Boardroom Barriers

THE GOING HAS BEEN SLOW, BUT DECADES OF PROGRESS in advancing women into C-suite roles has changed the cultures of companies across America. Harder to crack than that glass ceiling, though, is admission to the next level of corporate leadership: Boards of directors.

 

For several decades, a great deal of energy has gone into counter-arguments to the oft-noted wage disparity between men and women in the American workplace. Just has much has gone into promoting the notion that equal pay for equal work is a myth, and that women overall do indeed earn 72 cents for every dollar earned by a man.

Nuanced arguments from either side, however, overlook a more stark reality when it comes to the roles of women in business: Despite a slow but gradual increase in the numbers of women in executive roles, ascension to a seat on a company’s board of directors is even more challenging than breaking a glass ceiling in the C-suites.

A review of the board membership for the 25 largest publicly held companies based in Kansas City, for example, showed that 10—or 40 percent—have no female members at all. That puts Kansas City companies below the standard set by U.S. public companies overall; research firm GMI Ratings, in a 2012 study, calculated the figure nationwide at 36 percent.

Within those 25 area companies, women held none of the board chairmanships. And of the 15 companies with female representation, 10 had just one woman, five had two women, and none had more than two. Of a combined 216 seats, women fill only 20—a gender disparity of 90.8 percent to 9.2 percent. And even that figure for women is slightly skewed up by the presence of Lu Cordova on two of those companies’ boards.

A former board chair for the Federal Reserve Bank of Kansas City, she’s now CEO of Corlund Industries in Boulder, Colo. That she remains on the seats of two area companies—Euronet Worldwide and Kansas City Southern—is itself evidence of the dynamics that make gender rebalancing so difficult for both this region and the nation at large.

Part of the issue is that companies look to other companies’ CEOs to fill board seats, but women make up only small fragment of that cohort—among Fortune 500 companies, for example, just 4 percent of the chief executives are women. That’s a particularly glaring statistic when viewed through the lens of educational attainment—women overtook men in terms of numbers of college degrees issued way back in the late 1970s, and have continued to widen that gender gap ever since.

Putting that into perspective: A woman on the leading edge of that trend coming out of college is now less than a decade from retirement age.

At the executive level, women in this region have significant opportunities for advancement in sectors like health-care and education, two areas where large institutions dominate the region’s Top 100 private companies and not-for-profit organizations. But attributing this region’s board performance to its mix of public companies—dominated by male-centric sectors like financial services, information technology or energy—would be, in Cordova’s words, “an excuse.”

“Different industries do tend toward different genders,” she said, “but that’s not a good excuse. The nice thing about a board is you can look outside your industry, and people need to look outside their industry” when selecting directors. Take KC Southern, she noted. “They’ve got enough railroad people in the organization. And at the Fed, they didn’t want a banker; they’ve got bankers.” Her previous career experience in international finance and working in Mexico, she said, was a fit for service on both of the boards she serves on here.

Companies seeking to fill board seats, she said, should “look for people who can add value. That’s where people should be looking: For more diverse backgrounds to bring to the table.” But the primary focus of board recruiting committees is the concept of the right fit—their nominees should be people who are able to work collaboratively to set a company’s strategic vision.

“Those are the things you have to look to first,” Cordova said. A recent conference in Washington, she said, a discussion with top executives who were black or Hispanic showed that the challenge at their organizations was no different. “They find the best board member they can, and the fact of their ethnicity is not first in line—it has to be second.”

She’s not opposed to something akin to the Rooney Rule of professional football, named for the Pittsburgh Steeler owner who ordered that any search for a head coach had to include at least one African-American in the candidate field.

Big business, says Nancy Mellard, would be well-served to embrace a similar operating norm—voluntarily. The Leawood-based national leader for CBIZ Women’s Advantage, Mellard says an alternative—the worst possible alternative, she emphasizes—“would be federal legislation, and we don’t want that. But there is a collective wisdom that says a legislative gender-diversity mandate is the right way to do it.”

It’s not a far-fetched concept, either, as experience in Europe has shown. More than a decade ago, Norway imposed a government mandate phasing in a 40 percent level of female board membership on large companies, public or private. France followed suit, setting a 40 percent target for 2017, and most of the 27 member states are moving in that direction. Last fall, the European Commission voted to pursue a mandatory gender requirement on boards of companies through the union.

Mellard, who every day deals with the consequences of federal intervention in health insurance, says a better way to address board-gender issues is by taking a harder look at the candidate pool. And in her role with the Central Exchange, where she’ll be board chair in 2014, she’s seen what’s possible through a program called WiSTEMM, for Women in Science, Technology, Engineering, Math and Medicine.

“In a short period, we have seen an enormous number of women in this region involved those industries,” Mellard said. “One of the fallacies or crutches that companies stand behind is that they’d like to have more women on their boards, but can’t find qualified women. They’re there. You’ve got to say to the nominating committee or chairman, ‘You have to have as a priority gender diversity as a board.’ ”

The dispiriting thing, she says, is that “we’re still having the same discussions today that we had when I started my career.” So a long-term view is what’s needed, as well as a steady diet of public pressure.

“It is changing, but it is a very slow process,” Mellard said. “We just have to keep focusing on it, bringing it to the attention of a lot of people. I’ve heard it said that women’s groups and resources are too often nothing other than victims’ groups. My response is that the primary role of women’s networks today is to continue this dialogue, keep the conversation in front of all of us, to help everyone understand why it’s a critical business case—at the C-suite level and at the board level.”

 

 

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