Views from women on Fortune 500 Boards

"I am happy to talk with you, as long as it is absolutely clear that I do not want to be named or identified in any way. I prefer to stay in the background." We met this comment, or words to this effect, every time we introduced ourselves to the board members we contacted for this article. This presented something of a quandary: on the one hand, the individuals were very generous with their time, and very candid, making the sorts of observations that probably wouldn't be made for attribution by any high-level executive or director of a major company. On the other hand, their reticence also seemed a little ironic, since these are all people whose photos appear year after year in annual reports, if not in the general business press. Their reluctance to speak for attribution, however, was consistent with their sense that being a woman or minority board member brought extra attention, and required extra diligence on their part to preserve privacy and to be viewed as models of appropriate behavior by their colleagues on boards and by others in general.

These women directors raised troubling questions about whether it is getting harder for qualified women to make it to boards of major corporations, because one route that was common in the past -- community service -- may no longer be an option, but that other paths to the boardroom are not opening up as this traditional one is closing. One woman director is so concerned about the difficulties for qualified women that she described anyone who would look for ways to increase the number of women bo bers as "Don Quixote in a dress".

We may be witnessing a transition, they suggested, in which a proven source of strong women board members, community service and participation on non-profit boards, is being devalued or rejected altogether. This experience is increasingly compared -- unfavorably -- with the experience of women in management of major companies. The remarkable women who expressed their talents through community service and who have made significant contributions to major corporations, however, expressed concern that their contemporary equivalents, the equally competent women in business, are not being appointed to boards at an equivalent rate.

We have opted to go ahead and tell you what we learned, even though most of our valuable sources will not be named or identified. We will describe the board members this way: they range in age from 45 to 65+; they serve on two to four boards each (of Fortune 500 or Fortune Service 500 corporations; this does not include non-profit boards); they have from 5 to 20+ years of board experience. They all are or were married; approximately half have children, half do not. The companies on whose boards they serve represent a broad range of industries, including industrial products, consumer products, telecommunications, gas and electric utilities, banking, insurance, transportation, food, and forest products.

Virtually all of the women have observed a reluctance on the part of CEO's, or the headhunters who are conducting board searches, to consider a woman who does not already sit on a Fortune 500 or Fortune 1000 board. As women like Barbara Franklin resign from boards to accept public roles, and as older women who frequently were selected because of significant community service, retire, they are not being replaced except with "proven commodities." One board member who does not have a traditional business background managed an operating budget for a foundation that was much greater than many executives currently on boards have managed. Based on the comments of the directors we spoke with, however, we doubt that a woman today with similar experience and credentials would be selected.

Reaching outside the business community in order to have a woman director is tokenism, and the demise of this practice "is actually a good thing", according to one male director. Yet he too expressed frustration as he watched his fellow directors discuss the desirability of recruiting a woman board member but never actually do it. Year after year, he told us, names of prominent, "highly qualified" women would be proposed, including, once, a Nobel Laureate. These women were rejected, our source said, typically because they were perceived as "too strong ... [the other directors] wanted someone nice and non-controversial, someone who wouldn't rock the boat.". Despite management's avowed desire to have a woman on their board, they have not managed to accomplish this, whatever the actual reason. This male director's opinion was echoed by one of the most distinguished women directors: "They don't want someone who will shake the tree too much."

But if a woman with significant non-profit experience is no longer qualified and a Nobel Laureate is too strong, what does that say about the opportunities for women to make it into the boardroom?

Caution and conservatism about picking a woman who will not embarrass the company and who will interact successfully with the rest of the Board have always existed. These seem to be getting stronger, however, despite the increasing numbers of women in the workforce and in management. The women directors we interviewed are frustrated by companies' unwillingness to recruit obviously talented women to their first directorship.

Leon Farley, founder and head of a national search firm told us that he thinks prior experience on a major board is "a good requirement" although, he acknowledges, this does produce a bias against women. He also believes that the "old route of community service was patronizing and condescending" to women. Farley has done six board searches in the recent past, and in two of them, was specifically asked to recruit a woman. Both candidates who were selected had business backgrounds. One already served on a board of a major corporation. The other was a senior vice president of a major computer corporation, reporting to an executive at the level of a divisional president. Farley believes that companies can increase the representation of women and minorities on their boards "to the extent they go search" because qualified candidates are out there. "When we get more women running companies, we'll see lots more women on boards. The larger question," Farley adds, "is why aren't there more women CEO's?"

The New York-based organization Catalyst advises women who seek nominations to directorships to gain experience serving on non-profit or foundation boards. "The potential for networking is very good," according to Catalyst representative Divina Askin. Askin told us that Catalyst has completed approximately ten board searches in each of the last two years, primarily for Fortune 500 companies.

But ten searches per year in the last two years hardly seems encouraging when we consider that Catalyst has been in existence for over twenty years, and that increasing the representation of women on boards of major corporations was one of the main tenets of its founding charter.

Of the current women directors who came to boards through a path of community service, many, if not most, will be retiring soon. If this particular type of background is no longer as desirable or appropriate (and the women directors we spoke to were unanimous in their opinion that this is the case), and if the other sources of credentials for board eligibility do not produce greater numbers of women directors, then we could witness a decrease in the representation of women on boards.

Another route to board positions that has been traditionally acceptable for women is the academic one: the college or university president, dean, or professor. The directors we spoke with who have served on boards with academics have mixed opinions about the appropriateness of an academic career as preparation for a real contribution to a board.

One woman director pointed to a woman who had been a college president and considered herself the equivalent of a CEO of a medium-sized corporation. This may be the exception, however. Among all the individuals we spoke with, only Leon Farley could think of male directors whose only credential was being a professor, (as opposed to a president or dean of a business school, which is relatively common), and Farley acknowledges that the examples he knew of were men with scientific or engineering backgrounds, and on boards of technical companies. Yet there are women on major boards who are distinguished professors, but who have little or no business experience or expertise in an area related to the companies' services or products.

This, according to one woman entrepreneur who serves on three boards, is "sheer tokenism" and "ridiculous" in light of the large numbers of women who have significant business expertise to contribute. She suggested that this academic route, unless it is combined with significant business experience, will also become obsolete. She doesn't see the traditional sources being replaced, however: This same woman director has also been asked "dozens of times" to name prospective women candidates for directorships, but has never seen one selected who was not already serving on a major board.

What difference does it make, anyway? We asked our directors this, and all answered emphatically: it is critical to have women on boards of companies. "Just having a woman there [the other directors] have to bring up topics in front of has an impact", according to one director. Another told us of how a CEO of a company of which she was a director implemented "glass ceiling reviews" a standard part of the management review process -- after several probing conversations with her. Another director described her assertive efforts to get to know the women in senior management, and to initiate an annual review by the board of the progress these women were making in their careers.

Most of the women agreed with the opinion of one of the most prominent women directors: having women on the board is the best way for a company "to send a message to other women that the opportunities are there". This same director actively intervened when a CEO was about to assign a talented woman executive to the position of Corporate Secretary, "a dead-end job". The CEO changed his mind, and the woman executive in question now, many years later, runs her own company and sits on boards of several major corporations.

It seems indisputable that women make a difference on boards, whether it is in setting policy, or influencing the careers of others. They have a significant impact on the charitable giving of a company, which can directly affect women's issues. They frequently have critical influence on issues of public policy. They make a difference even through their symbolic role, even if this is denigrated as "tokenism". Yet no one we spoke with was truly optimistic about the future, and many directors were downright pessimistic.

The directors themselves attributed much of the pessimism to their awareness that the most important, and perhaps the only determining factor, in whether a company has women on its board, is the attitude of the CEO. Several women acknowledged some difficulty in discussing this, but, as one admitted, "some CEO's are just hopeless." Several commented on the influence of the CEO's spouse: CEO's with working spouses -- a distinct minority -- are perceived to be more aware of the need to have women on their boards.

All of the women we spoke with agreed that these "non- business" or "psychological" factors are extremely important -- and almost impossible to discuss openly. All also agreed that unless the CEO makes diversity on the board a personal priority, it won't happen.

So perhaps the way to increase the representation of women on boards is to conceive of new, creative ways of reaching CEO's. Perhaps Secretary of Labor Lynn Martin could add review of board nomination to the procedures for "glass ceiling" reviews that are being integrated into existing review processes. Perhaps each woman who currently sits on a Fortune 500 board could choose one CEO to lobby. In any case, companies that truly want to eliminate their own glass ceilings would do well to invite these impressive women who have been true pioneers in to consult to them on the importance of working from the top down.