Each March, we honor the resilient history and amazing achievements of women around the world during Women’s History Month, but progress towards gender parity is and should be a year-round effort — including strides towards more women on boards.
On the heels of this year’s celebration, aligned around UN Women’s theme of “Invest in Women: Accelerate Progress” and in support of HeForShe, YPO spoke to three male members around their thoughts and experience in increasing diversity representation on boards.
“It has to be a consistent effort, part of your DNA, how you show up to every meeting,” YPO Chairman Raymond Watt said during a recent YPO Pacific West event.
In YPO’s inaugural Global Impact Report, participating YPO members self-reported that on average, 25% of their boards were made up of women, higher than the global benchmark of 19.1%. The top three performers by country were the United States at 25.8%, Canada at 24.9% and India at 22.2%.
Even among the highest-performing industries and sectors, there is still room for improvement. In the service sector, the best-performing industry, the average was 32.1%. And among smaller companies — which outperformed bigger ones — 30.8% of boards seats were filled by women in firms with up to USD10 million in annual revenue, with up to USD100 million in revenue reporting 23.1% representation of women on boards.
The global target set forth in many emerging global regulatory frameworks in 40%, as the report notes.
The case for board diversity
Many leaders recognize the benefits and are often outspoken proponents of diversity. When boards add a director categorized as diverse, they usually don’t stop at one. EY data show that the percentage of S&P 1500 boards with three or more women increased from 35 percent in 2019 to 68 percent in 2023. This is not simply an exercise in checking the box. Diversity generates further diversity as directors experience its value. This is also simply about building the right board. Boards are casting a wider net to a broader pool to find the best candidates with the expertise and business acumen needed.
“If you want to get the best out of a board from a governance perspective and strategic guidance, then diversity and equity are key value drivers,” says YPO member Florian Kemmerich, managing director of capital mobilization at the global impact firm Palladium, which works to link commercial progress and commercial growth, and managing partner of Bamboo Capital Partners, a Luxembourg-based impact investing platform.
There is a rich body of research underlining the business case: the Credit Suisse Institute has found that companies with the highest representation of women on their boards generated higher compound annual returns in their share price since 2010, compared to those with the lowest board diversity. The researchers credit the diversity of thought and experiences of the more diverse boards.
Building more equitable boards from the ground up
So, what can be done to bring the benefits of gender diversity to more boards? Global nonprofit 50/50 Women on Boards creates a Gender Diversity Index that analyzes the performance of the Russell 3000 Index companies in areas such as board representation and other key areas of leadership. The organization has issued several recommendations for achieving greater board diversity. For instance, it suggests corporations create flexible work environments to retain women, look for ways to root out subconscious and unconscious bias, and do more to sponsor career development for women earlier in their careers through continuing education and mentorship.
Government action has helped move the needle in some countries, with five out of the top six countries with the highest percentage of women serving on boards having some variation on quota legislation, as Deloitte noted in its “Women in the Boardroom Report.” Countries are setting targets and using disclosures to motivate companies, the report says. But there are many other ideas percolating.
Watt stresses the importance of developing a nomination process for directors that reflects a diverse pipeline of talent and embracing a truly long-term focus and making sure that efforts go beyond just filling seats with women.
“It’s critical to make sure the women on your board have an opportunity to chair committees, says Watt. “It’s not just about showing up but doing the work.”
Paying attention to the structure of board meetings can ensure that both participants and companies can reap the benefits of better diversity, according to Kemmerich. Once a board attracts diverse candidates, it is essential to make sure the organization is truly benefiting from their input. Sometimes, he says, that means actively asking every member of the board for their input if some are speaking less than others. “The extroverted people have to hold back and listen,” Kemmerich says.
YPO member Orlan Boston, G360 Global Client Service Partner at EY with extensive expertise and experience in corporate governance and board topics and a key champion of YPO’s inaugural Global Impact Report, believes building a diverse pipeline of talent from within boards is critical.
“Most board seats are not filled by search consultants or executive recruiters,” says Boston. “It’s from existing board members, chairs, CEOs, the chairs of nominating and governance committees. That means it’s essential to network.”
Boston believes groups such as YPO can also play an important role in that networking. “YPO could be a great facilitator of board placements,” he says.
There are a number of YPO members and partners with expertise in this area. BoardProspects, a YPO partner, trains potential board members in board readiness and governance education, expertise-driven networking and talent discovery, and board recruitment solutions with the highest levels of diversity.
What if you want to join a board?
Many executives are more than qualified for board seats, yet they don’t know how to get started. Crafting a bio that speaks to your relevant skills and experiences is an important first step. “Not everyone assumes you’re ready or available or allowed to,” says Boston.
He advises that executives should study up on relevant areas and subjects, including compliance, cybersecurity, ethics, geopolitics, governance, mergers & acquisitions, talent management, strategy and sustainability, “These are meaty topics that boards wrestle with,” he says.
In the meantime, take advantage of professional opportunities to engage with boards.
“Getting exposure and an audience with a board of directors as a senior executive is important, and it can be done before you actually get onto a board,” says Boston. For instance, he says, a chief human resources officer or chief audit executive might have opportunities to present to the board and committees such as the Audit and Compensation committees.
The National Association of Corporate Directors offers programs he recommends. “I’ve known many people who’ve gone through them and found them helpful,” he says.
Another way to get experience is to serve on a highly professionalized nonprofit board at a large organization. The key, he says, is to seek out complex fiduciary responsibilities that are run in a formal way that is similar to for-profit boards.
“The right nonprofit boards can be a great way of getting exposure to how boards govern and to corporate board directors who often serve on nonprofit boards. It’s also important to know the board placement groups and practices within the major search firms, and getting on their radars can be very helpful,” says Boston. “Oftentimes, they will offer their own kind of ‘journey to the boardroom’ boot camp programs and webinars. Getting to know those folks, getting invited to their programming is another channel to look at and consider.”
What the future holds
Boston is optimistic that as boards become more diverse on a global scale, the momentum will build.
“It can become a self-perpetuating thing. When I serve on boards as a minority, especially if I am chairing the Nominating Committee, I’m constantly looking to ensure that we have a diverse pipeline of candidates to make a more effective and diverse board in terms of not only race and gender, but also ideas, perspectives, and experiences.,” he says, “As minorities, we tend to be empathetic, because we know what it feels like to be the only person in the room that looks like you.”
The next important frontier for many companies is making sure the role of board chair is truly open to all directors. The percentage of women around the world chairing boards is only 8.4%, nearly three times lower than the percentage serving on them, what Deloitte calls an “impenetrable” glass ceiling.
One factor that’s holding women back from winning these roles: the low percentage — only 6% — of women serving as CEOs.
In a statement accompanying the report, Deloitte points out that many companies prefer to recruit board members with CEO experience, and these numbers do not paint an optimistic outlook for pipeline development. They encourage companies to expand their skills profile requirements to further diversify their boards and shore up critical skill gaps.
Going forward, popular thought says investors will play a key role in setting expectations around gender diversity. Kemmerich takes that one step further: Business leaders looking to guide their companies to the best performance should not only look at shareholder value but also stakeholder value, he says.
“You look at your shareholders as part of it but also your employees and your suppliers,” he says. “If you want to become more competitive, find more success with your business, and drive this forward, having a fully diverse organization will lead to better results.”
