Why Breaking Into the Boardroom Is Harder for Women

Businesses prefer veteran female directors over untested ones, research showsWSJ Logo

For women like Jill O’Donnell-Tormey, an imaginary sign seems to hang outside U.S. boardrooms. It reads: “Help Not Wanted.”

The longtime chief executive of the nonprofit Cancer Research Institute has fruitlessly pursued a public company directorship for several years. With a resume that touts her decades of experience as a CEO and cancer researcher, she has reached out to business acquaintances and enlisted the help of an executive-recruitment firm. “I don’t think I even cross anybody’s mind,’’ Dr. O’Donnell-Tormey said.

Women looking to land their first board seats have a much tougher time than men, recruiters and corporate directors say. Some businesses are now trying to solve this problem in the face of intensified shareholder pressure for more female directors. BlackRock Inc., the world’s biggest money manager, this month for the first time said that companies in which it invests should have at least two women on their boards.

The proportion of women on S&P 500 company boards grew just one percentage point to 22% last year—up from 16% in 2007, executive recruiters Spencer Stuart reported. And women represented 42% of the latest novice directors that S&P 500 companies disclosed in 2017 proxy statements. That is up from 32% in 2016, but down from 44% in 2015, according to Spencer Stuart.

During her recent search for an initial directorship, human-resources executive Eileen Schloss discovered that her male boss’s network opened more doors than hers. In June 2016, she was aiming to retire from Medidata Solutions Inc., a technology and data-analytics company for the life sciences industry, when CEO Tarif Sherif summoned her to his office.

Mr. Sherif said he suggested Ms. Schloss become a director and offered to arrange introductions. He felt she could add real value to board decisions and mostly connected her with men he knew, such as venture capitalists, he said.

Yet five search firms whom Ms. Schloss had done business with for years declined to help with her board quest, she said. Recruiters told her that board clients preferred experienced CEOs and finance chiefs.

Assisted by a contact of Mr. Sherif, Ms. Schloss went on the board of Alteryx Inc. last May—shortly after the data-analytics startup went public and she retired.

To gain their first corporate board seat, women still have to overcome strong cultural issues that most men don’t have to overcome

said Bill George, a former head of Medtronic PLC and author of five leadership books.

Many businesses prefer veteran female directors over untested ones, research shows. The number of women serving on at least four boards of Russell 3000 companies rose to 38 from 30 between the end of 2012 and 2017, concludes an analysis for The Wall Street Journal by governance researchers Equilar. These women say they frequently get feelers about additional directorships.

“The only executive women whom many male directors know are already loaded up with board seats,” Mr. George said. “These men need to widen their aperture.”

Goldman Sachs Group Inc.’s board, where Mr. George holds a seat, has no rookie women but three male first-timers. The bank appointed Barnard College President Debora L. Spar as its first female director without corporate board experience in 2011. She left last April.

Prior board stints don’t qualify or disqualify prospective directors, a person familiar with the bank said.

Being a board neophyte disadvantages a male candidate less because men typically enjoy better connections with powerful men, according to governance specialists.

“Women on the whole are outside the trusted networks of public company boards,” said Coco Brown, founder of Athena Alliance, a nonprofit that helps women obtain seats. “So they end up with the bar that requires board experience.”

Even so, certain businesses hungry for specialized expertise have begun to accept greenhorn female directors. “When boards want tech or digital innovators, we see opportunities for women without board experience that didn’t exist five years ago,” said Julie Hembrock Daum, Spencer Stuart’s head of its North American board and CEO succession practice.

Consider Axon Enterprise Inc., a supplier of high-tech law enforcement products such as the Taser and body cameras. Facing the imminent departure of its only female member last year, the board decided to seek a woman savvy about cybersecurity—“an area where we weren’t particularly strong,” said Rick Smith, Axon’s leader.

Unfortunately, he said, the few qualified women whom fellow board members knew were prominent technologists with too many directorships. Mr. Smith turned to Athena Alliance and Boardlist, a marketplace for female board talent in tech. The five finalists whom those groups identified for Axon were all board neophytes.

They included Julie Cullivan, a senior vice president and chief information officer at cybersecurity firm ForeScout TechnologiesInc. She says she had spent 18 months looking for a directorship. Axon chose her in July.

Some women who have multiple directorships try to narrow the gender gap for board newbies. Women need to advocate for each other in the boardroom, said Kimberly Alexy, founder of Alexy Capital Management. She serves on the board of FireEye Inc., another cybersecurity concern, and four other businesses.

She highly recommended Alexa King, FireEye’s general counsel, for her first directorship at communication software maker Vocera CommunicationsInc. because “I knew what she was capable of,’’ Ms. Alexy said.

Her sponsorship “meant a great deal to me,” Ms. King said. She joined Vocera’s board in 2016.

Write to Joann S. Lublin at This email address is being protected from spambots. You need JavaScript enabled to view it.

 Original article here

 

... These companies clearly understand that board diversity is not a social issue, but is about improving their companies’ performance and enhancing their long-term sustainable value.

Mary Hartman Morris, Investment Officer, CalSTRS
Co-Chair Thirty Percent Coalition's Institutional Investor Committee.

 

 @30PercentCo