More Women Are Landing Seats On Corporate Boards, But Pace Of Change Is ‘Glacial’

By Alexia Elejalde-Ruiz Chicago Tribune

WWR Article Summary (tl;dr) The progress being made toward greater female representation on public boards comes as social movements like Me Too have galvanized the masses against sexual harassment and focused the spotlight on the importance of diverse leadership in shaping corporate culture.

Chicago Tribune

Michelle Collins' first experience on a corporate board felt like a box-checking exercise. Woman: check. Black woman: double check.

A young banker, Collins felt her opinions were politely ignored by her fellow board members, all white men.

She got so frustrated with what she thought was poor decision-making over a leadership succession plan that she resigned in the middle of her term.

"You're there, you're not sure how they're going to value you, and they really just didn't," Collins, 58, recalled of her five years on the chemical company's board.

Twenty years later, Collins has become selective about the boards she joins. She looks for companies with strong female leadership, where diversity doesn't feel like a numbers game but rather a natural consequence of seeking the best talent. She is, for example, one of six women on the 12-member board of Ulta Beauty, where she says diversity is "in our DNA."

While gender parity on a board is rare, Collins' experience shows the marked progress being made toward greater female representation on public boards, where the steady but slow pace of change has frustrated diversity advocates for years.

A Tribune analysis of regulatory filings shows that at Illinois' 25 most valuable companies, ranked by market capitalization, women have claimed 44 percent of new directorships since the start of last year, a sign that progress is accelerating.

Among those companies, 23 percent of board seats are held by women this year, compared with less than 18 percent at those same companies five years ago.

The boost comes amid strong investor pressure on companies to improve board diversity, broad agreement that diverse teams benefit business performance and a growing appreciation of the talent pool.

It also comes as social movements like Me Too, which galvanized the masses against sexual harassment, spotlight the importance of diverse leadership in shaping corporate culture.

It is too soon to know if Me Too has or will influence board composition, "but it's certainly helping drive broader cultural and strategic discussions in the boardroom," said Belen Gomez-Russum, senior director of board services at the research firm Equilar.

Gender diversity is strongest among larger companies, whose boards have seen a higher level of scrutiny in the past, but as public and investor attention shifts to small and midsize companies, Gomez-Russum expects female representation to increase more broadly.

Nationally, a third of new directorships went to women during the first quarter of this year, nearly double the rate in 2013, according to Equilar. Fewer new directors had CEO experience, suggesting companies are becoming more open-minded about what kind of experience makes someone qualified. Meanwhile, the share of companies with all-male boards dropped below 20 percent for the first time.

Still, to Kate Bensen, executive director of the women's leadership group The Chicago Network, the pace of progress remains "glacial" and representation of women on boards woefully inadequate.

Among the Russell 3000, a broader index that includes small-cap and midcap companies, women occupied 17 percent of board seats in the first quarter of this year, up from 12 percent in 2013, according to Equilar. Racial and ethnic diversity lags even further behind.

The Chicago Network for 16 years commisioned an annual census of local board and executive diversity, but discontinued it after 2014 because the gains were so marginal, Bensen said.

The organization and Deloitte, its partner in the census, instead will launch a program next month to prepare executive women to serve on corporate boards, though Bensen said companies that prioritize board diversity should have no trouble finding qualified women with the skills they seek.

"If at this point they haven't been able to identify someone, it's a legitimate question as to whether they want to," Bensen said.

Among Illinois' top companies, the greatest share of female directors can be found at Ulta, followed by the real estate investment trust Ventas, the only two companies in the top 25 helmed by female CEOs _ as well as at Abbott, where CEO Miles White has long been a diversity advocate.

At the other end of the spectrum is CNA Financial, whose 10-member board has zero female directors this year, even though the company added two additional board seats over the past five years. CNA, which in its history has had two female directors, declined to comment but pointed to its social responsibility page on its website, which describes a commitment to diversity and inclusion and its perfect score on Human Rights Campaign's index for LGBTQ-friendly policies.

Caterpillar had one of the largest increases in female directors over the past five years, from one to three, even as its board got smaller.

"Caterpillar is always intentionally seeking diverse points of view in our team, as we know it makes us stronger and better able to serve our global customers," Caterpillar CEO Jim Umpleby said in a statement.

Ulta CEO Mary Dillon said she didn't have a board diversity goal in mind when she joined the Bolingbrook-based beauty retailer in 2013, when two of its nine directors were women. But she did set out to refresh the board with people who could help her imagine the future amid a rapidly changing retail landscape, and as it happened the skills she sought, in technology, finance, governance and strategy, often came in the shape of women.

"If you open up your eyes, you will find this talent," Dillon said. Ulta last year reached 50 percent gender parity on its board with the addition of Sally Blount, former dean of Northwestern University's Kellogg School of Management, whose experience in academia is "an opportunity to deepen our knowledge about many topics and challenge our thinking," Dillon said.

That 92 percent of Ulta's 38,000 employees are women makes it all the more important to have strong female leadership, as "it's great for our associates to look up and see themselves represented," Dillon said. Ulta's customer base is also overwhelmingly female, but, Dillon said, any consumer company competing in a multicultural world can't afford to lack diverse perspectives around the table.

To Collins, who joined the Ulta board in 2014, the difference a diverse board makes shows up most concretely in the recruitment of the executive team, which at Ulta is also 50 percent female.

"We are looking at a broader population and that shows up in our business results," said Collins, president of the Chicago-based financial advisory services firm Cambium and a director on numerous corporate boards. "We see better executives."

Pressure from major shareholders is driving much of the attention to board diversity, which research has linked to improved decision-making and company performance.

A McKinsey report released in January, which reviewed data from 1,000 companies in 12 countries, found that the companies with the most gender-diverse executive teams were 21 percent more likely to experience above-average profitability, and those with the most ethnically and culturally diverse teams were 33 percent more likely.

While not proving a causal link, the authors theorize that more diverse teams attract better talent, deepen consumer insights, strengthen employee satisfaction and make better decisions.

BlackRock, the world's largest asset manager, in February updated its voting guidelines for board elections to state that it expects companies it invests in to have at least two female directors.

The investment firm State Street Global Advisors, which was behind the bronze Fearless Girl statue erected last year on Wall Street, in March announced it had pushed 152 all-male boards to add women, and that it voted against more than 500 boards that failed to show progress on board diversity.

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