(WOMENSENEWS)–By June, the corporate boards of Norway must be 40 percent female or else companies could lose their licenses.
While that doesn’t help women who wish to sit on U.S. boards, conditions may be improving for female aspirants as new rules and regulations, passed in response to the recent spate of corporate scandals, have put boards under new pressures.
“I’m enough of a cynic, that as serving on boards become less appealing, it makes room for women,” says Robin Wolaner, former CEO of Sunset Publishing and author of “Naked in the Boardroom,” published in March, about career advancement.
Under the Sarbanes-Oxley Act of 2002, audit-committee members on corporate boards must not accept any consulting, advisory, or other compensation from the company or have any business ties to the company’s affiliates or suppliers.
As of last year, the Securities and Exchange Commission requires publicly traded companies to disclose in their proxy statements details about the director recruitment process. That has meant companies must look beyond the CEO’s rolodex and existing board members for candidates. Search firms are busier than ever.
“Now more than half of board searches are done by search firms,” says Lauren Smith, a board member with the not-for-profit Miami WEL–Women’s Executive Leadership–and a senior executive with the recruitment firm A.T. Kearney.
“Boards are going to recruitment firms, because if things blow up, they can say they used a recruiting firm, not my friend from the club,” says Laurence Stybel, co-founder of boardoptions.com, a Boston, Mass., Web resource for board-level executives.
Pressure a Plus for Women
The new pressure could be a plus for women, says Ed Savage, managing director of the Los Angeles office of Dallas-based recruiting firm Stanton Chase International. “The percentage has doubled since 1995 in terms of the requests for women and minorities from nominating committees.”
Meanwhile, results from the 2004 Spencer Stuart Board Index, a study of corporate governance in S and P 500 corporations, which extracts information directly from company proxies, show that boards have begun recruiting more directors from outside the company and are therefore becoming more independent from senior management.
Twenty four percent of 443 new outside directors named last year were women, up from 16 percent in 2003. The one-year increase is the largest ever among S and P 500 companies, according to Spencer Stuart.
But while change is evident, it’s not happening in a big rush.
“Persistence and patience is key,” says Deborah House, founder of an Oakbrook Terrace, Ill., consulting firm, who has been searching for a seat on the board of a publicly traded company since 2001. “I’ve been getting terrific feedback about my credentials, but it’s frustrating. People with a personal relationship with an existing board member get the appointment. It’s still a good ol’ boys network.”
2003 Board Members Census
Two years ago, Catalyst, the New York City-based research and advisory organization working to advance women in business, released a census of board membership. At that point–the latest year for such a gender-composition statistic–Catalyst found that women were only 14 percent of board of directors of the Fortune 500 companies, the nation’s largest 500 companies as ranked by Fortune magazine.
Only 3 percent were women of color. A more recent study released in February by the Institute for Leadership Development and Research, a division of the Executive Leadership Council and Foundation, a nonprofit African American executive network, in Washington, D.C., suggests that figure could be even lower.
“Ten years ago I would have predicted that we would have come further,” says author Wolaner.
More Work Required
Board members’ duties traditionally have included areas such as assisting owners with setting business strategy and reviewing fiscal control. Boards also hire and fire CEOs and audit finances. Their rewards have included compensation in the form of cash or company stock or both. Networking and access to top business leaders also come with the territory, along with learning new ways of doing business that could help their own businesses.
Corporate boards have become less of a ceremonial, trophy position, and one requiring on average more than 250 hours of work per year.
Directors now face increased personal financial liability as lawsuits against boards rise. The 12 directors of Worldcom, the long distance telephone provider based in Clinton, Miss., had to pay $1.5 million out of their pockets for corporate misdeeds ranging from accounting improprieties to fraud.
Add to the mix the publicity tied to scandals such as Enron–which engaged in a series of off-the-books partnerships that allowed it to make revenue look better than it really was–and the spotlight burns on the boardroom.
Process Has Opened Up
Marjan Bolmeijer, founder of Change-Leaders.com, a consulting firm in Detroit, says the search process has opened up.
“Anne Stevens, the only female group vice president at Ford Motor Company was accepted to the board of Lockheed after an interview process with 160-plus candidates. Women can now count on a professional process,” Bolmeijer says.
Women’s ranks on boards may also be enhanced by the simple aging process. As seats empty on boards–many of which require retirement at age 70–that opens the door for women.
“Even if they are replaced by younger white men, these men may be used to women executives peers and more receptive to having women on boards,” says Betsy Atkins of Miami who has served on the boards of 25 publicly traded companies, including telecommunications company Lucent and healthcare provider HealthSouth.
As perks and benefits of being on a board are reduced or eliminated and the hours get longer–in part due to compliance and regulatory concerns under new laws–some board members, especially busy CEOs, are not apt to want to serve on multiple boards.
Many boards also require that the CEO only serve on one board. This has led to boards digging deeper, tapping chief financial officers and chief operating officers, more of whom are women.
“There are a lot more women CFOs than CEOs,” says Patricia Flynn, co-author of the Boston Club’s annual Census of Women Directors and Executive Officers of Massachusetts Public Companies.
Meanwhile, a coalition of six groups representing female executives last year joined forces to push the process along.
The groups–Board of Directors Network, Inc., The Boston Club, the Chicago Network, The Forum of Executive Women, Milwaukee Women Inc. and the Women’s Leadership Forum–formed ION (short for the InterOrganization Network) to push for women’s access to board seats.
In addition to publishing a summary of the six organizations’ most recent reports on women on boards, ION is also creating databases of qualified candidates to defy corporations that claim they cannot find candidates who are either female or people of color.
Elizabeth Hardy Noe, president of Atlanta’s Board of Directors Network, Inc., says no matter what, board compositions are going to change. “We’re not giving up,” she says.Sheryl Nance-Nash is a freelance writer based in Long Beach, N.Y., specializing in personal finance, general business and small business.
For more information:
The Alliance for Board Diversity–
Women and Minorities on Fortune 100 Boards
Board of Directors Network Inc.
Women Under-Represented in Corporate Board Rooms New National Network Reports Findings from Around U.S.:
2003 Catalyst Census of Women Board Directors
A Call to Action in a New Era of Corporate Governance
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