With so much discussion in support of improving female representation on boards, stepping back to consider the processes might just be the key to achieving 30% and 50% gender parity goals.
The slow growth of overall female representation reported in the CGLytics S&P 500 Boardroom Diversity Review between 2017 and 2018 brings up the question as to why it has been such a challenge to increase female representation on boards. Shareholders, media and legislators have rallied hard to see the percentage increase, and the research conducted proves companies are listening, however change is not currently happening fast enough.
In terms of the selection process and choosing the best candidates for building a strong board, the question must be asked, are there fewer women than men available and qualified for these appointments?
For years the standard for an S&P 500 company director has looked something like this:
- Served/ sits on S&P 500 Company board
- Holds/ held C-suite position
- Has relevant sector experience
- Has over 5 years' experience
- Has no conflict of interest
The diversity challenge we see today necessitates a change in director recruitment processes and tools.
The key for companies will be to look beyond their existing network and candidates that satisfy an arguably dated criteria. Simply put, the traditional standard used to determine the eligibility of prospects needs to be revised to allow the pool of potential directors to expand.
For example: The CGLytics' research shows 327 female appointments are needed to reach the gender diversity goal of 30%, and 1,431 female appointees to reach full gender parity. With female representation only reaching 24% in 2018 (up 1%), we discovered that if the net is cast wider than the 1,329 women currently sitting on S&P 500 boards, an additional 1,227 women are available (drawing from S&P Midcap 400 and S&P SmallCap 600 boards).
This expansion of networks should open the doors for companies to appoint qualified directors that meet diversity goals and also provide meaningful contributions to board discussions.
Getting ready for the coming season's gender debate
Boards need to be fully prepared for conversations around gender diversification this upcoming proxy season and companies should be ready to provide shareholders with evidence of their efforts to improve female representations. In addition to real-time governance risk analytics and solutions, CGLytics provides companies with a networking tool for discovering and connecting with top female candidates.
In addition to real-time governance risk intelligence and Pay for Performance analytics, CGLytics provides companies with a networking tool for discovering and connecting with top candidates for succession planning.
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