The Boston Club, a respected community of women business leaders, recently released its latest Census of Women Directors and Executive Officers in Massachusetts Public Companies. The study’s introduction concedes: “We are frustrated by the large numbers of companies that persist in ignoring the business imperative for a diverse board.”
Indeed. The Census found that across the Commonwealth’s 100 largest public companies, only 12.7% of board directors are women – a tepid 1.6% increase over 2011. More than a third of the top 100 companies still have all-male boards. Less than 2% of the 850 director seats in the Census are held by women of color.
These days, diversity has many persuasive advocates and virtually no opposition. Why then are boards diversifying so slowly? Part of the answer is psychological. Most boards are predominated by a “culture of the familiar” that can only evolve through sustained conscious effort. But mathematics may be the heart of it. Few board seats open each year, and the people currently occupying those chairs are valuable. Companies don’t want to lose them. So even in the most enlightened new belief system, change will come slowly.
Championing the ideal of diversity remains vital, but we now need more solidly pragmatic steps to speed the pace. One example: The boards of Raytheon, Boston Properties Inc., Vertex Pharmaceuticals and Hologic have all named women to serve as their Nominating Committee Chairs. That won’t change the world in a day, but it is progress likely to beget more progress.
With a keen focus over the past decade on diversity and inclusion, it’s no surprise that the largest public US companies have higher average percentages of women on their boards. But look closer and the overall numbers expose diversity isn’t cascading to the mid-size and smaller companies where few or no female director representation exists. The equation is now a matter of supply and demand where all boards are seeking only female directors with public board experience. With their success at moving the needle at larger companies, this elite cohort is now in short supply and many experienced female directors are either maxed out or ‘over-boarded’.
An openness to expanding the talent pool to consider more board-ready women during the selection process would be a positive step to growing the next generation of board leaders. What these candidates may lack in terms of large company directorship or governance experience is paid back in business and leadership skills a board needs. This series of incremental actions, while short of diversity quotas and the mandates we’ve seen abroad, might be just the impetus boards and Nominating Committee Chairs need to catalyze a positive change.
George L. Davis, Jr., based in Boston, is co-leader of the Global Board Practice at Egon Zehnder International.
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