by Martha Clark Goss and Lucille V. Corrier

Why are there so few women directors on the boards of American companies?

 

Is there a "Silent Quota" embedded in board selection? And what do the shareholders think? Here, a panel of directors and industry observers give their views.

“The recruitment of women and minorities to the boards of U.S. companies has not changed in the last three years, “according to the January/February 2003 issue of "The Corporate Board" magazine, which reports that women account for only ten percent of all directorships.

Some board watchers feel that a “silent quota” pervades many boardrooms.  One view holds that with the new focus on governance, shareholder activists are likely to target boards that don’t adhere to good principles of governance, of which board diversity is clearly one aspect.

As members of The Financial Women’s Association of New York, which works toward putting more women in the boardroom, and continues to be dismayed at the dismal statistics, we decided to explore questions about the lack of women on boards, with a panel of directors and individuals who closely watch governance practices and policies.

QUESTION: IS THERE A DIFFERENCE IN BOARD BEHAVIOR WHEN WOMEN ARE ON A BOARD?

JOHN STUART, former CEO of Ikon Office Solutions, formerly Alco Standard Corporation.  There were more than two women on the Ikon board during his tenure.  He serves on the Advisory Board for “Directors & Boards Magazine.”

"Women on boards cause different behavior, which is good.  A well-educated female director on our board, who had not worked outside the home nor had commercial training, was thoroughly prepared for every meeting and her comments were incisive.  I think women take the board role more seriously than men, some of whom don’t even read the materials before the meetings.  I think it’s a good sign if there is more than one woman on a board."

HENRIETTA HOLSMAN FORE, the Director of the United States Mint, was Chairman and CEO of Holsman International, an investment and management company, and Chairman and President of Stockton Products, a building materials company.  Prior to joining the Mint, she resigned board positions, which include the Dexter Corporation and HSB Group Inc.

"Anyone who serves on a board needs to have his or her ideas reinforced.  Sometimes it’s hard for women’s voices to be heard.  I have observed that women, rather than men, are more likely to reinforce the points made by other women."

ROBERT ABER, Senior Vice President of the Corporate Client Group at the NASDAQ Stock Market Inc.

"Women participating on boards add to the civility of the discourse -- and in general are exquisite listeners and thoughtful in exploring complex issues."

PATRICIA M. HALL, Managing Director and a Principal of Hallmark Capital Corporation has 20+ years in financial management, has sat on eleven private company boards, and currently chairs an audit committee.

"I see no difference in board behavior -- this may be because I’m on the boards of privately held companies with revenues of $200 million or less. Smaller companies tend to have smaller boards with less redundancy of skills, though I feel they are committed to a level of diversity.  I was sought primarily because I am a financial professional, but also because I am a woman.  I think my boards felt, ‘Let’s get both in one package!’  I never feel that I am a token -- I feel respected as a true contributor to the governance of these companies."

RICK SMITH, Vice President, Clark/Bardes Consulting, specializes in governance issues, and board and executive compensation.

"Initially, there is always an imperfect level of comfort with any new board members, men or women, until they become integrated into the workings of the board.  I’ve seen many situations where male members of a board are very pleasantly surprised that a new female director not only brings the needed skills but also has very good ideas."

QUESTION:  WHAT ARE WOMEN SEEN AS CONTRIBUTING TO THE BOARD?

ABER: 

"Clearly women provide a variety of professional skills that can add to the strategic focus of the board, be it in finance, law, science, politics, business, the arts, medicine, academia, technology, and on and on..."

SMITH:

"There may not be an instant impact, but I see very strong women joining boards and I see them helping boards make better decisions -- they do not hesitate to share their points of view and to put forth workable and creative suggestions."

FORE:

"Women can contribute largely the same things as men although they also bring a diversity of analytical and leadership skills, particularly in areas of consumer issues, governance and succession, and CEO leadership.  Women often can counsel male CEO’s more effectively than can other men.  Many CEO’s are married (or at least have mothers!) and are more accustomed to counsel from a woman than from another man, especially a business peer."

STUART:

"The questions posed by women board members come right to the heart of the issue; there is no posturing.  They’re generally more willing to ask the tough questions.  I have observed a number of men who are sitting CEO’s who don’t want to ask something they think they should know or admit they “don’t understand” an issue.  A recent study found that women have a higher ethical standard than men, which is of particular interest in today’s environment."

HALL:

"On my boards I’ve never seen the so-called woman’s point of view sought. Because these boards are smaller and need to find directors from a variety of disciplines, gender is a non-issue.  They are all B2B companies; they are not consumer-focused so they may not feel that the board needs to represent the same mix as the customer base of a consumer products company."

QUESTION:  ONCE A BOARD HAS TWO OR THREE WOMEN, IS THERE A “SILENT QUOTA” FACTOR THAT KICKS IN?

STUART:

"There is something to the concern about the “silent quota.”  I would guess that many boards that have one woman on the board are still “good old boy network” boards."

ABER:

"If I had Meg Whitman (CEO of E-Bay), Carol Bartz (CEO & Chairman of Autodesk), or a Tracy Wan (President and COO of The Sharper Image) on my board, I would want to increase that board by as many women of that stature as I possibly could -- then the idea of a “silent quota” would clearly have no relevancy."