Each will find a solution to diversity that works for its market, the company culture, and the times we live in. Below you will see my recommendation because the impediments that exist are very difficult to overcome from ‘within’ the boardroom (see part II of this article).

Start with a large database called the world

Diversity makes a significant difference in board competence. Directors who think differently react differently and can be the dividing line between success and failure. Alfred Sloane, the founder of General Motors, once dismissed his board because everyone was in agreement. He asked them to return once they were able to debate. Now the imperial CEO is a relic of the past, groupthink is behind every disaster that plagues the modern business world.

Yet, as we hang our hats on race and gender diversity alone, it ignores another kind just as important, diversity of thought. The substance of this argument is if you draw directors from similar backgrounds and education, you end up with diversity in appearance and similarity in thinking. It means we have the same problems, with a new class of directors to blame.

That leads to an inescapable conclusion — we need global diversity. Expertise in Asia, Latin America, and Middle East/Africa will also bring racial and ethnic diversity as part of the package.

The challenge is how to operationalize given the logistics of travel from these parts of the world and frequency of board meetings. There is an answer, and it means thinking outside the boardroom box.

Then grow your own

How can you increase the number of women, minorities, and other missing ingredients from the board, find them on a global scale, 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 it means we need to recruit 25,000 to achieve parity inside the boardroom.

I propose the following.

  1. Convene a diverse group of men and women, with attention to diversity across all spheres and sectors. Importantly, be sure they are from around the world so they can act as the eyes and ears for the board of directors across multiple areas of expertise.
  2. Canvass all the key operating regions where the company does business for the brightest up and comers across gender, ethnic, and geographic groups. The list will probably come to a ratio of 100:1 to choose from.
  3. The goal is to convene no fewer than 10 people for every company. Drawing from four cohorts 1) experts from business at a senior level; 2) globally connected advisors from key regions; 3) social and community leaders; 4) professionals from the arts, academia, medicine, legal, and finance.
  4. The cohorts should think of themselves as boardroom consultants who meet annually, once at a board meeting and once in the home region or market, telephonically during the quarters without meetings.
  5. Identify disruptive trends and technologies in their markets.
  6. Each cohort and individual has a pulse on key issues affecting the company. The cost of the Board Corps pays for itself in a year’s time if my hunch about insights into the emerging regions and technologies is correct.
  7. After several years, it will be clear which individuals have board potential, and preparations can be made to recruit them on an as needed basis.
  8. Serve for periods of 2–3 years with nonconsecutive terms (so that termination from the board is not seen as signaling).
  9. Those who do not become board directors will be more like lawyers or auditors who do not make partner, but leave with goodwill and long lasting relationships with the company.
  10. It will have the added benefit of making thousands of global women and minorities better versed in business. Good for the planet, too.
“I believe in the notion that great companies will stand among humankind’s noblest inventions.” — Peter Drucker

Directors have a fiduciary duty 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).

Other parts of this article:

Part I (Silicon hypocrisy)

Part II (media’s problem)

 

Author’s Bio

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.