“Add Women, Change Everything,” Marie Wilson,one of the leaders of the women’s movement and founder of The White House Project, famously said in her book “Closing the Leadership Gap.”
Was she ever right. On August 6th, in a historic and somewhat surprising move, the SEC approved Nasdaq’s revolutionary rule to require its 3,000 listed companies to have either one or two women on their board of directors (depending upon board size), as well as one person from a racial minority or who identifies as LGBTQ+ — or publicly explain why not.
This rule, championed by Nasdaq CEO Adena Friedman, on top of other state laws and emerging investment best practices, is changing the game for corporate governance, as well as for women in the C-suite, and throughout organizations, globally.
More Equity; More Diversity; More Inclusion; Better Decisions; More Value
Women on a board tend to value diversity of thought as well as of representation research tells us. They usually make sure there are more women and underrepresented minorities in the C-Suite and in executive leadership as well as on the board. They listen more seriously to #MeToo allegations and prefer unbiased investigations. They represent broader stakeholder constituencies, begin to add value, positively effect ROI, and redefine leadership, the workplace, and career expectations for our post-Covid world.
Carrots, Sticks, and Nudges
For well over 20 years now, women and their allies have been advocating for more diversity on corporate boards. Their goal has been a rolling target: First, in the early 90’s the goal was to get 10 percent of corporate boards to be female. Then, it was 20 percent. Then 30 percent, and now that 30 percent has been reached, the goal has shifted to parity — 50%.
In their quest, these advocates have marshalled carrots, sticks, and nudges:
They have cited research that companies with more diverse boards have higher ROI. They have created high-level membership groups to solidify their positions and best practices. Some have backed quotas in various states such as California (at least one woman on each corporate board domiciled in the state), and in countries such as France, Norway, and Israel.
They have celebrated companies that have made significant progress. And they have shamed companies that have no women on their boards.
BlackRock, State Street and Vanguard Enter the Ring
Even more powerfully, asset managers such as BlackRock and State Street started campaigns to increase board gender diversity by voting against directors’ reelection at companies that had not made sufficient progress in diversifying their boards.
And they have moved the needle. As reported by Jeff Green in Bloomberg, today “women hold at least 30% of seats on a majority of S&P 500 boards for the first time, a result of years of investor pressure and regulations requiring more gender diversity among corporate directors. The number of index companies with at least 30% female directors rose to 251 in July, as women gained a net 13 seats … The average number of women directors was unchanged at 3.3, out of an average board size of 11.”
So, to honor the progress, and highlight the work yet to be done, please meet just some of the women who got us here. They’re not stopping until they get us further:
A Gleam in Susan Stautberg’s Eye
These statistics were just all just a gleam in the eye in 2000, when Susan Stautberg, author of Women on Board, Insider Secrets to Getting on a Board and Succeeding as a Director, founded Women Corporate Directors with a few women directors sitting around her dining room table. Her goal was to create a membership organization exclusively for the small number of women corporate and large family company directors world-wide, in order to share best practices, trade war stories, advocate for getting more and more women on boards, and begin to define the boardroom of the future
Stautberg built the organization — and its yearly Visionary Awards Dinner, honoring exceptional companies with women in leadership roles — into one of the most prestigious, powerful women’s organizations ever, with over 80 chapters globally, and over 2,500 members in over 40 countries.
Now, in her next act, she has become a Governance Advisor to Atlantic Street Capital, in order to recruit more women and underrepresented minorities to their private equity portfolio company boards — one of the next frontiers for board diversity.
Says Stautberg, “diversity is slowly getting better on corporate and PE boards. Companies are making an effort to not only be more transparent, but also more accountable in recruiting a wider range of candidates from different races, religions, nationalities, and sexual preferences.”
10 Years after WCD was Created, Janice Reals Ellig Started the “Breakfast of Corporate Champions” on Wall Street, and in the UK, Helena Morrissey Started the 30% Club
In 2011, Janice Ellig, CEO of executive search firm Ellig Group, was President of The Women’s Forum of New York. She wanted to celebrate those companies whose boards were more and more diverse, and put some pressure on those whose were not, with special recognition for those approaching the goal of parity by 2025.
The Breakfast of Corporate Champions, which she created at the New York Stock Exchange and holds biennially, did just that. It became one of the most sought-after tickets in corporate America, as 600 CEOs, board chairs, and other leaders flocked to attend with their peers, and publicly embrace the change
Says Ellig, “In 1995 women’s representation on boards was 10% and as of June 2021 S&P 500 female representation is 30% (which was Helena Morrissey’s goal over in the UK’s 30 Percent Club, now chaired by Ann Cairns) — but that is less than a 1% increase annually over 25 years.” Ellig continues, “that’s not progress that is procrastination. Nasdaq is putting DEI into the Boardroom’s DNA for better corporate governance and representation of employees, customers, communities and investors.”
From 2020 to 50/50 Women on Boards, Betsy Berkhemer-Credaire Pivoted as the World Changed
Betsy Berkhemer-Credaire was one of the unstoppable forces behind California’s 2018 law requiring boards of companies headquartered in the state to have at least one to three women on their board, depending upon their size. The CEO of 2020 Women on Boards since 2018, once that percentage was met (20% women on boards by 2020), Berkhemer-Credaire pivoted immediately to calling her group 50/50 Women on Boards. Ever aspirational, and now aiming toward parity, here is what she says of the Nasdaq effort:
“Nasdaq is a powerful voice to help continue to foster change on corporate boards. The SEC’s approval for companies to disclose board diversity furthers the business advantages brought by diverse people with in-depth business experience and perspective. It also enables transparency, so investors, clients, employees and customers can make informed decisions when looking at a company’s approach to diversity. We are committed to women holding 50% of all board seats and women of color holding at least 20% of all board seats. Today, of the directors who self-identify by race and ethnicity, only 10% are diverse and 5% are white. But 84% have yet to self-identify. Even with Nasdaq, we have work to do to ensure all have an opportunity to advance.”
We Can Do This!
According to Iris Bohnet, a professor at Harvard who co-directs its Women and Public Policy Program, “a wealth of empirical evidence in behavioral science suggests that the disclosure of data, comply-or-explain regimes and support systems that make it easier for companies to comply help achieve desired outcomes, making our world safer, cleaner, and indeed, more inclusive. These tools have helped the UK increase the gender diversity of the FTSE100 boards from 12% in 2011 to now more than 33%, showing that we can do this!”
“Human Capital” — Catalyst Brings it All Together
“Human capital represents a growing, significant part of the asset base of companies,” says Lorraine Hariton, CEO of Catalyst, the global nonprofit working with some of the world’s most powerful CEOs and leading companies to build workplaces that work for women.
“The oversight of human capital is something the SEC is focusing on. Diversity is a key element for success in attracting and retaining a broad set of human capital and having better results. They have to get a hold of more oversight of these metrics. By doing what Nasdaq requires and the SEC approved, it is in support of getting better oversight of key metrics that are important for measuring business and being accountable,” says Hariton.
“It is absolutely critical to having good oversight and being responsive to what investors think is important. Nasdaq is not requiring anyone to put people on a board. They are saying explain it… It is a critical measure for oversight of businesses.”
From Gender Equity to Racial Equity
There is little doubt that, as female representation on corporate boards has reached 30%, the continuing challenge is to attain racial equity as well. Today, some estimates put the percentage of underrepresented minorities on boards at 10%, ironically the same percent that women held in 1995.
Dolores Wharton was the first woman and first African American elected to the boards of the Michigan Bell Telephone Company in 1974, the Kellogg Company and Phillips Petroleum Company in 1976, and the Gannett Company in 1979.
A woman of privilege, she was the wife of Clifton Wharton, the first black president of Michigan State University, the first black chancellor of SUNY, and the first black CEO of TIAA-CREF. Yet, as reported in Black Enterprise, “she became a diplomatic but outspoken and respected board activist, advocating for the creation of committees that prioritized issues of corporate social responsibility at both Phillips and Kellogg. The work of these committees encompassed corporate contributions to nonprofits, education, minority employment programs, environmental concerns, and safety standards.
“‘Diversity in the workforce was the hot topic of the time,’ Wharton writes in her book, (A Multicultured Life, written at age 92) ‘one that we explored deeply.’ Although she has been retired for 20 years, it is not lost on her that progress, as relates to diversity, has been woeful. ‘Regrettably, in many companies, interest in these early initiatives has fallen off,’ Wharton writes.”
And now it is time for that to be re-addressed with as much vigor as gender equity. Or more.
No Doesn’t Mean Never. It Means Not Now
Dr. Dambisa Moyo, a Zambian-born global economist who today sits on multiple boards, including Chevron, Conde Nast, and the 3M Company, is the next generation of board member and activist. Her newest book is “How Boards Work: And How They Can Work Better in a Chaotic World.” Published only a few months ago, it is must-reading for every corporate citizen.
Says Moyo in her podcast with Janice Ellig: “To me it’s an existential crisis. I think boards and companies that continue to think about business as usual will really struggle. We are being forced to think of macroeconomics … we need to be able to create institutions that can survive the hits of that. But at the same time there are very fundamental cultural shifts that are occurring, whether it’s around worker advocacy, data privacy or gender and race concerns…I do think that the board role and the role of corporations is fundamentally and meaningfully challenged and must be challenged in the environment in which we find ourselves.”
Her advice to those who want to get on boards: “There are no engraved invitations coming. Build your network. Do a lot of work on how to add value. Continue to raise your hand.” And, most importantly, “I take the view that no doesn’t mean never. It just means not now.”
The Future — Extraordinary Women on Boards
Lisa M. Shalett, former Goldman Sachs Partner, is the cofounder of a new community of sitting women board directors, Extraordinary Women on Boards. And when you look at this dynamic and fast-growing, dedicated group of women, you can look into the best version of our future. It is the road that all these mothers of success both past and present have paved.
To quote Lisa, “what now is EWOB came together completely organically — women board directors were expressing a need for a trusted space in which they could meet other women directors and talk about their board work with a peer group of women already on boards. This became so crucial during the pandemic.”
She continues, “I think all of the women in EWOB have a vision as to what modern governance should be. They sense the need for stale boardrooms to change. Their goal is to seek excellence as board directors themselves and emerging best practices in modernizing their boardrooms.”
The next generation starts now. And Marie Wilson must be so proud.