Breaking through the Board of Directors Barrier
One of the outcomes from the “Fearless Girl” statue staring down the Raging Bull on Wall Street was to raise awareness on the topic of diversity at the board level. While the statue may be controversial, we can’t argue with the numbers. Today only 25% of the boards in the Russell 3000 have a female director. Women hold just 19.9% of the Board Seats for the S&P 500. The call to action for diversity in the boardroom comes, in part, from the returns data; companies with the most women board directors had 16% higher Return on Sales (ROS) than those with the least, and 26% higher Return on Invested Capital (ROIC). http://www.catalyst.org/knowledge/bottom-line-corporate-performance-and-womens-representation-boards-20042008
I don’t believe that policy and quotas will alone open up the doors to the closed boardroom. As a former director of a public company, where I chaired the Nominating/Corporate Governance Committee, I observed some of the systemic blocks to creating diversity in the boardroom.
· Board Search Processes are Closed Loop: In 2016, 87% of board searches were conducted by the directors themselves, without using a search firm or accessing public databases to source candidates. The closed-loop system recycles the same existing board directors into the new board positions. http://www.pwc.com/us/en/corporate-governance/annual-corporate-directors-survey/top-10-findings.html
· Position Criteria creates a Double-Bind. There are two long-held assumptions built into most director search processes. Sitting directors think they must a) hire a director who already has public company board experience and b) hire a director who is a sitting CEO or retired CEO. This, by default, limits the search to an extremely limited female population set, as only 4.2% of Fortune 500 CEO positions are currently held by women, and only 5% of the Russell 3000 have women CEOs at the helm.
Changing the status-quo
Andreessen Horowitz, the power-house venture firm headed by Marc Andreesen and and Ben Horowitz, is trying to tackle some of these systemic blocks head on. Last week, in partnership with the Stanford Rock Center, they hosted an invitation-only seminar for 100+ women and diversity candidates. This is the 3rd year of the event, and the goal is to expand the pool of trained and qualified candidates for board positions. Attendees were trained by Stanford Law Professors on the practical and legal obligations of board membership, and given access to hear best practices from women who are currently directors of public companies. I had a chance to participate as a panelist alongside Scott Kupor and Lars Dalgaard where we discussed Building Positive Board Dynamics in a VC-backed Board.
Here are some ideas I gathered from the conference on how to break through the board “sound barrier”:
1. If you are a board looking to hire an independent director, then Expand your Aperture. Don’t set the search criteria for retired CEOs or sitting CEOs. There are qualified potential directors who are currently employed executives in operating roles. Here are some of the amazing women who attended the A16z conference, and are interested in serving as directors on private and public boards:
- VP Corporate Development & Strategy, Twitter
- Founder, SoulCycle
- VP Platform Engineering, Box
- CMO, Brocade
- VP & CISO, DocuSign
- VP of AI, Google
- CMO, LinkedIn
- Chief Customer Officer, Okta
- General Counsel, Pindrop
- COO Notjoy, former SVP Marketing SurveyMonkey
- Founder & Exec Chair, TaskRabbit
- COO, Walker & Company Brands
- Head of Moonshots at X, formerly Google X
- CFO, Zendesk
2. Once the board has expanded the aperture, prioritize the functional expertise to add to your board’s existing talent bench. Here are three examples of recent director appointments of women executives with functional expertise in marketing, technology, or legal/compliance. Ford recently brought on Lynne Vojvodich as an independent director, and she had been CMO at SalesForce. Symantec brought Anita Sands on their board, and she had been Managing Director of Change Leadership at UBS. Pinterest recruited Michelle Wilson, who was the former General Counsel for Amazon, to their board.
3. If you are a CEO, then encourage and motivate the high-performing and talented women in your ranks to consider board roles as part of their leadership development. This just might be the best thing you can do for them, and it will also add value back to your own business. These executives will bring tangible leadership and industry perspective from their board roles back into their day jobs. Erin Lantz, who is the VP & GM of Mortgages for Zillow Group, gained the support from her CEO Spencer Rascoff to take on an independent board role. Rascoff not only supported her, he also went out of his way to make introductions to his network. Lantz is now serving as director on two public company boards, Truecar and Washington Federal. We need more CEOs to be like Rascoff inspiring this kind of leadership initiative. And we need more women executives to take the first step of advocating to their CEOs their objective and goal to sit on boards. Lantz also suggests the following, “Figure out what you’re uniquely capable of offering to a Board, and focus your search on a narrow, targeted list of potential companies where you think you could be most helpful.”
4. Aspiring women directors should also proactively manage their own search. Don’t sit back, and expect that search firms will come calling on you. You will need to think outside the box on your search. First, figure out how you describe your value by reflecting on the themes of your career, and what unique perspective you can bring to a board. This is your story to tell, and you need to package it into sound-bytes. Then upload your profile directly into the director databases, which you can locate on BroadRooms, an informational resource for executive women who want to serve on corporate boards. http://broadrooms.com/candidate-databases/
Most important, you will need to actively manage your own search. Create your own board search play-book to get your word out there. I’ve interviewed a number of women about their play-book; I estimate there is 1:100 in 12 months formula. Commit to a plan to meet with 100 people over a 12-month period. You won’t know who all of these 100 people are upfront, just start by calling on your top 10 list. The initial top 10 should include your contacts who are currently serving as directors of a private or public company; you will gain valuable insights from each and every director you meet. Each person you meet, ask them for their best idea on who else you should meet. Your list of 100 will grow organically. Trust that by being pro-active, you will meet and talk to 100 exceptionally interesting people. You will tell them your story, they will remember what makes you uniquely positioned as a board director, and from this constellation of networking touch-points, an ideal board seat will emerge. Erin Lantz offered the additional advice, “Expect that it will be a long process — but with patience and perseverance, and support from those around you — you’ll improve your odds of finding a great opportunity.”
I’m Anne C. Mitchell. I’m an executive coach with 15 years of venture capital experience, and private and public company board experience. I now advise entrepreneurs, executives, and company boards to help them maximize their performance, overcome obstacles, and dare to be great. Learn more at http://www.coachacm.com/