Serving on a corporate board offers many key benefits, including that it can elevate both the executive who is serving on the outside board, as well as the organization where they are currently employed. But the pipeline to women filling board member seats remains challenged, and many executive women face serious obstacles in connecting with and landing suitable, career-elevating board positions, and understanding how best to vet them.
According to 2020 Women on Boards, of the 2835 active R3000 companies, in 2018 women held 17.7% of the board seats, an increase from 16.0% in 2017 when there were 2871 active companies. In 2018, the percentage of women in the largest R100 companies is 25.3%; in the smaller R2001- 3000 companies it’s 13.0%, reflecting that smaller companies are less diverse.
This week, I caught up with a top expert on board service for female executives, who addresses these key issues and more.
Sheila Ronning, CEO and founder of Women in the Boardroom, established the organization in 2002 with a revolutionary vision of creating an environment where women could assist other women in achieving their leadership and corporate board service goals. Ronning, considered a trailblazer in working towards gender equality in the boardroom, has since grown Women in the Boardroom into a membership organization with global reach across multiple industries, and influence in private and public boardrooms, including Fortune 100 companies.
Here’s what Ronning shares:
Kathy Caprino: Sheila, what can you tell us about why companies should advocate for their senior level executives to join corporate boards?
Sheila Ronning: Corporate board service offers many benefits, not only to those who are serving on outside boards but also to the respective companies where they hold senior level positions. Board directors develop a unique perspective and new skills during their tenure and this board-level experience and knowledge is beneficial when applied to any company.
Here’s what they gain:
Awareness of corporate culture
Board service can provide a keen awareness into the culture of a company and this insight translates well to a director’s executive position. Observing both the positive and negative aspects of a corporate culture helps create diverse perspectives and more well-rounded views of what to do and not to do at their own respective companies.
Board affiliation often leads to many fruitful connections that can benefit the company and the executive. These networking opportunities could develop business and perhaps even insight into a new or complimentary industry.
Greater exposure and breadth of experience
Companies benefit from having executives with board experience because they are able to view business and management issues from different perspectives, and utilize the knowledge gained from board-level situations. Furthermore, board affiliation reflects well on both the company and their executives when listing it in professional profiles on the company website – the executives are seen as prestigious and well-rounded.
Caprino: Why does board affiliation make for a better executive and how can it assist in fast tracking executives to C-suite status?
Ronning: Board affiliation not only benefits the companies that employ these executives, but the executives themselves. For those looking to advance to C-suite level – especially women trying to shatter the corporate glass ceiling – one way is through board membership. The reason for this is two-fold: board service allows for the creation of a better executive and the honing of skills needed for a C-suite position.
Board service allows executives to experience various leadership styles, corporate cultures and business models. As directors absorb information from their boardroom experiences, they bring that back to the companies they work for. For some, it allows them to run more productive meetings. For others it pushes them to develop the next strategic plan or introduce the board to a new idea.
Board members assist in the hiring and firing of the CEO. This aspect of board service allows for a keen understanding of what is required of a CEO, as well as what is essential when looking to advance to such a position.
Harvard Business Review tested this idea and created a sample of roughly 2,140 top executives in S&P 1500 firms. Executives with similar profiles were studied against one another and data showed that “serving on a board increases an executive’s likelihood of being promoted as a first-time CEO to an S&P 1500 firm by 44%”.
Caprino: What are some of the factors that should be taken into consideration when thinking about board service?
Qualifications. Qualifications for board service include leadership experience, technical expertise, and soft skills. Overall, boards need people who are committed and maintain high standards. If you have expertise in a particular field, you may be better suited for board service in that industry.
Time commitment. Another factor in considering whether a board opportunity is appropriate is the likely time commitment and how it fits in with their current workload and personal life. The time commitment for public boards can be between 250 to 300 hours per year on average. Private boards may require more or less, depending on the company.
Legal and financial risks. Director candidates should conduct reviews of the publicly available financial information, check the company’s ISS corporate governance ratings, examine its public policy positions, and speak with financial analysts about the company. Some executives may have the option to utilize their company’s internal legal, investor relations and public relations departments to help vet the board opportunity.
Caprino: What resources are available to prepare women executives for their board journey?
Ronning: There are several resources available for senior level executives who are prepping themselves for board service, but the executive has to be ready to put in the work. LinkedIn is a great resource for researching companies you might be interested in or the backgrounds of existing board members as well as to join groups and network.
Networking is the most important step. With search firms filling less than 15% of corporate board seats, networking is crucial. It doesn’t matter if you are looking for your first, second or third board seat, you have to network. Knowing whom in your network to reach out to, how and when to reach out to them, and what to say is vital. Timing is also key and is a big component in maintaining these relationships. But don’t think that it is only the people in your current network that you should be reaching out to. We all have people in our extended network that we need to reengage and reconnect with. Working your own network using our proven networking process will always give you the biggest ROI in landing your board seat.
Organizations designed specifically for women executives are instrumental as well. These organizations provide a wealth of resources that are custom tailored to help with board membership, whether obtaining a first-time board seat or a third. Women in the Boardroom, for instance, offers services ranging from one-on-one coaching, networking opportunities, and strategies to help develop your board documents. Additionally, a library of 100+ webinars led by industry experts is available on-demand to provide in-depth information on various aspects of board service.
Caprino: Are there any key qualifications women must have to engage in board service?
Ronning: If you oversee a large budget, manage a group of people or are part of making the final investment or strategy decision for the company, then you are most likely qualified for board service. However, specific board qualifications will vary by company, and there has been an uptick in boards seeking more defined expertise such as digital disrupters, CTOs, and cyber security experts.
Caprino: How do you know when the right board opportunity comes along?
Ronning: When looking for board membership, executives will want to join a high-functioning board of a well-performing company. Therefore, it’s just as important that you interview the board, as they interview you. Executives should fully vet board opportunities, do their research and ask the right questions. The other part of knowing if the right opportunity has presented itself is to fully consider the reasons for wanting to serve on a board. Lastly, executives often want to join boards of large companies, but they should be open to serving as a director of a smaller company if they have not previously served on a board. Boards of smaller companies are more willing to recruit knowledgeable executives who are new to corporate board service, providing the executive with an opportunity to gain valuable board experience.
Caprino: Finally, why should companies appoint more women board directors?
Ronning: Numerous studies have shown that companies with female board directors tend to have better profit margins and generally outperform companies with no women. Furthermore, in light of the passing of SB 826 it may no longer be a choice for some companies but rather a mandate.
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