CED proposes expanded search criteria for new directors that would open the way for women in many other roles besides CEO
‘Every other one’ is the ambitious slogan of an initiative that a Washington think tank launched last week to increase the number of women on the boards of Fortune 500 companies.
The idea is that companies recruit a woman for one of every two director positions that become available as board members retire over the next four years. That could potentially raise the proportion of women on boards from the current 17 percent to 30 percent, according to The Committee for Economic Development (CED), the non-partisan public policy nonprofit behind the proposal.
‘It does feel like things are starting to change,’ said Beth Brooke-Marciniak, a CED trustee, member of its executive committee and one of those heading up the initiative. ‘We’re trying to do something different: expand the search criteria for new directors beyond just CEOs.’ (Brooke-Marciniak is also EY’s global vice chair of public policy.)
The expanded criteria could open a path to a board seat for women executives below the CEO, divisional presidents, partners in law or accounting firms, investment bankers, money managers, entrepreneurs, risk management professionals, heads of nonprofits and foundations and university presidents, CED says in a study published in connection with the initiative.
‘This is more than just the right thing to do,’ said Mike Petro, CED executive vice president, in launching the initiative at CED’s fall policy conference in Washington on November 14. ‘It is an economic imperative.’
Some European countries, such as France and Norway, have legally mandated quotas for gender diversity on company boards. CED, which describes itself as ‘business-led,’ believes the effort in the US should be voluntary.
The initiative ‘provides us with a path, with an actionable game plan,’ Barbara Krumsiek, outgoing CEO of Calvert Investments, said during a panel discussion at the conference. Calvert actively votes its shares in public companies and takes diversity on the board into account.
The CED study finds that despite professing a desire for diversity, board nominating committees consistently choose sitting or retired CEOs, CFOs or current directors of public companies, creating a ‘self-perpetuating cycle of exclusion.’
The business case for increasing the number of women on boards is that it will enhance performance and competitiveness, convey to female managers that there is no glass ceiling, align the company with stakeholders, customers and societal norms, forestall potential regulation and respond to the wishes of institutional shareholders.
Women have for a long time constituted the majority of US college graduates and now represent 35 percent of those enrolled in MBA programs.
If the most prominent US corporations fail to sufficiently integrate women into top management and monitoring positions, ‘US competitiveness will be hurt by not utilizing the full potential of the labor pool,’ the study says.
The CED’s two hundred-some trustees, both men and women, plan to reach out for one-on-one contact with nominating committee members and chairs to promote the new initiative.
‘Men want to be part of this effort,’ said Anne O’Brien, a Heidrick & Struggles executive who is involved in director searches. ‘Companies shouldn’t feel it is [only] women pushing women into the boardroom.’
Peter Grauer, chairman of Bloomberg and US chair of The 30 Percent Club, sees the goal as challenging. ‘It is a race without a finish line,’ he said, noting the experience of the original 30 Percent Club in boosting gender diversity on the boards of FTSE 100 companies. In the UK, the presence of women on boards has risen from 12 percent to 23 percent in the past four years.
‘But there is palpable momentum,’ Grauer added.
