Women and Private Boards: A Perfect Storm

Leadership

Dec 4

The boards of today are undergoing a dramatic season of change. There exists massive potential on the horizon for women seeking positions as directors, and the dynamics that contribute to this perfect storm are two-fold: The composition of private boards is shifting and the positive impact of diversity in the boardroom on a company’s bottom line has become established fact.

Private Boards

Due to the current climate of increased transparency fueled by advances in technology and social media, the distinctions that used to exist between private and public boards are eroding. Some would even argue that any differences in the expectations for each no longer exist.

At an increasing rate companies are placing more value on reputation and consumer perceptions. Private companies are increasingly under the same pressure and scrutiny as public ones to ensure the quality of their practices, and this includes the composition of their boards.

The result of this shifting climate is that private companies are placing more stock in the value of advisory boards to ensure the sanctity of their character and reputation. Private companies whose boards used to consist primarily of friends and family are now refocusing their efforts on building diverse boards to preserve the reputation of the name on the door.

Having said that, these companies are also realizing that the addition of an advisory board means a major impact on their bottom line, so much so that 97% of private companies reported an increase in revenue after adding a board. These numbers are hard to ignore, and growing the company, and/ or assisting with an initiative has become a primary focus of boards in front of company reputation

Another effect of these developments is that private boards are becoming an increasingly reputable and desirous place to serve as a director. Positions on public boards have historically been held as an ultimate end-goal for serving as a director, and while these positions have been highly coveted they’re also extremely difficult to attain.

An increased focus on expectations for private boards, and consequently improved reputation and prestige, translates to positions that are not only becoming increasingly available, but increasingly desirous as well. This trend is also being reflected financially in the context of increasing rates of pay for directors serving on private boards.

Diversity in the Boardroom

As consumer confidence becomes more of a topic of focus and companies strive to navigate change, there is an increasing awareness and value placed on the role of diversity in the boardroom. This concept is quickly moving from a “good idea” to an established truth when it comes to the understanding that a diverse board plainly translates to a far better long-term outcome for privately owned companies.

Along with the decisions that affect the companies it serves, board composition is being increasingly recognized for its impact on consumers and communities. A growing focus on diversity of experience and thought means a board that looks more like its company’s customers. It also means bringing more perspective to the table and increasing the breadth and depth of meaningful decision making. Consequently, this translates to the improved quality, longevity and success of a company through its board’s decisions.

Aside from this valuable dynamic, there is also a direct correlation between women in leadership and financial success. Of the top 20 percent of companies that are financial high performers, 37 percent have women in leadership, and companies with women occupying at least 30 percent of leadership roles are 12 times more likely to be in the top 20 percent of financial performers.

More specifically, there is also a direct connection between a diverse board and increased revenue. In fact, a gender-diverse or ethnically-diverse board can boost revenue up to 21% or 35%, respectively.

It’s also being recognized that there is a serious misrepresentation of women and minorities on boards, even more so on private boards than public ones according to the BoardForward Awards.

While “women comprise about half of the total U.S. workforce; hold half of all management positions; are responsible for almost 80% of all consumer spending; and account for 10 million majority-owned, privately-held firms in the U.S., employing over 13 million people and generating over $1.9 trillion in sales”, they only represent 17.9% of corporate board seats according to the 2020 Women on Boards Gender Diversity Index of Fortune 1000 companies.

Some might view this disparity as discouraging, however it can also be considered an opportunity ripe with potential.

As awareness increases of the profound impact a diverse board, including women, can have on a company’s bottom line, so will the demand for women who bring experience, skill and unique insight with them.

Companies who are acknowledging and addressing this shift in dynamics are also being recognized as front-runners of change, thus improving public perception and brand-building. Tesla, for example, has been acknowledged for veering away from its history of appointing primarily men to its board of directors with the appointment of Ebony Media CEO Linda Johnson Rice.

As tech companies have been notoriously lacking in diversity on their boards, this move was recognized as innovative and as capturing a “unique opportunity to be leaders in bringing in diversity, which results in good governance,” according to Deb DeHaas, vice chairman and chief inclusion officer at Deloitte’s center for board effectiveness.

The Woman, Not a Woman

We see this “perfect storm” come into place:

● More private companies are forming or are completely revamping their boards.

● Due to a shift in focus to consumer experience and public perception, the reputation and expectations of private boards are on par with public ones.

● Diversity is becoming an increasingly acknowledged and sought-after component of board composition due to the recognized improvement of board quality that comes with breadth of experience and skill, the resulting increased revenue, and the potential for brand building.

● The current representation of women serving on boards is low, which translates to a massive opportunity for entry into awaiting board positions as the value of what the right woman can bring to the table is increasingly recognized.

The potential for women seeking to serve on boards is incredible, and we are literally standing at a precipice of massive change. What will be crucial to keep in mind, however, for both the women seeking to serve as directors and the for the companies whose boards they’ll sit on is filling those seats with the right women, not just some women.

Holding a seat on a board of directors is an enriching experience as it facilitates the creation of a higher quality executive and the cultivation of skills needed to pursue C-suite positions. The experiences and information gained in serving on a board are brought back to the companies that directors work for, and given that less than 20 percent of C-suite executives and only five percent of CEOs are women this experience can be invaluable.

It’s important to pursue positions with companies that aren’t just looking to fill a chair with a female body for appearances’ sake or to “check a box.” The companies that grasp the value of finding the right, qualified women to bring a diverse voice to their boards are the ones that will provide the most rich and valuable experiences when it comes to filling a director’s seat.

In summary, it’s not only valuable to be the right woman, but to put your skills and experiences to good use with a company that recognizes the value of the right woman. Furthermore, beyond those skills and experiences the board worth serving on will also take into consideration the “whole person” as companies are increasingly paying more attention to board character.

It’s my goal to engender this type of congruence in the leaders I work with through my Bloom Development Approach. Looking at the six areas of emotional Intelligence, physical well-being, spirituality, social/fun/lifestyle, psychological/love-based perceptions of self, and career and finances I strive to provide clarity, understanding and fulfillment around goals and life experiences.

This is an incredibly exciting time to see opportunity meet with potential for so many women. The floodgates are opening to the changing tides and it will be powerful to see so many step into alignment with their goals.

Where will you be during this season of change? Are you ready to step into your potential?

Let’s get started.