Female Board Members Are Good for Business

With California’s recent lower court ruling striking down SB826 as unconstitutional, one might think increasing gender equity on public boards is taking a step back…but think again. As Senate President pro Tempore and co-author of the bill Toni Atkins pointed out: “Businesses with women on their boards outperform the competition in more ways than one,” and she’s right.

BoardReady’s recent report showed that companies outperform their competition in 11 out of the top 15 S&P 500 sectors when more than 30% of their board seats are held by women. Also, they have better overall year-over-year growth as well.

This trend began before the signing of the California bill in September 2018. In fact, the bill arguably came from this early drive toward increased diversity, and if businesses care about their bottom line, it will continue long after it. When it comes down to it, good business is just that: good business.

Progress: A Step Forward

As U.S. demographics change, companies are feeling the pressure from investors for greater diversity across their boards and leadership. And many companies are taking heed.

As the Deloitte and Alliance for Board Diversity’s 2018 Missing Pieces Report found, women and minorities made more progress in board representation between 2016–2018 than the four years prior.This only increased further from 2018 to 2020, with white women making the largest gains in board seats. Growth in diversity continued after 2020 due to increased awareness and activism from consumers, investors, and employees.

Yet the current edition of the report also states the obvious: there’s room for improvement (which is what bills like SB826 were trying to address). Yes, the trend is moving in the right direction (led by forward-thinking and success-driven companies), but it needs to move faster to reach anything close to proportional representation.

Additionally, the report pointed out what qualified diverse talent already knows: a good number of the diverse board seats are occupied by individuals who already hold board seats, while qualified board-ready individuals struggle to find their first board seat.

Continued Progress: What Else Can Be Done

Given this, companies would do well to broaden their definition of diversity to include diverse skill sets and functional backgrounds instead of resorting to the usual, already tapped-out CEOs, CFOs, CMOs, CCOs, CHROs and other “check-the-box” talent. As the Harvard Business Review rightly noted, demographically and cognitively diverse boards better represent their constituents, better enable companies to adapt to market fluctuations, and ask better questions.

Therefore, in order for companies to face the variety of challenges that didn’t exist 20 years ago, today’s boards need skilled board members in new emerging areas, which should mean more opportunities for the right people.

Regardless of what happens with SB826, one fact remains: the diversity train has left the station. Companies and well-positioned talent that get on that train will come out ahead, time and time again.

Start Early

For diverse talent, getting one’s first board appointment is not easy (especially if you come from a nontraditional background). However, even with an obvious track (like finance, for example), it takes work. In fact, it takes a campaign. Women who start early in their careers benefit from that foresight—and it is never too early.

Build Your Team

Any campaign worth its salt requires a team of supporters to broaden one’s reach. One way to do this is by identifying areas to share thought leadership and highlight your relevant skills and experience to targeted external audiences. Additionally, tapping one’s network can provide much-needed objectivity, insight, and support in strategizing next steps and referrals.

Assume Nothing

One common mistake people make is assuming that their network knows (or should know) their board aspirations. However, that is usually not the case. Because of this, it is critical to let people know your goals while clearly articulating your specific skill set, experience, or value-add.

Build Bridges

Additionally, (and importantly), reaching out to women who already are on boards and who have similar backgrounds can lead to useful introductions and even recommendations. Often, they are overwhelmed by calls to join additional boards so board seekers can actually be helping them while helping themselves.

Elevate and Amplify

Beyond tapping one’s industry network, it is also necessary for diverse talent to elevate their presence as a thought leader and expert in the relevant subject matter through articles, blogs, and other content posted to LinkedIn and other industry platforms—particularly in today’s crowded and busy world. Doing so will create a sense of familiarity and trust.

Persist

The fuel that funds one’s board campaign is patience and persistence. It takes a tremendous amount of focused work over an extended period of time—typically a few years—particularly for a first board appointment or if one is coming from a non-traditional background where even more foresight, strategy, and clarity around value-add are required.

Strategize

Identifying meaningful targets such as companies that are transitioning from a VC-driven board, for example, to one with members that have deep subject matter expertise is a winning strategy born from tapping one’s network, keeping focused, and getting creative.

Keep a List

For those who are already on board, having a list of women that can be recommended to recruiters and other leaders when they call is a must in changing the world for the next generation.

The Future

When it comes to gender diversity, recent reports show that companies are adding fewer women to their boards than they did last year. Is this the inevitable: one step back, that two steps forward? Not necessarily.

Women have continued to make gains and the reason is clear (and it has nothing to do with the striking down of SB826). The bottom line doesn’t depend on legislation, it depends on companies doing what best serves their business. Increasing diversity on boards does just that. Companies are becoming (albeit slowly) more adept (and creative) at identifying that diversity of talent. That trend is only going to continue.