Gender Parody: How to Get Even More White Men on Your Corporate Board

By Stefanie Johnson

Unlike the United States, many European countries have seen declines in the percent of white men on corporate boards. The author presents five strategies commonly used board recruitment strategies guaranteed to maintain the status quo. 

In European countries like Norway, Belgium, Germany and France women hold 30 – 40% of corporate board seats. The legislative body of the European Union (the commission) has advocated for 40% of non-executive board members to be women. Among the FTSE 100 (Financial Times Stock Exchange) in the UK, women board directors have increased from 17.3% in 2013 to 27.7% in 2018 with aims of increasing that percentage to 33% by 2020.

In the United States, only 20% of board seats among the Fortune 500 are occupied by women. Although the government does not (wo)mandate the gender distribution of board members in the United States, groups like State Street Global Advisers and Blackrock are working to increase the number of women on boards. There has been an increase of 88% in the number of interventions by activist shareholders in recent years, including efforts to remove sitting CEOs who fail to increase board diversity.

Despite these pressures, the percent of women on corporate boards in the United States has stagnated and, for the first time in 8 years, declined in 2016. Data suggest that it will take until the end of 2055 to have board parity in the United States at the current rate. This raises the obvious question of how companies in Europe (and some U.S.-based companies) can learn from the way that most boards in the United States have been able to maintain the percentage of men on their corporate boards. Based on my own research, I have identified 5 key steps to limit women’s access to corporate boards.

1. Insist on CEO or COO status in a large corporation. According to a 2015 Spencer Stuart Study, the highest priority of boards was to recruit active CEOs or COOs, with 65% of respondents expressing this preference. This makes using this criteria quite effective for securing male board members given that only 5% of CEOs are women and the results are similar for the rest of c-suite. If you are trying to snag a good white man for your board, look at the c-suite.

2. Encourage board members to tap their existing networks. There is strong and consistent data showing that most new board members are recruited from the small, preexisting networks of current board members. Importantly, if you already have a strong group of white men on your board, their networks are likely to be very similar to them in terms of race, sex, sociodemographic, behavioural and interpersonal characteristics. If you do not want people who provide different viewpoints and independent thinking (and only 14% of directors and c-suite executives report they do), then tap your existing networks.

3. Look at recruiting firms. Most recruiting firms are going to provide white male board candidates as well because they are easiest to find. Executive search for boards is a loss leader for most search firms, but they do it as a way to build relationships so they are hired to headhunt for more lucrative roles. As a result, they will likely give you the easiest (most white and male) list possible. 

4 .Highlight the importance of meritocracy. Although it may seem like hypocrisy to recruit all of your talent from the small existing networks of your board members and then say that you want to hire the “best person” for the job, always talk about the importance of meritocracy. Obviously, it is not possible to get the actual best person for the job if you hire all of your talent from 30% of the population (the white men), but there is evidence that companies who promote the idea of meritocracy are the most favorable toward white men. It is also a sure fire way to end any conversation on the importance of diversity.   

5. Dovetail the conversation on meritocracy with a discussion of culture fit and risk. Directors fear change and disrupting the good relationships among board members, so bringing this risk to their attention will likely be impactful. Emphasise the status quo (we have been getting along so well) and the risk of losing that and the board will never choose the unique candidate – the status quo bias is one of the best biases that white men have on their side.

The risks of having more female board members are clear. CEOs who increased the demographic diversity of their boards elicit higher profit margins for the company but at the expense of lower pay for themselves. Using 12 years of data of Fortune 500 companies, researchers showed that demographically diverse boards are more likely to challenge the authority of the CEO and curtail CEO pay. Board members who are demographically similar to the CEO feel less comfortable sharing dissenting opinions toward the person who helped them gain their coveted seat. 

Of course, there are some reasons that companies may not want all male boards, beyond government mandates to increase women. For example, greater board diversity leads to higher firm financial performance; Fortune 500 companies in the highest quartile of women on their board have a 42% greater return on sales and 53% higher return on equity than the rest. Companies with one or more women on the board have higher average returns on equity, lower debt to equity and higher overall growth. Investing in companies with women on the board results in 36.4% greater returns. Having at least one woman on a board is related to reduced risk that a firm will have to restate its earnings. Overall, if women achieved gender parity it would increase global output by more than 25%.

A McKinsey study shows that more diverse boards have better intuition, have better decision-making, and encourage talented female employees to join and stay at a company. Having more women board members creates role models for talented women, results in increased women executives the subsequent year, and creates social justice.

For those companies who decide to go against the status quo and increase the number of women on their board, what can they do? First, set goals and plan for increasing diversity when board seats open. There is evidence that the best way to achieve diversity outcomes is to have metrics, goals and accountability around achieving a more diverse group. Mandatory term limits, mandatory retirement, and board decisions to remove stagnant board members also provide opportunities to replace current members with new board members who bring in diverse perspectives.

CEOs can have an immense impact on the percent of women on their board. They can crate diverse networks from which to recruit female board members and establish diversity and inclusion as a priority for the organisation. Change must be intentional from the CEO, or board parity is unlikely to be achieved.

When recruiting board members, the Nom-Gov committee should ensure a diverse slate but consider interviewing the women first. Having a diverse slate of board candidates makes it more likely that you will hire a woman. In fact, there is evidence that just have two women on the finalist slate makes all of the difference in who is eventually hired. When there is only one woman, she is a token and the status quo bias to go with a man is at its peak. But, when there are two women, that bias seems to break down. Press accounts say that is not enough, suggesting that all of the women should be interviewed before interviewing any men to limit status quo bias. If a qualified woman cannot be identified, then interview the men. As evidence of how strong the status quo bias is when it comes to board seats, there are data showing that just as male board directors tend to be replaced with men, female board directors tend to be replaced with women to maintain the status quo. 

Current methods of recruiting board members are practically guaranteed to maintain the overrepresentation of men on corporate boards. Companies stating that they want to increase the percent of women on their boards, but are not looking for new ways to recruit members are certainly not going to achieve their goals. In contrast, companies who are willing to shake up the status quo, can create real change and achieve added value with their board.

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About the Author

Dr. Stefanie K. Johnson is Associate Professor of Leadership at the University of Colorado, Boulder’s Leeds School of Business. Dr. Johnson studies the intersection of leadership and diversity, focussing on (1) how unconscious bias affects the evaluation of leaders and (2) strategies that leaders can use to mitigate bias.