The following blog post is part one of a two-part series on the benefit of female representation in boardrooms based on the qualitative findings from an interview-based study of 103 corporate directors conducted by the Better Boards Initiative.

International Women’s Day is a time to honor the difference women directors have made to corporate board effectiveness.  Study after study shows they have not only improved the functioning of their boards but made the companies they serve measurably more successful.  A few recent studies show how women improve decision making on boards and lead to better investment decisions.

The value women bring is especially important to emphasize now as boards’ commitment to diversity appears to be waning.  The appointment of women has slowed.  Women represent less than a third of the seats on big U.S. public boards – 28 percent of the Russell 3000 – and many fewer than that on the much more numerous private company boards.  One recent study of private boards found that women held the equivalent of less than one in seven board seats – and zero seats on nearly a third of the companies studied.

Some boards are also deterred by what The Economist calls “woke-lash” – anti-DEI and ESG sentiment.  One Chairman and longtime director I recently spoke with said he has been advised in the current political environment not to champion diversity as all his boards already have some women. He now believes “it’s a generational issue” without immediate urgency.  Others mention “checkbox diversity” and imply that adding women somehow diminishes the merit and impact of boards despite the voluminous research to the contrary.

In  light of all of this, I’d like to revisit what directors told me as part of our Better Boards Initiative board diversity research in 2021.  I also reached out to a few directors for updates.

Better Boards research

Of the 103 directors interviewed as part of our research, most agreed that boards are better off for their diversity.  They say that, in addition to the perspective of different life and career experience, women tend to bring a higher degree of professionalism into the boardroom.  They both represent and are held to a higher standard for contribution than previous generations of directors, some of whom are still serving, as boards are slow to turn over.

As one Fortune 500 Chairman put it, when women were added to his previously all-male leadership, “We grew up.”  The chemistry changed, the language used changed, a broader mix of perspectives were taken into account.  One all-male board that he inherited as Chair had completely missed a major market transition.  Now he believes in 50-50 boards.

“When half of your board is women, it’s much more fact-based, it’s much more civil, it’s much more orderly.” 

-Anonymous Fortune 500 Chairman

Lately, he says he has been fortunate to sit on boards with gender parity and racial diversity: “If you can’t see the value of diversity, then great:  We’re going to beat you in the marketplace.”

The Better Boards research focused on best practices for diverse boards – how to best mine the power of diverse voices around the board table for the most benefit to a company, its shareholders and stakeholders.  We found five interrelated main areas of focus.

Tone at the top

Above all, directors agreed that what makes the most difference is tone at the top – commitment by the Chair and CEO and leadership to finding and valuing diverse perspectives and styles.  Most of our interviewees have sat on multiple boards, in some cases, dozens.  The ones that haven’t worked lacked this commitment.  They have/had ‘in-groups’ and hierarchies often based upon old established relationships and ironclad views dismissive of fresh ideas and directors from different backgrounds.  Commitment to diversity made not only diversity work – but made the board much more effective.

Culture of respect

This is directly connected to tone at the top, boards moving beyond commitment to diversity to the harder task of inclusion and modeling it for all levels of their company.  “Diversity has changed the talking and listening ratio in the boardroom,” said another Fortune 500 Chairman interviewee.  “There is more honoring and seeking to hear from all directors because we have a 50 percent representation of women and racial diversity, where in some other boardrooms that were predominantly white and male there were one or two people dominating the conversation” and a sense that they had the right answers.

Leadership, organization and facilitation

The best boards not only valued diverse perspectives, but set themselves up with formal routines to support multiple points of view.  The Chair or Lead Director made sure everyone’s viewpoint was heard by routinely going around the table   They also facilitated in other ways, such as following up and soliciting input.  Management brought their hardest problems to the board to appropriately focus their efforts and genuinely wanted to hear challenging ideas.  Many of the directors interviewed noted that these common sense steps are taken only by the most skilled, savvy, and confident leaders.

Effective onboarding of new directors

One of the greatest challenges with diversity is that, given that boards were almost entirely white and male a few short years ago and are still mostly so, adding women also means adding new directors.  There is a learning curve associated with contributing at the right altitude in a first corporate boardroom.  Many of the experienced directors we interviewed created their own onboarding programs, which their boards are adopting for others.  Board buddy and mentoring programs and follow up and advice from board leadership are best practices.

Strategic board refreshment

One impediment to diversity and to board effectiveness is the lack of turnover on boards.  Directors stay on after their experience and skills are the most needed and relevant, sometimes for years and years.  A PwC survey found that almost half of directors think one or more of their board colleagues should be replaced.  Nineteen percent would replace two or more of them.

Best practices include a strategic board skills matrix and progression plan that the board actually follows.  Board and individual director evaluations that enable boards to maintain the right mix of talent for the current business environment.  Clear communications around the difficult task of asking a likeable and/or hardworking director to retire to make way for someone with more relevant experience.