What Will It Take to Get More Women on Boards?
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Careers Leadership Jul 6, 2018

What Will It Take to Get More Women on Boards?

Women make up less than a fifth of cor­po­rate board mem­bers. Chang­ing that is a busi­ness imperative.

Yevgenia Nayberg

Women are a rapid­ly grow­ing eco­nom­ic force in many lead­ing and devel­op­ing economies. In the Unit­ed States, for instance, women have influ­enced or con­trolled near­ly three-quar­ters of house­hold spend­ing for the past sev­er­al years, and their spend­ing share may be as high as 80 per­cent, par­tic­u­lar­ly when it comes to gro­cery and oth­er retail purchases. 

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It is crit­i­cal for com­pa­nies to ensure that they rep­re­sent this impor­tant cus­tomer base with­in the board­room. With­out greater female rep­re­sen­ta­tion on their boards, com­pa­nies are los­ing out on not only an impor­tant seg­ment of tal­ent, but on a crit­i­cal mar­ket­place perspective. 

While board­room gen­der diver­si­ty has been slow­ly increas­ing, it remains mod­est in com­par­i­son to women’s influ­ence on spend­ing. Among S&P 500 com­pa­nies, women account for 19.9 per­cent of direc­tors; glob­al­ly, the num­ber is about 14.7 per­cent.

Get­ting more women serv­ing on boards will take a proac­tive approach by both com­pa­nies and female direc­tor can­di­dates. Here are ways to build more momen­tum around this effort. 

Com­pa­nies Should Con­sid­er Female Direc­tor Can­di­dates Using the Same Cri­te­ria as Male Candidates 

As of May 2018, with the retire­ment of some high-pro­file female CEOs (among them, Meg Whit­man of Hewlett-Packard), women hold 24 of the CEO posi­tions in the For­tune 500, down from 27 at the start of the year. Not sur­pris­ing­ly, these top female lead­ers find them­selves inun­dat­ed with mul­ti­ple requests to serve on com­pa­ny boards. Clear­ly, when com­pa­nies want to add a female direc­tor, the first thing they typ­i­cal­ly look for is a woman who is a CEO

But the fact is, there are many men serv­ing on boards who occu­py senior lead­er­ship posi­tions oth­er than CEO. So why, then, are women held to a dif­fer­ent, high­er stan­dard when it comes to board ser­vice? One rea­son may be the unfor­tu­nate fact of cor­po­rate life that men are often pro­mot­ed based on their poten­tial, while women are pro­mot­ed based on their accom­plish­ments. So, if women have not first proven them­selves as CEOs, they may be less like­ly to be con­sid­ered as direc­tor candidates. 

This think­ing excludes many tal­ent­ed and qual­i­fied women who might be senior vice pres­i­dents or hold C-lev­el posi­tions oth­er than CEO. Apply­ing the same qual­i­fy­ing cri­te­ria to both male and female direc­tors would increase the pool of exec­u­tive women who bring tal­ent, expe­ri­ence, and a diverse per­spec­tive to board service. 

Com­pa­nies Need Patience and Per­sis­tence to Change Board Composition

Chang­ing a company’s board com­po­si­tion takes time. That’s not an excuse — it’s a fact. For com­pa­nies with­in the S&P 1500 Com­pos­ite Index, aver­age direc­tor tenure is 8.7 years. While board diver­si­ty ini­tia­tives are close­ly watched by investors and activists alike, it can take sev­er­al years of con­cert­ed effort before a board’s com­po­si­tion looks appre­cia­bly different. 

This slow­ness, how­ev­er, masks what I believe to be real progress. In 2010, women held 15.7 per­cent of board seats at major com­pa­nies; today, that has grown to about 20 per­cent. But there has been a much larg­er increase in female direc­tors than the num­bers might reveal at first glance. A decade ago, it was not uncom­mon for direc­tors to serve on as many as six or sev­en boards. The women who also served on mul­ti­ple boards were, in effect, being count­ed mul­ti­ple times (as were their male coun­ter­parts). Now, because of more strin­gent reg­u­la­to­ry require­ments, such as Sar­banes-Oxley, direc­tors are serv­ing on few­er boards. This means there are far more indi­vid­ual women direc­tors in the mix, which indi­cates an encour­ag­ing trend in board gen­der diversity. 

The Women’s Direc­tor Devel­op­ment Pro­gram at the Kel­logg Cen­ter for Exec­u­tive Women helps poten­tial board can­di­dates craft their val­ue propo­si­tion. In this pro­gram, par­tic­i­pants pre­pare for their jour­ney to the board­room: they devel­op their ele­va­tor pitch; prac­tice deliv­er­ing it to peo­ple in their net­work, includ­ing their CEO and cur­rent board mem­bers; pre­pare for con­ver­sa­tions with search firms; engage in prac­tice inter­views with sit­ting direc­tors; and estab­lish a plan for eval­u­at­ing board oppor­tu­ni­ties that they receive. The Kel­logg Women’s Direc­tor Devel­op­ment Pro­gram has helped pre­pare near­ly 800 women for board oppor­tu­ni­ties. More than one-third of these women have been offered a board role, with many of them now serv­ing on mul­ti­ple boards. 

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Keep­ing this trend mov­ing in the right direc­tion will require com­pa­nies to stay com­mit­ted to their gen­der-diver­si­ty efforts — and investors and activists should take a patient, but firm, approach to ensur­ing they do so.

Women Need to Devel­op Their Val­ue Propo­si­tion for Board Service

As board recruiters will read­i­ly report, com­pa­nies are eager to add female direc­tors. Yet there are many qual­i­fied women exec­u­tives who won­der, Why doesn’t my phone ring?” This is the part of the process where women can be proac­tive. Unless a woman is a sit­ting CEO — a high­ly desired expe­ri­ence that speaks for itself — being con­sid­ered as a direc­tor can­di­date requires hon­ing a val­ue propo­si­tion,” which is the unique val­ue she brings to a board. 

It is impor­tant to note that there is a key dif­fer­ence in net­work­ing for a job ver­sus posi­tion­ing one­self for a direc­tor­ship. At the exec­u­tive lev­el, get­ting a job is about being a leader. But as a board mem­ber, it’s all about exper­tise — in cyber secu­ri­ty, dig­i­tal mar­ket­ing, emerg­ing mar­kets, or oth­er sought-after spe­cial­ties. In their over­sight role, board mem­bers focus pri­mar­i­ly on strat­e­gy, CEO suc­ces­sion and plan­ning, and fidu­cia­ry responsibility.

One high-lev­el exec­u­tive I know shared her sto­ry of being very suc­cess­ful when it came to secur­ing cor­po­rate roles; she had vast expe­ri­ence, incred­i­ble skills, and a huge net­work. When con­tem­plat­ing board mem­ber­ship, she thought it would be the same: just a lit­tle com­mu­ni­ca­tion with­in her net­work and the phone would ring. But when noth­ing hap­pened, she real­ized she need­ed to reach out strate­gi­cal­ly to an even broad­er range of peo­ple to com­mu­ni­cate the val­ue she could bring to par­tic­u­lar types of boards and seek their advice. She ulti­mate­ly secured a seat not only on the board of one com­pa­ny she admired, but a num­ber of oth­ers as well.

Women Need to Be Selec­tive about Their Board Membership

When women active­ly pur­sue board mem­ber­ship, they should be as dis­cern­ing about the oppor­tu­ni­ties as the boards are in eval­u­at­ing them. Can­di­dates need to do care­ful due dili­gence before accept­ing a board role. There is a say­ing in board ser­vice that direc­tors’ and offi­cers’ lia­bil­i­ty insur­ance is meant to guard board mem­bers against the finan­cial risk of serv­ing on a board — but only direc­tors them­selves can guard against the rep­u­ta­tion­al risk they take on when they accept the board appointment. 

This is why it is so impor­tant for prospec­tive board mem­bers to con­sid­er not only the company’s his­to­ry and cur­rent sit­u­a­tion, but also the company’s expec­ta­tions of its direc­tors. For exam­ple, does the CEO invite input and chal­lenge, or is it expect­ed that the board will large­ly serve as a rub­ber stamp for the CEO’s ini­tia­tives? One ques­tion for women to ask dur­ing the board inter­view process is, Can you give me an exam­ple of a time when the board and the CEO dis­agreed?” Beware if the answer is that they nev­er dis­agree. It is very dif­fi­cult to get onto a board, but it is even hard­er to get off a board, so you need to select wisely.

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Victoria Medvec

Adeline Barry Davee Professor of Management & Organizations

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