Headlines about corporate cooked books and executive looting haven't dampened the enthusiasm of women who want to serve as corporate directors. On April 1, 200 women braved a prodigious downpour to attend “Women in Corporate and Not-for-Profit (NFP) Governance,” a program sponsored by the MIT Sloan School MBA program.
Program panelists were: Madeleine Condit, senior client partner in the Chicago office of Korn/Ferry International and Executive Urban Fellow of MIT Sloan; Ilene Gordon, MS '76, president, Alcan's Food Packaging Americas; Frances Hesselbein, chairman of the Board of Governors of the Leader to Leader Institute (formerly known as the Drucker Institute); Judy Lewent, MS '72, CFO, Merck; and Jerry Martinson, executive director of the Big Sister Association of Greater Boston. MIT Sloan School MBA Program Executive Director Margaret Andrews, assisted by MIT Sloan Dean Richard Schmalensee, kicked off the event.
According to Catalyst, a leading research and advisory organization working to advance women in business, women comprise 13.6 percent of the boards of the largest 500 U.S. companies. Experts now see an unprecedented demand for women board members as companies seek boards that better reflect their customers and the increasingly diverse population. According to recent studies, women make 80 percent of all purchase decisions and own 46 percent of all U.S. businesses. Forty-five percent of investors are women.
As the audience of MIT Sloan alumnae, students, faculty, staff, and recently admitted students learned, board opportunities are growing, but the responsibilities — and the potential hazards — of board membership are also increasing.
Drawing from her own experiences, Judy Lewent observed that today's corporate boards are looking for a cross-section of capabilities. “Boards are especially interested in directors with expertise in finance and human resources and who understand compensation, succession planning, and management,” she said. “They are looking for geographic, ethnic, and gender diversity and they want directors who can interact effectively.”
Frances Hesselbein, former director of the Girl Scouts and a veteran board member, added that directors need to focus on three major areas of governance — mission and vision, planning and policy-making, and review and oversight. While these are the board's critical tasks, board members need to be more vigilant than ever, particularly if they are part of oversight groups such as audit, compensation, or succession committees.
“Board members are the custodians of public trust and money,” said Hesselbein. She also noted that board service is not without risks. “Director insurance has increased an astonishing 300 percent in the past few years as a result of corporate scandals. Prospective board candidates should check the organization's director insurance policy before agreeing to serve,” she added.
Poor corporate governance isn't confined to illegal or fraudulent activities, observed Ilene Gordon who shared her experiences — good and bad — as a director on a number of corporate boards. “Sometimes missed signals or the inability of the board to act can result in lost opportunities for shareholders and even lead to poor business decisions,” she said.
Board service can create tremendous value for a community, according to Jerry Martinson, who represented a not-for-profit organization. “The difference between corporate and non-profit boards is that with a non-profit board, the shareholders are the community at large,” she said. “This can be tremendously rewarding. However, in today's climate, if a non-profit board makes a misstep, the consequences can be severe in terms of public trust. You also have to have the time, talent, and commitment to perform all of the director tasks that are required. A good candidate will find out what those are up front and give them careful thought before joining the board.”
The demand for talented, committed board members is growing on all fronts. Recruiter Madeleine Condit has seen her business grow significantly over the past few years, and currently has several active board searches open. “Anyone who is interested in serving on a board should think about what they can bring to the organization,” she observed. “They should talk to people who may be looking for directors to become recognized in business circles. They can also establish themselves as thought leaders in their industries by giving speeches, writing articles and assuming leadership positions on not-for-profit boards.”
In today's competitive marketplace, companies recognize that diverse leadership teams are needed to outdistance the competition. The companies that recruit, retain and advance diverse work forces — and boards — will have a competitive advantage in the global marketplace.
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