By now, few people would argue (at least publicly) against putting more women on corporate boards, whether the impetus is shareholder pressure, studies that cite higher earnings for companies with gender-inclusive leadership or, now, a legal mandate. In September, California Gov. Jerry Brown signed Senate Bill 826, which requires any publicly traded corporation based in the state to have at least one woman on its board of directors by the end of 2019. That means nearly 100 firms that currently don't — about a quarter of the state's public corporations — have a year to find a female director, or face a $100,000 fine (no media companies on the 2020 Women on Boards' Gender Diversity Index are in danger of violation). By the time the law is fully implemented in 2021, women should occupy 400 to 500 seats statewide.
But the demand outnumbers the female chairmen and CEOs with whom board searches typically begin — and end. Only 5.1 percent (151 companies) of firms on the Russell 3000 stock index have female CEOs, while just 24 women lead an S&P 500 corporation. "All those women are boarded up," says Betsy Berkhemer-Credaire, CEO of executive search firm Berkhemer Clayton and nonprofit 2020 Women on Boards, who testified in Sacramento six times this year on behalf of SB 826's passage.
Media and entertainment, dominant sectors in the state, contribute their share of active and former chiefs to the board pool, but there are only so many Bonnie Hammers, Sherry Lansings and Debra Lees, each of whom sits or has sat on multiple boards. Adding to the challenge of finding top female executives for boards are the policies of several large public companies, including Disney, Apple and Google, that prevent employees from serving as a director for an outside public company. (It's worth noting that Hollywood's only current female studio chairman, Universal Pictures' Donna Langley, has never served on an outside corporate board, though NBCUniversal does not bar its employees from doing so.)
At the rate women are being promoted to the top of the org chart, studies extrapolate that it will take at least 40 years to reach nationwide gender parity in the boardroom. And in the meantime, companies are missing out on the chance to take advantage of fresh — and, in some cases, literally younger — perspectives that can help them anticipate technological trends and conceive of more nimble strategies. "Why are we not looking at the woman who might be in the C-suite in the future?" asks ELY Capital's Hope Taitz, an active advocate for women on boards. "What are boards doing about innovation? I sat on a hotel board — five years ago, they wouldn't have thought about how Airbnb was going to disrupt the business."
Recruiters say that forward-looking companies are now considering board candidates with strengths in digital marketing and understanding consumers, opening up the playing field for CMOs, CTOs, entrepreneurs and human resource chiefs. "What caused a pretty dramatic shift was the rise of desire to have digital DNA or transformational DNA," says Jana Rich, whose Rich Talent Group specializes in placing women on boards. Adds Julie Daum, who leads the North American board practice at executive search firm Spencer Stuart, "Because the average age on boards is pretty high, those directors worked in a different world, so these are skill sets that are really needed."
So while a new class of in-demand directors has emerged, female executives, unlike many of their male counterparts, tend to be more measured in making a decision to serve on a board, especially when weighing the time commitment against existing obligations in a culture in which women are still expected to shoulder the brunt of family responsibilities. Most public companies have mandatory board sessions every quarter, which can sometimes last for up to two days, including social activities and committee meetings. Capitol Music Group COO Michelle Jubelirer says she has recently been approached with board opportunities that she ultimately felt weren't the right fit. "Women are more discriminating about what they say yes to," she notes, adding, "but they don't get asked enough to get that opportunity."
Without the benefit of a chairman or CEO title, experts say, women can chart a path to the boardroom by first serving on the board of a large nonprofit or a trade association, or burnishing their financial and tech bona fides by getting involved with a private equity or venture capital fund. This generates not only board experience but also, crucially, relationships that can help penetrate the inner circle of boardrooms, where newly open seats are still invariably offered to cronies. "A lot of boards are the products of familiarity — new members being asked after serving on other boards with extant members," says ICM Partners board member and literary agent Jennifer Joel, a former Goldman Sachs banker. Adds Berkhemer-Credaire: "Men are lined up, six guys deep, behind every board seat. They play golf together, they're on university boards together."
Not that existing directors necessarily need to be replaced. "It may be necessary for boards to increase the number of seats in order to create diversity, rather than wait for seats to become available." says TriStar chief Hannah Minghella. Indeed, SB 826 allows firms to add seats to reach compliance. Firms may seek to do that anyway: "There are shareholders who will vote against a company if they don't see a diverse slate," says Taitz. "My fear is, are they just going to go back to the same 50 women? We have to get [new] women the skills, get them into the room with the people who make things happen, and break apart the mold."
These 20 female leaders already have deep business experience, plus the marketing, digital or lifestyle backgrounds that boardrooms often lack.