Today’s gap between the demand and supply of female directors exists for two basic reasons: boards are overlooking a pool of female talent that is in plain sight, and CEOs are missing the single best way to prepare women to serve on boards. While 58 of the Fortune 100 CHROs are female, only 5 currently serve on a public company board. This is a missed opportunity. Boards should mine HR for this new breed of leader, many of whom are female. And while there are fewer female CFOs — just 15 of the Fortune 100, 8 of whom are on a board — this too is a source to explore. To address the gap, CEOs can help develop this key talent pool — while improving the quality and speed of strategic decisions. One of the best practices we’ve seen is the creation of what we call a G3 (group of three): a tight-knit three-way partnership with the CEO, CHRO and CFO.
Today’s gap between the demand and supply of female directors exists for two basic reasons: boards are overlooking a pool of female talent that is in plain sight, and CEOs are missing the single best way to prepare women to serve on boards.
Consider the reality that most women executives have spent their careers moving up in a single functional silo: HR. This came into sharp focus for Ram a few years ago during a talk to some 400 women in Washington, D.C. When asked who among them was in HR, almost everyone raised their hand. A career track in one function deepens a person’s expertise but historically hasn’t done much to broaden their view or to build their business savvy. That’s why many old-time board nominating committees tend to think of HR leaders as masters of administrivia and not as business leaders and strategic thinkers.
But things have changed, and perception should too. CHROs of big companies are now deeply involved in planning the company’s future. They understand the high-level business issues, and because they attend some if not all board meetings, they know how to work with a board. At the same time, their expertise in compensation, culture, recruiting, and other high-level people issues is itself increasingly valuable as boards and managements prioritize talent.
Yet while 58 of the Fortune 100 CHROs are female, only 5 currently serve on a public company board. This is a missed opportunity. Boards should mine HR for this new breed of leader, many of whom are female. And while there are fewer female CFOs — just 15 of the Fortune 100, 8 of whom are on a board — this too is a source to explore. But that still won’t meet the growing need.
To address the gap, CEOs can help develop this key talent pool — while improving the quality and speed of strategic decisions. One of the best practices we’ve seen is the creation of what we call a G3 (group of three): a tight-knit three-way partnership with the CEO, CHRO, and CFO. Where we’ve seen a G3 used— for example by CEO Peter Zaffino, CFO Courtney Leimkuhler, and CHRO Mary Anne Elliott at Marsh— the three leaders jointly set priorities and review the company’s operations every quarter. They communicate frequently in between. That tight working relationship links the allocation of human and financial resources across the organization and vastly improves strategy and execution.
Importantly, a G3 also gives the CHRO a deeper understanding of the company’s financial issues and expands the CHRO’s (and CFO’s) view of the enterprise. That’s why Laurie Siegel, the former head of HR at Tyco International, was board-ready when Dennis recruited her in 2009 as a director of Embarq (later acquired by CenturyLink). She now serves on the boards of Factset Research Systems, Volt Information Sciences, and California Resources Corporation. Similarly, Beth Amato, having worked as a partner with with the CEO and CFO in her role as EVP & CHRO of UTC, was ready to ply her financial and business savvy when Dennis proposed her to the board of Aqua America.
The same idea applies to lower organizational levels. HR leaders can cultivate broader skills by working closely with business leaders. Structuring their work that way has benefits such as improving placement, recruiting, and learning and development, but it also helps identify HR leaders who have the potential and/or capacity to serve on boards.
Some companies have begun to rotate HR leaders in and out of the HR function. In companies like Humana and India’s Tata Telecommunications, HR executives have real performance experience in at least one other function, such as selling or marketing or financial analysis. An IT staffing leader at Humana spent a year and half in the group that manages relationships with physicians to deliver quality outcomes for members. She says that because of her time outside HR, she is more attuned to macro trends and thinks more strategically. It’s easier for her to see what is valuable for the enterprise, not just for the IT department. That broadening of perspective happened in a relatively short time.
At Tata Telecom, the CFO and CHRO were once at odds, but as the CEO got them working closely together on crucial business issues, the CHRO’s business analysis skills grew by leaps and bounds. So much so that the CEO put the CHRO in charge of one of the company’s highest-growth subsidiaries. Similarly, when Angela Ahrendts left her post at Apple, her successor Deidre O’Brien became senior vice president of retail and people.
The G3 is the best way to prep CHROs for Boards. Along with that, we recommend companies do the following:
Search deeper and wider. Finding people with experience running a large P&L continues to be difficult even before gender is factored in. But the pool of women who have relevant business experience, including P&L responsibility, is surprisingly large once you go three or four levels below the CEO. The names are hidden, and the resumes may be relatively short, but some of these people will have the maturity to be a director. By maturity we mean the poise to articulate a point of view and reason things out together, and the ability to look at the business broadly, dispassionately, and from the outside in.
Corporations are not the only sources. Talent can come from government agencies, academia, small business, or former military. Bonnie Hill was Dean of the McIntire School of Commerce at the University of Virginia when she joined the Hershey board, the first of her many directorships that later included Albertsons, Yum! Brands, and Home Depot, where she was Lead Director.
Korn Ferry recently recruited Air Force General Janet C. Wolfenbarger to the board of KPMG, the massive global accounting firm. And Vanguard, practicing what it preaches, has added several women to its board, including Amy Gutman, an academic and President of the University of Pennsylvania, and Sarah Bloom Roskin, a former Deputy Secretary of the US Department of the Treasury.
Women in startups will bring lots of skills and ideas to a board table and would love to get the experience of serving on a bigger company board.
Take a risk. Boards often back away from a first-time director. But to get the right talent, they should overcome that hesitation and take a chance on a younger and/or less experienced person who meets their criteria.
When Ram first met Adriane Brown at Corning Glass, she had never served on a board, but her business mind was shining through. Starting as a shift supervisor, she had worked her way up to VP and general manager of the environmental products division. From there she went to Allied Signal, became CEO of Honeywell Transportation Systems, and was later president of Intellectual Ventures. When he first proposed her as a director candidate, companies were not convinced. Two tries later Harman International Industries put her on their board, where she made useful contributions. That first break led to others. She is now on the boards of Raytheon, eBay, and Allergan.
Eight years ago, Dennis recommended Clara Shih to a client who was seeking a director with a technology background. Shih had shown herself to be a brilliant digital pioneer. She had graduated #1 in her Stanford computer science class, had masters degrees from Stanford and Oxford, and after working at Google, Microsoft, and Salesforce.com, had co-founded Social Hearsay, an enterprise social media platform company. She was 29 years old at the time, reason enough for the client to dismiss her out of hand as too young and inexperienced. Starbucks saw things differently. Recognizing the value of Shih’s perspective, they asked her to join their board. Suddenly several other boards tried to recruit her.
It is said that at the rate we’re going now, the U.S. won’t achieve gender balance on boards until 2055. Let’s all commit to getting there sooner. We know there are qualified women out there. Let’s go find them.
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