Gender Diversity in the Corporate Boardroom

While many studies show that gender diverse work teams consistently outperform homogeneous groups and companies with women directors outperform companies without, adding women to corporate boards has not yet become a corporate imperative. Many people speculate why this is so, with the popular beliefs being that there are not enough women CEOs and women are not known by male-dominated boards. While both these theories are likely true, as a former CEO, Director, and change advocate, I see the problem more broadly.

For 9 years, from 2003 to 2012, I was CEO and President of Sonesta International Hotels Corporation, a publicly traded, family controlled global hotel chain, which owned, operated, and franchised hotels in the United States, Caribbean, Latin America, and Egypt. From 1996 until his death in 2008, my father was Chairman of the Board. While there was a woman on the board before I joined the board, due to my insistence, the role of the board was to agree with the Chairman’s wishes. My father was not looking for diversity of thought. He was looking for agreement. While CEOs claim they want different perspectives, they really want people who will agree with them and support their ideas. As a CEO, I understood this. Do I really want to have to justify my decisions to people who do not know the business as well as I do? Preparing for board meetings takes time and effort. I would rather spend my time creating the vision and strategy and then executing it, rather than discussing it. Other CEOs understand this, which is why CEOs want other CEOs on the board.

My experience as a director, as an insider at Sonesta, and an independent director at Century Bank and Trust and Century Bancorp gives me a different perspective. I really appreciated the diversity of perspectives that came from a more diverse board. After my father’s passing, my cousin, Peter J. Sonnabend, became board chairman and the two of us created a dynamic Sonesta board of 4 white men, 2 African American men, and 4 women—that is true diversity. Six of the 10 board members were independent directors. At Century Bank, I was the only woman when I joined the board. Upon my insistence, they added a second woman and then a third. They are now committed to having a diverse board because they see the value.

The third perspective I have on the issue of gender diversity comes from being Cofounder and Chair of 2020 Women on Boards, a United States campaign dedicated to increasing the percentage of women on corporate boards to 20% or greater by 2020. The campaign redefines successful corporate governance and gender diversity standards, and creates a cultural imperative for corporate action. For 3 years in a row, we tracked the 2010 Fortune 1000 list of companies quantifying them by the percentage of women on the board. The 2020 Women on Boards Index reveals a number of relevant findings: ¹

Larger companies have more diverse boards than smaller ones. In 2013, the Fortune 100 had 20.6% of board seats held by women. The Fortune 500 had 18% and the Fortune 501-1000 had 14.8%.

In 2011, 51% of all companies had one or zero women on the board. This shrank to 46% in 2013, with the decline predominantly in the “Z” or zero women on the board companies.

Of those companies that dropped out of the Fortune 1000 from 2012 to 2013, 65% of them had one or no women on their boards.

Boards do have turnover; 50.6% of the companies added or lost a board seat from 2012 to 2013. Some of this may be a result of timing rather than actually growing or shrinking the board, but it does clearly demonstrate that seats are turning over. Yet only 12.4% of the total companies added at least one woman.

For women to gain a voice in the boardroom of corporate America, a number of things need to change:

Companies must recognize that the definition of diversity is a minimum of 20%. They cannot claim a diverse board with anything less and should comply with and be measured by this standard.

A gender diverse board must become a corporate imperative. This can occur by encouragement from government as occurred in California Resolution 62, by investors and stakeholders expressing their desire for a diverse board, or for companies realizing that they need to have a board that better represents all their stakeholders. Encouragement could come from inside the organization or from some external source. Shouldn’t the institutional investors demand a minimum standard of good corporate governance?

Smaller companies need to embrace diversity and put women on their boards who may not have CEO or public company experience. Divisional presidents, nonprofit executive directors, and small business owners understand what it takes to run a successful business. Human resource professionals could add value to discussions on compensation and workforce development. When you broaden the criteria, many more qualified women emerge. This will given women the experience they need to sit on larger company boards.

Women who are on boards need to speak up and insist that the board add other women. They need to be better advocates for diversity.

High profile men need to speak out passionately about boardroom diversity. When men participate in the conversation, the rate of change will accelerate. Their customers, employees, and investors will applaud them. More importantly, their daughters and granddaughters will appreciate that their father/grandfather believes that they too have the same opportunities as their male siblings.

With men and women working together in corporate boardrooms, companies will likely be more profitable, more socially conscious, and better places to work. This will transform corporate America and even the world.