Women make up less than a quarter (or 21.1%) of board directors of the top 50 public companies in Wisconsin. Nationwide, that figure is not much better. Female board directors make up only 26.5% of all board directors for all S&P 500 companies.
Looking at the state of female corporate executives at public companies in Wisconsin, the number is almost even with that of board directors — 21.9% as of 2020. While progress has been steady since research on corporate diversity in Wisconsin was first conducted by Milwaukee Women inc (MWi) in 2003, there is still much work to be done.
Why should we care?
Simply put, the case for gender diversity and inclusion is supported by research. A variety of scholars and organizations have found improved financial performance, above average growth, positive external and internal reputation, sound corporate governance, and effective leadership development in companies that prioritize diversity and inclusion. One specific study, a 2020 report from Catalyst, a global nonprofit that works with over 800 companies around the world to accelerate women into leadership, found that women need to hold at least three board seats to create a “critical mass,” which can lead to better financial performance and create an environment in which innovative ideas can spring forward. We call this the “Power of 3.”
Moving the needle matters.
Since its founding in 2003, MWi has worked to achieve balanced representation of women on boards of directors to maximize the performance of Wisconsin businesses and change the face and quality of leadership in the Wisconsin business community. For 17 years, we have measured the gender board composition of Wisconsin companies, leveraging the mindset that what gets measured gets attention.
What we’ve seen is a steady improvement that is helping grow Wisconsin’s economy.
Diversity best practices
Alongside research, though, comes the opportunity to advise and counsel companies on taking action. Working with our members and partner companies, most of whom are already actively pursuing diversity in their businesses, MWi recently developed a wholistic set of business best practices for improving diversity in leadership. A few of the key ideas are outlined below.
For companies looking to diversify their boards of directors, leaders can:
- Require a diversified candidate slate for board positions. Identifying demand for an efficient way to achieve this, MWi created a database of experienced executive women leaders interested in corporate and organizational board roles. Companies can use this, or other similar resources to build out their diverse candidate pool.
- Build a pipeline of qualified, diverse candidates for future board roles. For instance, board members can challenge themselves, and perhaps establish a process, to meet and connect with potential candidates outside of active search periods.
- Ensure board members adequately represent stakeholder interests. While in the past board nominating committees focused on adding CEOs and CFOs to their boards, today we are seeing a greater emphasis on also adding leaders in specific operational areas similar to the disciplines needed to run a company. This provides opportunities to add diverse candidates with a variety of skill sets to the board.
For those looking to improve diversity among their executive leadership team:
- Know that it starts at the top — CEOs and boards of directors must make a visible commitment to diversity and a culture of inclusion. This can be done by sponsoring and advocating for the company’s own executive women for outside director opportunities or requiring a diverse candidate slate for leadership positions.
- Set measurable and achievable outcomes, measure targets at every level of your business, and regularly communicate progress and results. Two favorite hiring practices are instituting blind resumes and establishing a diverse interview panel.
Progress in action
For Exact Sciences, the highly successful molecular diagnostics company based in Madison, diversity matters.
Kevin Conroy, chairman of the board and CEO of Exact Sciences, shared his perspective in MWi’s 2019 research report. “Innovation, one of Exact Sciences’ core values, simply doesn’t happen without diversity of thought and approach. We seek out talented leaders who will bring skill to the business and build and coach high-performing teams. Our leadership team is all on the same page on the importance of identifying and hiring diverse leaders, and we frequently discuss our progress. We encourage our leaders to expand their professional network, and encourage others to do so, to help connect with up-and-coming leaders. Members of our leadership team often approach problem-solving from different directions. Respectful debate and challenges lead to better decisions and outcomes,” he stated.
These values helped Exact Sciences lead the list of the top 50 public companies with the greatest gender diversity in their executive leadership team the last two years. As of 2020, 28%, or seven out of its 25 leaders, are women.
While COVID-19 may have changed how we conduct business today, and likely well into the future, the economic and social importance of advancing diverse leadership is more critical than ever. One of the outcomes of a year unlike any other is a renewed focus on diversity and inclusion. In 2019, MWi achieved its goal of achieving 20% board gender diversity by 2020. That year, we renewed our commitment with a new goal — 25% by 2025. Best practices, databases, and research go a long way to moving the needle forward. However, we know that more than anything, motivating change requires relationship-building and everyday personal commitment from individuals at all levels.
Patricia Ackerman is senior vice president of investor relations, corporate responsibility and sustainability, and treasurer for A.O. Smith. She also serves as chair of Milwaukee Women inc, a nonprofit organization of professional women determined to change the face and quality of leadership in the Wisconsin business community by increasing the number of women corporate directors. Learn more about Milwaukee Women inc at https://milwaukeewomeninc.org/