Research shows that a diverse board of directors will increase the financial performance of your company.
Credit Suisse’s Gender Diversity and Corporate Performance report found that “in testing the performance of 2,360 companies globally over the last six years, our analysis shows that it would on average have been better to have invested in corporates with women on their management boards than in those without.” They also found that companies with one or more women on the board have:
• delivered higher average returns on equity
• lower gearing
• better average growth
• higher price/book value multiples
An analysis by the University of British Columbia Business School of all of the mergers and acquisitions activity of S&P 1500 companies between 1997 and 2009 showed that women on corporate boards help companies strike better M&A deals. The report found that for each female director, the company spent 15.4 percent less on acquisition bid premiums.
A diverse board challenges management to think strategically and innovatively. Diversity includes gender, ethnicity, comparative youth, different backgrounds, and an outsider approach to board discussions.
As a long-time business negotiator and mediator, I look for win-win solutions. Improving board composition and dynamics through diversity is a win-win opportunity for your board. While recently recruiting for new board members for the board of a public company that I chair, I realized this opportunity. Extraordinarily qualified women want to serve on corporate boards and are highly motivated to do so. However, the first board seat is always the hardest to find for men and women because boards often seek candidates with previous company directorships.
Since women and minorities compose a small percentage of boards, this dynamic has created a window for your company to attract amazing fresh talent to join your board. But how can you find candidates that meet your criteria?
While Fortune 500 companies can pay thousands in fees to the big recruiting firms, most companies cannot. Fortunately, there are resources available that provide a disruptive approach to the typical “who do you know” method of finding excellent candidates.
BoardProspects.com is similar to LinkedIn but specifically for board candidates. You can search their free database and post a board opening for a fee.
Another resource is the National Association of Corporate Directors (NACD), which has a network of contacts, many with formal corporate director training. NACD also has a fee-based database of registered candidates.
A number of business schools are also providing information about their graduates.
The tailored services of Women2Boards.com were especially helpful in our recent board expansion. Their CEO, Nancy Sheppard, was a CEO in the financial industry and now uses her connections to bring qualified, board-ready women to corporate boards that need new talent. Nancy listens carefully to your company’s culture and needs and then uses her network and database of highly qualified director candidates to give you a range of candidates to review. Women2Boards referral fees are modest and based upon final selection of one of their candidates. Through this process, we were thrilled to review a dozen strong candidates and to have two remarkable women join our board. These new members bring their diverse experience (CEO and CFO, Fortune 50 and start-ups) and their Silicon Valley and Texas perspectives to help us invigorate our strategy and discussions.
Warren Buffett captured the need to take advantage of the untapped talent of women in business when he said, “We’ve seen what can be accomplished when we use 50 percent of our human capacity. If you visualize what 100 percent can do, you’ll join me as an unbridled optimist about American’s future.”
As a business community, we can work together to encourage a broader look at how we approach improving corporate governance through our board composition.
Britt Ide is chairwoman of the board for PCS Edventures, a Boise-based public company that sells science, technology, engineering and math experiential education products in all 50 states and 14 countries. She is also president of Ide Law & Strategy, PLLC, a firm that proactively resolves business disputes and consults on energy policy, strategy and sustainability. Britt is a co-founder of the Boise section of the Northwest chapter of NACD.