Women on boards-review & outlook_10-2011_layout

The world has changed in the past 10 years. Companies can go from obscurity to an estimated $100 billion market cap(Facebook) or from zero to $1 billion in revenue very quickly (Groupon did it in two years), or from near collapse in the late‘90s to become one of the world’s most valuable companies (Apple). To succeed today, companies need to embrace change, inways that include learning to market and sell using digital channels, pursuing global customers, leveraging technology, andrelentlessly streamlining operations to remain competitive.
CTPartners is starting to see changes in the boardroom that mirror these macro changes. There are more than 1,100 directorscurrently serving on F1000 boards who are over 70 years old.i With these impending vacancies, demand is emerging for a newgeneration of directors, one which will include individuals capable of contributing new insights into customers, technology,distribution channels, and international markets. The goal is to create a boardroom with diverse perspectives, which leads tobetter-informed discussions and more effective decision making. With this new generation comes the opportunity to includemore women directors. The onus is on boards, management teams, and search firms to ensure that qualified women are givenconsideration in the director recruitment process.
Among the Fortune 1000, there are 140 boards that have no women directors; and, women comprise fewer than fifteen percentof all directors.ii Beyond the Fortune 1000, representation by women is even less. CTPartners looked at an additional 1,000midcap companies with revenue ranging from $500mm to $3 billion and found that 300 still had no female directors. Perhapsmost startling is the fact that, among these companies with no women directors, there are many that sell directly to consumers.
Women control nearly 75 percent of consumer purchasing decisions,iii yet there are still 29 Fortune 1000 consumer companieswith no women on their boards. On a positive note, there are 54 Fortune 1000 consumer companies with three or morewomen on their boards. This raises a pressing question: Why is it that some consumer companies embrace women directorsand others do not? The business case for diversity at the board level is compelling. That’s especially true for companies that sell to consumersand/or have a large percentage of women employees; effective boards, after all, are representative of the customer or employeebase. Additionally, there are studies that have validated a performance-based rationale for bringing women on boards. Resultshave demonstrated that companies with women board members outperform companies with no women directors.iv Interestingly, this rationale was confirmed by male CEOs and directors that CTPartners interviewed during the course of itsresearch: Repeatedly, we were told that having women in the boardroom leads to better discussions and better decisionmaking. Women On Boards (continued)
Gender diversity in the boardroom is a primary focus for European companies, many of which must now comply with quotasfor women on boards. Norway established a 40 percent quota in 2006 and now leads the way in female representation, havingachieved the 40 percent target in just two years by 2008. Spain and France have quota legislation in process, and the Europeanparliament has called for EU-wide legislation with a 40 percent quota by 2020. In the UK, the February 2011 Davies Report’sreview, “Women on Boards,” recommends that FTSE 100 companies should aim for at least 25 percent female representationon boards by 2015, while also urging FTSE 350 companies to set targets.v No quota system yet has been proposed in the US. Gender diversity is, however, of interest to many shareholders, who throughletter-writing campaigns, shareholder propositions, and the creation of diversity databases, have taken matters into their ownhands to make progress on a company-by-company basis. Over the past few months, CTPartners has spoken to more than 50 Directors, CEOs, Chief Human Resource Officers andgovernance experts in order to learn more about their perspectives on this topic. This report highlights the facts relating tocurrent representation of women on boards, and offers some lessons learned and suggestions from those who have successfullybrought women onto their boards. Julie C. Norris is a Partner with CTPartners. Julie may be reached at: +1 617 316 5556 or [email protected] Marie E. Kelly is a Partner with CTPartners. Marie may be reached at +1 212 588 3577 or [email protected] For more information regarding CTPartners, please visit www.ctnet.com Women On Boards (continued)
Boards with and without women
n There are 140 F1000 boards with no female directors and 133 with three or more women directors (Exhibit 1).
n Boards with no women cut across industries (Exhibit 2).
n There are 41 companies with four or more women directors (Exhibit 3). n There are 29 consumer companies with no women directors, while there are 54 consumer companies with three or more n Boards with three or more women serving on them also cut across industries (Exhibit 5).
Women leadership
n More women are leading F1000 companies, boards, and board committees than ever before, but there is still room for n There are 38 women CEOs of F1000 companies (Exhibit 6). n There are 23 women Chairmen, 11 of whom also hold the CEO role for their company, and 12 additional non-CEO chairs n There are 39 women lead directors (Exhibit 8). n There are 332 women chairing mandatory board committees (Exhibit 9).
Talent availability
n Qualified women do exist. In fact, over the past 12 months, 83 women directors have joined F1000 boards.
n These women range in age from 34 to 68, with 86 percent of them ages 60 or younger (Exhibit 10).
n These women come from all industries, with financial services and industrial most heavily represented, followed by consumer and technology, media and telecommunications (Exhibit 11).
n The vast majority of new women directors include CEOs, Division Presidents, President/COOs, CFOs, and other n It’s worth noting that, as another prospective talent pool, there are 78 Women CFOs, and, of those, 53 are not currently SUGGESTIONS FOR BOARDS SEEKING TO BRING ON WOMEN DIRECTORS Based on CTPartners’ experience recruiting women to Board and C-level positions, enhanced by the research conducted withmore than 50 CEOs, CHROs, Directors and governance experts, we have developed some recommendations for boards seeking to recruit top women talent, shared below: 1. First agree on the expertise sought in a new director, independent of gender.
Every director recruitment should begin with a consideration of the company’s strategy going forward, and determination ofwhich additional expertise would strengthen the board as the company pursues its strategy. This should be the starting pointfor every director search, even if the board is expressly interested in bringing on a woman. Women On Boards (continued)
2. Ensure the Nominating/Governance Chair, CEO, Chief Human Resource Officer and search firm are aligned as to the importance of bringing women onto the board.
Directors who served on boards that successfully recruited women told us that accomplishing this was a top priority for all in-volved in the process. If the pool of candidates being reviewed does not include women, it is incumbent on the search firm andothers involved to search for qualified women candidates. Many exist. Throughout the course of our research, we heard of numerous instances in which the board was required to dig deep to findmore women. As long as all involved were aligned on the importance of having women considered, qualified women could befound. Conversely, if having a woman join the board was not a consistent priority, inevitably the lists of candidates containedmen only.
3. Set guidelines and goals. Some companies operate with guidelines for hiring executives, e.g., at least 50 percent of all candidates put forth on any execu-tive search the company conducts must be women. Some of the directors and CEOs we interviewed suggested using a similarapproach to ensure better representation of women in the lists of prospects discussed.
4. Believe in the person, not only the paper.
There needs to be a willingness to look beyond titles on the piece of paper. One female CEO we interviewed said she would nothave gotten where she is today if previous decisions had been made based only on “checking boxes.” Instead, the Chairman sawher potential as someone who could achieve success in this role, even though she had not done the exact job before. This is animportant criterion when considering women director prospects, since many will not possess prior experience as a publiccompany CEO or director.
5. Be willing to embrace change. Now, more than ever, boards recognize that they need to do things differently. Growing numbers of boards have taken this leapand embraced the opportunities that come along with bringing on directors who, for example, may be in their 40s; they mightbe experts in digital marketing or possess strong international experience; they may be women or minorities. For those CEOswe spoke with who came from industries in which women have held leadership roles, e.g., retail, bringing women onto theboard was a natural step. When senior executives have a history of working with women in leadership roles, it seems com-pletely understandable that women should be in the boardroom. Unfortunately, for CEOs from industries in which womenhave not yet been at the helm, there is still an education process that needs to happen. 6. Find common ground.
We have heard repeatedly from women who were the first woman director on a board, as well as from Nominating Committeechairs, that finding common ground is critical for women to be accepted into the boardroom. If the CEO or other directorshave not worked with a woman or have no female role models (difficult to imagine, but still a reality), then introducing quali-fied women candidates with shared interests or backgrounds often helps bridge the gap. Even small actions can make a differ-ence: One woman director talked about ordering a scotch at a board dinner instead of white wine. One Nominating Women On Boards (continued)
Committee chair mentioned introducing women candidates who were former CFOs for a search where the CEO had been aformer CFO, so there would be common ground. Another mentioned age as a potential bridge in the sense that qualifiedwomen from the same generation as the CEO or other board members were able to make the transition onto an all male boardmore easily than would a woman who is, for example, 20 years younger than the CEO. TIPS FOR WOMEN INTERESTED IN SERVING ON BOARDS What boards are looking for in a director
At CTPartners, we increasingly are asked by CEOs and Chief Human Resource Officers to work with their top executives to
identify board opportunities as part of their professional development plan. In our work with executives seeking to serve on
corporate boards, we start with letting them know what qualities boards are looking for in a new director. As mentioned above,
the world has changed and boards today are looking for individuals with the specific skills and expertise to address these
changes as part of the ways that they will help the business succeed. They seek other tangible and intangible qualities as well.
Specific skill requirements are different for each board, but the good news is that there are many qualified women who fit this
profile. Some themes we see repeatedly include the following:
n General management perspective and relevant industry expertise – CEO, COO, or Division President experience is still in high demand by boards. Boards are willing to look a level below the CEO to division or regional leaders for directors withproven leadership and successful track records. Many positions at this level are held by women today. n Digital sales and marketing experience – Companies are looking for directors who have driven revenue growth via digital channels. Social networking experience is also of interest for some boards.
n Chief Information Officers or others with experience leading technology transformation on the operational side of the business are also of interest to many boards. With information now an integral part of operations and risk management formost companies, CIOs are being considered for board positions. This represents a significant change.
n CFOs/Former audit partners – Demand for experienced CFOs and financial experts remains strong. With 78 women CFOs in the Fortune 1000 alone, the pool here is not trivial.
n Global citizens – Executives who have done business in international markets, especially in BRIC economies, are of interest to boards of companies seeking to grow overseas.
Other qualities that boards continue to look for include a high level of networks/relationships that directors can potentiallyleverage for the benefit of their corporation, as well as intangibles, including the ability to hold solid views and express themcollegially, as well as a positive mindset orientation.
Prospective directors should recognize that finding the right director role is a win-win proposition. Rather than simply aimingto meet whatever criteria a board is looking for, the director should do her own due diligence to ensure that any board she isconsidering: will match with her interests; that the management team and profile of other directors is attractive to her; thatthere is “chemistry” in this potential fit; and that the time commitment and remuneration are consistent with her expectations.
Women On Boards (continued)
Steps potential directors can take to increase their visibility to boards
n Excel at what you do. Be recognized by your peer group. Meet the right people. Women directors we spoke with repeatedly told us they found their board seats through prior relationships they had. One woman CFO told us a board found her be-cause one of the directors had worked with her ten years earlier. Consultants and former audit partners find their way ontoboards based on their reputations as thought leaders and their successful track records leading professional services firms.
n Develop a game plan. Many directors who join boards today found those boards through a rigorous and structured ap- proach. Of course, timing is always a critical component in finding a board position. But it is a reality that most directors donot have offers to join boards fortuitously land in their lap. Some steps we have seen work: Start by educating yourself on what it means to be a director. Meet with CEOs, directors or governance experts youknow for insight about what is expected of a director and how to add value in the boardroom. Become conversanton governance issues.
If you are currently working, make sure your CEO and board know of your potential interest in serving on a boardand are supportive of your efforts.
Write a board bio or description of your expertise that clearly states your value proposition for a board. Develop a target list of companies that best fit your skills and expertise, and are also free of conflicts. Be realistic. Boards typically look for directors with relevant experience at similarly situated or similar size companies, so it makes sense to target companies within your reach.
Be patient. Timing plays an important factor. Many directors we spoke with found themselves on boards based onrelationships they had formed or conversations they had participated in years earlier.
GOING FORWARD – CONSIDERING MORE WOMEN FOR BOARD SEATS Recruiting women to leadership roles is an important aspect of our board and executive search practices, and we invest signifi-cantly in getting to know women executives and board members. There are many qualified women interested in serving onboards, including COOs, Division Presidents, CFOs and CIOs.
We encourage boards to keep an eye out for up-and-coming director talent: women who have demonstrated a successful trackrecord in their executive roles and who therefore would have the relevant expertise to make a meaningful contribution to aboard. Making an effort to get to know these women as they ascend in their careers is our priority as a search firm and wefirmly believe that it should be a priority for CEOs, Chief Human Resource Officers and Nominating/Governance CommitteeChairs as well. The pool of qualified women for boards is stronger than ever. As boards seek to replace retiring directors, we encourage themto make sure that a diverse slate, including women and others representing different backgrounds, is considered in the process.
Women On Boards (continued)
Exhibit 1 – Distribution of Women Board Members Serving on F1000 Boards # of boards with.
Number of boards % of overall number of boards
Total boards
The total number of Fortune 1000 companies covered by GMI/The Corporate Library does not equal 1000 because it excludes any privately held companies, and is also subject to the natural attrition that occurs throughout the year as various companies are merged, acquired or dissolved. Exhibit 2 – Distribution of F1000 Boards with No Women Directors by Industry Industry
Number of companies
Grand total
Women On Boards (continued)
Exhibit 3 – Companies with 4 or more Women Directors Exhibit 4 – Consumer Companies with No Women Board Members As of 6/15/11, there were 29 consumer companies with no women. Border’s Group was removed from the list.
Women On Boards (continued)
Exhibit 5 - Boards with 3 or more Women by Industry Industry
Number of companies
Grand total
Exhibit 6 – Women CEOs of Fortune 1000 Companies Laura J. Alber - Williams-Sonoma, Inc.
Sara Mathew - Dun & Bradstreet Corporation* Judy R. McReynolds – Arkansas Best Corp.
Carol M. Meyrowitz - TJX Companies, Inc.
Catherine M. Burzik - Kinetic Concepts, Inc.
Jane T. Elfers - Children's Place Retail Stores Inc.
Denise M. Morrison - Campbell Soup Company Ilene S. Gordon - Corn Products International, Inc.* Janet L. Robinson - New York Times Company Patti S. Hart - International Game Technology Laura J. Sen - BJ's Wholesale Club, Inc.
Diane M. Sullivan - Brown Shoe Company, Inc. Ellen J. Kullman- E.I. du Pont de Nemours and Company* Cindy B. Taylor - Oil States International, Inc.
Patricia Vincent-Collawn - PNM Resources, Inc.
Constance H. Lau - Hawaiian Electric Industries, Inc.
Mary Agnes Wilderotter - Frontier Communications Corporation Tamara L. Lundgren - Schnitzer Steel Industries, Inc.
Patricia A. Woertz - Archer-Daniels-Midland Company* Margaret C. Whitman - Hewlett-Packard Company Women On Boards (continued)
Exhibit 7 – Additional Women Chairs of Fortune 1000 Companies* *Reflects women who are board chairs and not currently the CEO. **Previously served as CEO of listed company Exhibit 8 – Board Leadership Roles Held by Women Women On Boards (continued)
Exhibit 9 – Committee Leadership Roles Held by Women Exhibit 10 – Age Distribution of F1000 New Women Directors % of Women
Grand total
Women On Boards (continued)
Exhibit 11– Industry Backgrounds of F1000 New Women Directors Of 83 new women directors in the past 12 months Women On Boards (continued)
Exhibit 12 – Functional Backgrounds of F1000 New Women Directors The data on Women CEOs and Chairmen is current as of 10/31/11. All other data in this report is current as of June 15, 2011.
Board Analyst, The Corporate Library. (2011) Data as of 6/15/11 - The total number of Fortune 1000 companies covered byGMI/The Corporate Library does not equal 1000 because it excludes any privately held companies, and is also subject to thenatural attrition that occurs throughout the year as various companies are merged, acquired or dissolved. iii Boston Consulting Group’s Household Spending survey. (2008). Retrieved from http://www.marketwire.com/press-release/ Survey-The-Boston-Consulting-Group-Outlines-How-Americans-Plan-Curb-Spending-920438.htm iv Catalyst – “The Bottom Line: Corporate Performance and Women’s Representation on Boards” Author: Lois Joy, Ph.D., Director, Research, and Nancy M. Carter, Ph.D., Vice President, Research, at Catalyst Inc.; Harvey M. Wagner, Ph.D., and Sriram Narayanan, Ph.D. Published: October 2007. Women on Boards. Lord Davies, 2/2011. ABOUT THE CTPARTNERS CEO & BOARD PRACTICE With broad and deep connections throughout the global marketplace,our firm is at the nexus of insightful and impactful C-Suites, boards ofdirectors, and business experts. With a firm-wide commitment to360-degree integration and Six Sigma performance, the GlobalCEO/Board Practice collaborates closely with colleagues across allindustry sectors and geographies.
Our ability to consistently deliver value to our clients is enhanced bymore than twenty years of experience in Board Assessments, enablingus to help boards continuously improve to meet today's toughcompetitive, regulatory, and leadership challenges. Most importantly,we are prepared to assist in the development and execution of bestpractice Succession Planning both in the C-Suite and with the Board.
The CTPartners team is committed to redefining the relationshipbetween global corporations and their executive search partners.
CTPartners has signed the Executive Search Firm Voluntary Code ofConduct for FTSE 350 companies requiring women account for atleast 30% of candidates on board search long lists.
CTPartners is a leading performance-driven executive search firmserving clients across the globe. Committed to a philosophy ofpartnering with its clients, CTPartners offers a proven track record inC-Suite, top executive, and board searches, as well as expertise servingprivate equity and venture capital firms.
With origins dating back to 1980, CTPartners serves clients with aglobal organization of more than 400 professionals and employees,offering expertise in board advisory services and executive recruitingservices in the financial services, life sciences, industrial, professionalservices, retail and consumer, and technology, media and telecomindustries.
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