Women Lose Ground on New Board Seats for First Time in 8 YearsBy
Men took 72 percent of vacant seats on Fortune 500 boards
Three-quarters of new directors had previous board experience
After seven years of progress, gender equality has taken a step back in the board room. Just under 28 percent of the 431 open board seats in Fortune 500 companies were awarded to women in 2016, down from 30 percent the year before.
Last year saw the first decline since executive recruiter Heidrick & Struggles started tracking director appointments in 2009. At this rate, the firm says, women won’t make up 50 percent of directors until 2032.
Boards are often looking to fill vacancies with people who have been chief executive officers or chief financial officers, said Bonnie Gwin, co-leader of the global CEO & board practice for Heidrick & Struggles. Both of those roles are disproportionately filled by men as well. “If you focus on CFOs and CEOs, you miss out on diversity, largely.”
Among new directors, 50 percent were current or former CEOs and 16 percent were current and former CFOs. Three-quarters had previously served on a board, according to Heidrick & Struggles.
The other challenge is the stubborn persistence of mostly male networking circles, said Coco Brown, CEO and founder of the Athena Alliance, which was formed in 2014 to help boards find women candidates.
“I haven’t received a job through my resume since I was 23, and I’m now 46,” Brown said, citing a report from consultant PwC that found that 87 percent of board appointments come from the directors’ network of associates. “People don’t get board seats through being in a database. The candidate is still coming from the intimate network.”
Male directors also tend to doubt the positive business effects of having women on the board. A 2016 survey of directors by PwC found that 24 percent of men said that board diversity leads to better company performance, compared with 89 percent of women, and 38 percent of men said diversity made a board more effective, compared with 92 percent of women who did.
The sentiment runs counter to a growing body of research. In a 2015 study, McKinsey found that companies with above-average gender equity are 15 percent more likely to outperform markets than those who lag in gender diversity. Last year, a Credit Suisse report determined that companies with a more diverse workforce return more money to investors.
Women made up 40 percent of new directors at technology companies, an increase from 13.5 percent in the 2015, according to the Heidrick & Struggles report. About half of new directors at business services companies were female, the highest proportion of any sector. Industrial companies appointed the fewest women relative to vacancies filled.