Looking for Female CEOs? Consider Board Service as a Qualifier

 

Kathy Gurchiek By Kathy Gurchiek September 20, 2019
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​Board membership can be a pathway for women to attain CEO roles, according to new research from Georgetown University.

More women than men tend to serve on boards of public companies—59 percent versus 42 percent, respectively. Nearly one-fourth, or 23 percent, of women serve on a board for a private company versus 12 percent of men who do so, the research found.

That experience—coupled with serving as chief operating officer, president or executive vice president—can serve as a way around the requirement that a candidate have served as a CEO. But for board service to be a viable route to the corner office, organizations will need to relax their requirement of prior CEO experience. 

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Requiring CEOs to have already been a CEO at another company tends to ensure that more men will hold this title than women. In May, the number of female Fortune 500 CEOs rose to 33, up from 24 in 2018 but still a disproportionately small number.

Georgetown University's findings are based on research that identified 140 female CEOs among the 3,000 largest publicly traded U.S. companies. After eliminating those who founded their companies or inherited their position from a family business, 100 were randomly selected and matched with male CEOs from a similar sector and company size to see how their career progression compared. Researchers identified the three titles they held prior to reaching their first CEO role at a public company, as well as any board experience they had prior to their first public-company CEO appointment.

'Seal of Approval' 

Women's board involvement "is a way of breaking this logjam" in the CEO pipeline, said Catherine H. Tinsley, professor at Georgetown University's McDonough School of Business and faculty director of the university's Womens Leadership Institute in Washington, D.C. They are the authors of the Georgetown University study.

Board experience brings with it networking opportunities and visibility that can lead to career growth. An Harvard Business Review study found that sitting on a board gives a person a kind of "seal of approval" for executive potential.

"Board appointments increase an executive's visibility and give him or her access to unique contacts and learning opportunities," according to the study, which was conducted from 1996 to 2012 of 2,104 top executives of large, publicly traded companies in the U.S.

Women are seeing the door to the boardroom open a little wider for them as public scrutiny of boards and calls for more diversity on them have increased.

There are no longer male-only boards of directors among Standard & Poor's 500 companies, for example. And last year, California became the first state to pass a law requiring publicly traded companies headquartered there to have at least one woman on their boards by the end of 2019. By the end of July 2021, boards with five members need to add at least two women to their boards, and boards with six or more members must add at least three women. Other states, such as Illinois and New Jersey, are starting to follow suit.

[SHRM members-only toolkit: Developing Employee Career Paths and Ladders]

Tinsley and Purmal note in their report that the recent trend in women being appointed to corporate boards, along with their research on how such experience helps get women in the CEO pipeline, "may signal a significant increase of women in the CEO talent pool in the years to come." 

Pointing to the 2018 U.S. Technology Spencer Stuart Board Index, which annually examines emerging trends and issues in board composition, governance practices and director compensation for 200 top U.S. technology companies, they noted:

  • Women represent 40 percent of the incoming class of board directors, up from 36 percent in 2017.
  • Women represent 24 percent of all directors, up from 22 percent in 2017.
  • 17 percent of the incoming class are 50 years old or younger—up slightly from 16 percent in 2018—and more than half (53 percent) are women.
Tinsley cautioned that experience on nonprofit community boards may not translate into the kinds of skills needed for a publicly traded company. 

"It's wonderful to let your company know what you're doing, but it's not necessarily an indication of external credibility. You're just volunteering; it's not like somebody said, 'This person needs to be on the board.' I suspect the external validation signal is important to companies when considering candidates for a CEO position."

Advocating for Themselves 

Women have to do their part, too, Tinsley said. That includes telling people they are interested in serving and finding ways to hone their skills to make them viable candidates.

"You can actively seek revenue-generating roles, or join the board of an industry association to develop specific skills and expertise in your field" to prepare yourself as a potential corporate board member, Tinsley said. "You should have conversations [with company leaders] about the company's succession-planning process to learn how to best leverage [your] chances for success."

Those conversations happen more often with men than women, according to new research from Working Mother Research Institute, which found that 64 percent of men said their company provided information on career paths that lead to executive positions, versus about 37 percent of women who said such information was provided. And 63 percent of men versus 37 percent of women had attended a round-table discussion with senior executives.

Those findings are based on an October 2018 survey of 2,289 female and 749 male professionals—200 of whom were C-suite executives.

Forbes recently prompted a backlash when its list of America's 100 Most Innovative Leaders included only one woman: Barbara Rentler, CEO of Ross Stores.

"Women, as we all know, are poorly represented at the top of the largest corporations (just 5 percent of the S&P 500) and fare even worse among growing public tech companies," Forbes editor Randall Lane said.

The methodology for determining who would be included in the list was flawed, he said.

"It would be intellectually dishonest to construct a methodology designed to generate a predetermined result, but in this case the forest got lost in the trees." He noted that Forbes should have "used the moment to delve into the larger problem of women ascending to CEO." 

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