Founder of Advanced Care Partners | Board Member | Investor | Advisor | Philanthropist | EY Entrepreneur of the Year
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Until recently, I hadn’t thought much about the role of gender equality in my own personal journey. After all, my mother was the entrepreneur in our family and paved the way for my success. As such, in less than a decade, I was able to build one of the fastest-growing healthcare companies in America from the ground up while also raising a family of four.
However, things started to change when I sold the majority ownership of my company to a private equity firm. When I stepped down as the company’s CEO to join the board of directors as the second-largest shareholder, I noticed that I was one of two women board members at the table. That’s when I started paying attention to gender diversity on boards, in particular. The lack of representation in the boardroom became even more apparent when I looked for other board opportunities.
Like you, I’d read the numbers: the percentage of women holding board seats at Russell 3000 companies has steadily increased over the years. In 2021, women topped 25% of board seats, a 3% point increase from 2020. Similarly, women now hold at least 30% of seats on S&P 500 boards. While these numbers don’t reflect true gender equality, they’re trending in the right direction.
However, my personal experience in the boardroom brought me to pay closer attention to the situation for privately-owned companies. That matters in the grand scheme of things as fewer than 1% of America’s 30 million businesses are listed on the stock exchange. And, what I found in a recent Crunchbase study on the topic was surprising, to say the least: Only 7% of board seats are held by women, and 60% of the 200 surveyed companies had no female board members at all.
The Business Case For Board Diversity
Since then, I’ve tried to find an explanation for this gap between privately and publicly owned companies. Here’s what I discovered: We’re positioning gender board diversity as the right thing to do. And, while publicly owned companies are making changes as a result — mostly — of investor pressure and PR considerations, privately-owned companies simply don’t see what’s in it for them. In order to promote real change, we ought to showcase that doing the right thing is the smart thing to do.
Here's a statistic that business leaders should pay attention to: Today, women drive 70-80% of all consumer purchasing decisions. Therefore, boards that fail to include representatives from their core customer target group are, without a doubt, missing out on key opportunities for growth.
The reason why gender diversity on board is the smart thing to do is not that women bring a different skill set to the table or a more ethical, caring way of doing business. These assessments are flawed, and frankly, in my opinion, sexist. First, it portrays men as a homogeneous group of ruthless and morally lax people, which surely is sexist. Second, it places the burden of responsibility "to do better" on women, which is also sexist.
The reason why representation matters (for women and all minorities) is to make better decisions reflective of those these companies serve. That’s why gender board diversity is so powerful. But don’t take my word for it. When women are included on executive committees, the average return on equity improves by 47% and average earnings before interest and tax improve by 55%.
How To Promote Gender Diversity In Your Organization
As a result of my experience on boards, I decided to get involved with various organizations promoting women empowerment in the boardroom, including the EY Board Diversity Cohort, Him For Her, Golden Seeds and OnBoard. Here are some actionable insights I’ve gathered to help bring your company to new heights.
• Begin with data and transparency. If you’re serious about expanding board opportunities to women and minorities, start by disclosing where you stand today, where you want to go and include measurable targets and a time period over which such targets will be achieved.
• Start at the top. Too often, board diversity initiatives are side programs led by consulting firms or external stakeholders. To be effective, research finds that existing board members, together with the CEO of the company, must be intentional and actively engaged in bringing more women to the table.
• Understand how unconscious bias works. Each human unconsciously processes more than 11 million pieces of information per second, in comparison to only 40 pieces consciously. Our brains are designed to process and categorize enormous amount of information into digestible pieces for survival purposes. This can manifest as unconscious bias. Don’t believe you’re exempt. Nobody is. It is in our nature. Question your assumptions — often.
• Go outside of your network. According to one company's data, around 90% of board members come from recommendations within a network. This can make it difficult to expand to a diverse pool. Ask the women around you for recommendations. And, don’t hesitate to leverage external resources (including the organizations I’ve listed above!) to seek people with a wide array of experiences and backgrounds.
• Hold yourself accountable and report on your progress — or lack thereof. Better yet, validate these results through a third-party audit to bring legitimacy to your efforts.
Today, gender diversity is a key comparative advantage, directly impacting a company’s bottom line. As business leaders, it is our job to anticipate market trends. Don’t let this one pass you by.
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