2013 CATALYST CEO SUMMIT Women in the Boardroom: The New Normal Solutions From The Boardroom For The Boardroom The expectation for businesses to diversify is the new normal. Diverse boards are good for business, an element of good governance, and key to reputation, innovation, risk management, and leveraging talent. Despite escalating attention to the importance of women on boards, women s representation remains low and stagnant. How do boards become more gender diverse? In December 2013, over 50 CEOs, senior executives, and board directors representing 38 leading companies around the world convened at the 2013 Catalyst CEO Summit to consider this question and help pave the way to the new normal. Candid conversation underscored that there is no one-sizefits-all approach to increasing the representation of women on boards. Solutions offered by some directors were non-starters for others, reflecting the diversity of boards, corporations, and geographies represented. For this predominantly North American gathering, regulatory approaches, including quotas, received little favor. I put a lot of emphasis on leadership. We are talking about process issues quotas and voluntary but at the end, it is about walking the talk and what we do as leaders. Actually start with ourselves to drive this through. Peter Voser, Retired Chief Executive Officer, Royal Dutch Shell plc While interest in particular strategies varied, one core principle emerged: change begins at the top with intentional leadership. Boardroom diversity is achieved one board and one decision at a time. Start now, choosing the boardroom-tested advice that works best for your companies.
DEMONSTRATE INTENTIONAL LEADERSHIP Catalyst research shows that between 2009 and 2011, more than 4 out of every 5 open F500 seats were filled by men. Changing that ratio requires intention demonstrated through consistent, focused action. The CEO or Chair must lead from the top, but all directors must act as leaders in this area. Leaders articulate a vision. CEOs or Chairs should share their vision for how they want the board to look. Leaders influence other boards. Call CEOs or Chairs of boards with zero or few women, and share your experience and ways your board benefitted from gender diversity. Ask, Can I do anything to help? Leaders challenge subtle bias. If board members use she isn t a CEO as a reason to reject or fail to consider a woman, note that half of F500 board directors do not have CEO experience. Challenge the CEO is the best type of board member rule and unpack the skills that CEO is shorthand for. Leaders shift the dialogue. Rather than discussing why women should be on boards, focus on the risks that come with not having women on your boards. Leaders actively sponsor the women they know. Leaders ensure that diversity is a nomination/governance priority. [Gender diversity on the board] has to be CEO- or chairmanled. Whenever we ve wanted a capable woman, we ve found one, but it has had to be intentional, led from in front and the top. Doug Conant, Chairman, Avon Products; Chairman, Kellogg Executive Leadership, Institute at Northwestern University; Founder & CEO, ConantLeadership; Former President & CEO, Campbell Soup Company [It s] also important for governance committees to be very intentional and persistent regarding diversifying boards. Sharon Allen, Chairman of the Board, Retired, Deloitte LLP 2
TREAT BOARD DIVERSIFICATION AS A MATTER OF GOOD GOVERNANCE It s good to talk all the way around an issue via all the perspectives. Agreement without sufficient deliberation can take over otherwise. Ellen Kullman, Chair of the Board and Chief Executive Officer, DuPont Being on a corporate board is a significant responsibility, with the well-being of shareholders and the success of the company hanging in the balance. Leaders agreed that good board governance is absolutely essential and recognized the benefits that a diverse board confers: effective deliberation, avoidance of groupthink, fresh conversation, and management of risk. Approaches to board renewal and diversification included: Insist on women on slates. Leaders must demand women on candidate slates. Although search firms have an important role to play here, search firms will respond to client requests. Engage in board self-evaluation. Meaningful assessment of board effectiveness, including evaluating group process and building a skills-based matrix, encourages a holistic, expertise-focused approach to board composition, decision-making, and judgment. Consider term limits. More common in the UK and Canada, term limits are rare in US-headquartered companies. The institution of term limits can lead to an increase in board member turnover, ensuring the development of board succession plans and the presence of new talent and perspectives. Diverse perspectives are what boards need to help manage risk. Kathy Hill, Director, Moody s Inc.; Director, NetApp; Former Senior Vice President, Cisco Systems, Inc If you don t have balanced slates, it s hard to have balanced outcomes. Bill Downe, Chief Executive Officer, BMO Financial Group 3
BUILD THE PIPELINE OF WOMEN DIRECTORS AND EXECUTIVES Diversifying the board is a continuous process. Invest now in building the pipeline of women board candidates and strive to develop champions who will do the same. Exert influence among your colleagues. Participate in the virtuous circle demonstrated in Catalyst research: having more women board directors is predictive of having more women senior executives. Facilitate board service for senior executives. Board service provides unparalleled experience for talented senior executives, including executives in demanding line positions, and future CEOs. Help your top executives land a seat on an outside board or subsidiary board. Actively sponsor board-ready women. Make phone calls on their behalf, introduce them to your network, include them in meetings with other directors, and recommend them for open board seats. Groom women in your company for seniorlevel positions, and develop champions who will act similarly. Women are a significant part of your talent pool. As you develop them and reap internal benefits from their contributions, you will be preparing them for board service as well; this is a win-win. Pay it forward. Many sitting directors receive calls to join additional boards. If you cannot join a new board, recommend a woman to fill the seat. EXPLORE THE WHY Participants of the 2013 Catalyst CEO Summit grappled with solutions how to diversify boards rather than causes why women are not being selected. We encourage leaders to explore the why. Some participants suggested that unconscious bias is a barrier to women s advancement. Catalyst research shows that powerful and pervasive stereotypes, including the think-leader, think-male mindset, make women the unusual suspects for board seats. As you reflect upon the decisions you have been a part of, consider what factors elevated some candidates above others. If women were not selected, what were the reasons? Does the rationale for rejection vary between women and men candidates? If so, in what ways? 4
CONNECT THE PIPELINE TO BOARD SEATS The size of your board is an art, not a science. Add a new seat with a woman, and start alternating with a woman and you ll jump-start [the process]. Mary B. Cranston, Retired Senior Partner, Pillsbury Winthrop Shaw Pittman LLP There is a growing supply of women board candidates, yet women are chosen for less than 20% of open seats. Connect the supply to the demand by building up relationships of trust with women and ensuring that women are selected when board seats open. Build relationships. Develop a pipeline of potential women board members prior to a board seat becoming open. Build trusting and open relationships so that you can envision the value of having particular women in the boardroom with you. This will ensure that women are on the radar, known, and respected when board seats open. 5 Alternate selection of women and men for gender-balanced selection of open seats. Create fair processes and jump-start the process by mandating that both women and men get a seat at the table. Where appropriate, consider adding a seat to the board and fill it with a woman. Don t stop at three. Continually evaluate the diversity of your board to ensure it is drawing from the full deck of talent. Don t focus on a number like three for larger boards, three women may not represent even 25% of the board. We d like to hear from you. Have you used any of the solutions or tips identified by Catalyst CEO Summit participants to increase the number of women on your boards? If so, what solutions have worked for you? What solutions have not worked for you, and why? What potential solutions do you think are missing? Let us know at cbsinfo@catalyst.org.