How to Accelerate Gender Diversity on Boards

Conference Context and Metrics

• The 20th Annual Global Conference at the Milken Institute highlighted gender equality as a critical governance issue.
• The institute aims to increase female panelists to meet the "30% Club" metric, falling slightly short of the 30% target this year but committing to achieve it next year.
• In 1993, Ruth Bader Ginsburg famously stated that true equality arrives when women in high places are no longer seen "one at a time."
• The US Senate did not have a women's room until 1993, while the US House of Representatives did not install one until 2011 despite having 76 female members by then.
• Current data indicates women hold approximately 19% of board seats at US large-cap companies, placing the US 13th globally in this metric.
• In the top 50 US large-cap companies analyzed, women comprise 33% of board members, with the leading company exceeding 50%.
• One top-performing company has increased its female board representation by 24 percentage points since 2005.

Panelist Backgrounds and Organizations

• Ron O'Hanley (CEO, State Street Global Advisors): Manages $2.4 trillion in assets and created the "she index" to track gender diversity; State Street is the architect of the "Fearless Girl" statue.
• Denise Morrison (CEO, Campbell Soup Company): Leads an $8 billion global food company with 40% female board representation; serves on the MetLife board and the Consumer Goods Forum.
• Tiger Tiagarajan (CEO, Genpak): Leads a $2.5 billion digitally powered business services firm; a founding member of the US 30% Club with a GE heritage.

The Business Case for Diversity

• State Street Global Advisors views diversity as a governance necessity because index funds hold permanent capital and cannot easily divest; evidence shows diverse boards perform better.
• Denise Morrison argues that in consumer products, board diversity mirrors the customer base (50% female), thereby driving shareholder value and strategic alignment.
• Tiger Tiagarajan posits that professional services firms fail to leverage 50% of the world's talent by not having gender-balanced boards and management teams.
• Diversity of thought is identified as a mechanism to solve complex problems and improve decision-making quality beyond just race and gender demographics.
• High-performing boards avoid "group think" caused by undue collegiality, using diversity to ensure candor and transparency.

Strategic Actions and Board Composition

• Expanding the Talent Pool: Panelists advise moving beyond "sitting CEOs" as the primary criteria for board recruitment to avoid limiting the candidate pool.
• Targeted Slate Creation: Genpak deliberately requested a slate of only women with digital expertise, requiring them to change headhunters who repeatedly sourced from the same non-diverse pools.
• Cross-Industry Perspectives: Campbell's and MetLife boards benefit from the cross-pollination of insights between the food and insurance sectors, specifically regarding regulation and complex global shifts.
• Removing Sitting CEO Restrictions: Genpak's board initially rejected sitting executives but later removed this barrier to include a non-CEO executive from a large-cap company.
• Pipeline Development: Campbell's CEO personally mentors the top 20 women in the organization to help them navigate the "mid-level thinning" where women drop out of the leadership pipeline.
• Sponsorship vs. Mentorship: State Street emphasizes "sponsorship" (giving opportunities) over mentorship, suggesting roles like running risk committees to broaden senior women's perspectives.
• Entrepreneurial Boards: Campbell's values "owning it like a founder," noting that founders and their descendants often bring a longer-term, more innovative perspective to the boardroom.

Challenges and Barriers

• Search Firm Limitations: Search firms often treat board searches as a "loss leader" intended to secure the lucrative CEO recruitment assignment, leading to conservative, non-diverse slates.
• Risk Aversion: Post-2008 financial crisis culture has made boards more risk-averse, causing them to avoid "betting the company" on candidates who may not fit the traditional mold.
• Network Bias: Recruiters frequently rely on existing networks of "who you know," which perpetuates homogeneity; expanding the network to include the US military and division heads is suggested.
• "Fit" as an Exclusionary Tool: The perception that diverse candidates lack "collegiality" or "fit" is identified as a primary barrier, whereas diversity actually enriches board dynamics.
• Defensiveness: Nominating and governance committees often display defensiveness when challenged on their recruitment processes, focusing on "what" they want rather than "how" to achieve it.

Forward-Looking Initiatives and Tools

• The Fearless Girl: A temporary one-week art installation for International Women's Day by State Street evolved into a permanent cultural symbol with a one-year permit extension.
• Board Lists: Resources like "The Board List" (US/Canada) vet and nominate ready-to-serve women, aiming to remove the excuse of "no available women" from search committees.
• Metrics and Goals: Tiger Tiagarajan advocates for setting diversity goals for management teams comparable to revenue and EBITDA targets.
• Board Evaluation: State Street suggests including specific diversity progress questions in formal board evaluation processes to force accountability.
• CEO Accountability: The panelists agree that deliberate change must originate from the CEO or Board Chair, requiring persistence rather than passive declaration.

Audience Q&A Insights

• Preparation: Aspiring board members are advised to gain nonprofit board experience, particularly audit committee roles, to understand governance and complex reporting.
• Networking: Networking is described as "working"; candidates should position themselves on search firm watch lists and engage with alumni networks from major business schools.
• Male Engagement: To engage men, institutional investors must leverage their voting power (e.g., CalSTRS representing 70% female beneficiaries) to demand change from companies.
• New Board Members: New directors should focus on rapid immersion, understanding the firm's specific marketplace, and acting as a team rather than individuals.
• Digital Literacy: A specific gap identified is the need for board members to possess deep understanding of digital strategies and technologies, as boards increasingly debate digital offensives.
• Nonprofit Difficulty: Serving on nonprofit boards is cited as more difficult than corporate boards due to the lack of a clear "shareholder value" objective function and less robust financial records.