Reeling from a string of corporate accounting scandals, America's chief executives and board nominating committees are focused on recruiting more independent directors, people who are tough, knowledgeable and at all costs honest. However, despite all the coverage of Wall Street's accounting scandals, two important questions remain largely unanswered: Will there be enough capable executives willing to accept the dramatically increased scrutiny and potential liability certain to go with serving on a corporate board? And will the drive toward board reform finally result in the diversity-specifically gender diversity-that has been severely deficient over the years?
The answers-as best as I can predict-are "yes" and "yes."
As an outside legal counsel who often works closely with senior executives and board members, I know there are plenty of talented and capable people willing to serve, both male and female. However, because women are currently underrepresented on boards, they may welcome the new demand for board members and begin filling the huge gender gap that exists in our boardrooms.
According to Catalyst, a not-for-profit organization dedicated to advancing women in business, women hold only 11% of the board seats at Fortune 1000 companies-amazing when you consider that half of all of America's consumers are women. Even more amazing is the healthcare industry, where women make three out of every four household healthcare decisions but hold only 12% of the board seats of the Fortune 1000 healthcare companies.
Given the recently enacted corporate reforms, it makes business sense to address this situation. Having diverse points of view on a board yields a wider and better approach to decisionmaking. And more effective boards promote more compliant and more profitable companies.
Unfortunately, the collective Corporate Boardroom has dragged its feet in embracing diversity. One reason often proffered is the allegedly insufficient supply of senior executive women with experience comparable to male board members. Or it is argued that if such women exist, they are either overcommitted to multiple boards, unwilling to serve because of the time commitments or risk-averse. These arguments simply do not hold water.
In the past few years, a critical mass of senior executive women finally has reached top positions throughout various industries. As they cap their careers, they also are ready to share the risks and rewards of governing boards of directors with their male counterparts, giving back to other companies by sharing their knowledge and experience.
However, in seeking such board positions, women quickly have discovered that chief executive officers and nominating committees often recruit based upon a "whom do you know" and "who knows you" culture. For the vast majority of these women, business contacts-while they may be deep within their own companies or industries-fail to garner the visibility necessary to cross the radar screens of CEOs and nominating committees.
To increase their visibility, signal their readiness to serve on the most prestigious boards and thus compose the "supply" for new directors, many women executives have invested their time in a number of new initiatives this year. They include:
- In March, the Women Business Leaders of the U.S. Health Care Industry Foundation-a group I helped to found-held its inaugural retreat outside Washington (March 18, p. 33). Approximately 100 senior executive women representing healthcare manufacturers, payers, providers and those who supply services to the industry attended the event. The foundation's mission is to facilitate the networking and visibility of healthcare senior executive women-and increase the number of these women who serve on corporate boards.
- In April, Corporate Women Directors International held an international women's conference in Washington on board membership. Attendees heard presentations designed to make them more knowledgeable and effective board members.
- In May, the first Women's National Leadership Summit was held, also in Washington. There, 150 high-level women from the public, private and not-for-profit worlds discussed moving more women onto corporate boards. Business Week magazine featured the event in a June 3 article, "Powerful Women, Powerful Message."
- In June, the American Council of Education held a summit in Washington for women college presidents. As reported in Newsweek magazine, women college presidents are "still underrepresented on corporate boards-a common appointment for male presidents."
- In July, the Kellogg School of Management at Northwestern University in Evanston, Ill., opened its Center for Executive Women and hosted its inaugural Women Director Development conference for executives.
Increasing numbers of senior executive women are using these organizations and conferences to network, sharpen skills, share information on best practices and receive advice on how to land a position on corporate boards and be effective once they get there.
Undoubtedly the current scandals and the resulting reforms will trigger a demand by CEOs and nominating committee members for more qualified, independent directors. At the same time, the supply of senior executive women is strong and growing. These converging trends of supply and demand are bound to intersect and create greater diversity in corporate boardrooms.
The published version of this article can be viewed at www.modernhealthcare.com, registration is free.
