Want to Be on a Corporate Board? Strap In for a Bumpy Ride…

Principal Andi Cullins published an article on ABA Law Practice Division’s Law Practice Today on women’s underrepresentation on corporate boards.

By Andi Cullins | March 14, 2016

It’s an old story by now. Although women make up 50% of the labor market, they remain shockingly underrepresented on corporate boards. While there has been some movement recently, it’s been slow going, and will likely continue to be sluggish in the near future.

Board diversity, and specifically gender diversity, isn’t just the right thing to do. Numerous studies from wide-ranging organizations have all found that diverse boards are better boards; especially when the group includes more than one woman. Studies show diverse boards communicate more effectively, make better, less risky decisions, and outperform non-diverse boards in terms of shareholder value. A Credit Suisse report found that large companies with at least one woman on their boards performed better than their all-male counterparts, and boards with three or more female directors enjoyed particular success, according to a report by Catalyst.

While the direct association of increased profitability for diverse versus non-diverse boards may still be somewhat arguable, what is unarguable is that diverse boards better reflect customers and employees, and bring viewpoints that could go unexplored with a more monolithic group in the boardroom. In a report published by international CPA firm Grant Thornton, companies with diverse executive boards outperform peers run by all-male boards. The study covered listed companies in India, the UK and US. Their research estimates the opportunity cost for companies with male-only executive boards (in terms of lower returns on assets) at a staggering $655 billion in 2014.

Still, according to a Fortune study, fewer than 1% of corporate boards in the Fortune 500 have achieved or surpassed gender parity. In the face of such evidence, it’s hard to understand the slow pace to change.

But old stories often contain some portion of misinformation, misconceptions and myths. This one is no different. Take for example, the idea that there are not enough women qualified to serve. According to the Huffington Post, women hold only 4.6% of CEO roles among top corporations but the numbers almost triple if you consider all executive-level positions. The good news is, organizations like Catalyst and Boardroom Bound have been trying to address the issue for 20 years. These groups, and others like them, have answered with the development of board training programs, some of which have been very successful in getting their graduates on boards. Catalyst’s website reports graduates who have been appointed to public company boards at 98 to date, and 28 in 2014 alone. In its December 2015 report, Corporate Boards, the Government Accounting Office cited a growth in the appointment of women on S&P 1500 boards from 8% in 1997 to 16% in 2015, with an increased rate of appointment in 2015 of 22%. However, even if equal proportions of women and men joined boards each year beginning in 2015, GAO estimated that it could take more than four decades for women’s representation on boards to be on par with that of men.

One reason for the glacial pace of transitioning to more diverse boards the is rate of turnover among current board members. With no mandates for term limits or mandatory retirement age, vacancy rates are estimated at about 7% each year. The same GAO report calculates that at the current pace of appointments of women it will take 40 years to reach parity.

Compounding the problem further is the nature of how most board seats are filled. Traditionally, board vacancies are filled by referrals from other board members or CEOs, who are overwhelming white and male. When male-dominated boards start from the premise that few, if any, women are qualified to serve, they may fall even more heavily into the trap of not even looking for alternatives to the usual suspects. They nominate those with whom they are most familiar and comfortable, who also tend to be their male contacts.

A recent survey by Bloomberg found male attitudes about board diversity differ sharply from women’s. In that study, 63% of female respondents–compared with 35% of men–said that having women on corporate boards was very important. Racial diversity was very important to 46% of women, while just 27% of men agreed. And women were also more confident that qualified diverse candidates were available to serve on boards: 46% of women said there were enough qualified diverse candidates, while only 18% of men agreed.

If you are female and a lawyer, getting a seat on a corporate board is even more complicated. Lawyers, regardless of gender, face a separate set of considerations that can act as a barrier to entry