By: Vicki Kramer, Marcy Cohen and Mary Quazzo, Thirty Percent Coalition
Getting more women, and more diverse representation of all kinds, on corporate boards is a goal for a number of groups. Now the Thirty Percent Coalition has pulled together many of them, along with various other individuals with a shared interest, to work together on increasing the velocity of change in the boardroom. Below, two leading in-house counsel, Marcy Cohen of ING Americas and Mary Quazzo of Bechtel Group, Inc., join with Vicki Kramer, president of the Thirty Percent Coalition, to discuss with MCC the group’s goals and their own thoughts and experiences on what GCs and CLOs can do to advance diversity in their companies’ boardrooms. Their remarks have been edited for length and style.
MCC: Please tell our readers about the Thirty Percent Coalition.
Kramer: We are a national collaboration of more than 80 members. We’re committed to the goal of women, including women of color, holding 30 percent of board seats across public companies, on the way to parity. We have a diverse group of members that includes public companies, private equity funds, institutional investors, professional services firms, national women’s organizations, government officials and some individuals. For the first time, these groups and individuals are working together to drive the pace of change.
MCC: How and why did each of you become involved with the Coalition?
Kramer: I’ve been involved since the beginning. I was part of a group that met in New York in late 2011 to bring together individuals and organizations involved in trying to increase the number of women on corporate boards. We thought that if we talked about ways of collaborating we might be stronger and better able to move the numbers more quickly. Much to our surprise, out of that day’s meeting came an agreement that we should start the Thirty Percent Coalition. I ended up as its founding president. Since then, we’ve grown from the 27 individuals who were in that room to more than 80.
Cohen: I became involved with the Coalition through another great organization, DirectWomen, a national nonprofit that works to increase the representation of women attorneys on corporate boards. The Board Institute, an annual two-day orientation program, is their centerpiece event. It consists of an update on key issues facing current and future directors in an effort to better position exceptional senior women lawyers for service as directors of major U.S. corporations. Vicki contacted DirectWomen with the goal of creating a thought piece by chief legal officers on the important role they can play in promoting diversity on corporate boards. A committee of CLOs and others was established and the thought piece was created – a copy is below.
Quazzo: My story is similar to Marcy’s. I became involved with the Thirty Percent Coalition through DirectWomen, which I’ve been associated with since its first Board Institute in 2007. The organizations are working together to advance the mission of increasing the representation of women on boards. The Thirty Percent Coalition helps to do that with efforts like the thought piece and by bringing together a group of advocates for increasing representation of women on boards that hopefully have the ears of people that are making decisions about candidates for board membership.
Kramer: DirectWomen is one of the national nonprofits that is a member of the Thirty Percent Coalition. Two of the women who are on the chief legal officer committee who signed our thought piece, “Gender Diverse Boardrooms: The Role Chief Legal Officers Can Play,” are Roberta Liebenberg and Kathleen Franklin, who are both representatives of DirectWomen to the Thirty Percent Coalition. This initiative is one of the ways in which we collaborate with members and try to effect change by having corporate leaders influence other corporate leaders.
MCC: How does the Thirty Percent Coalition define diversity?
Kramer: We’re working on the kind of diversity that’s related to workplace efforts on diversity and inclusion, which are primarily focused on categories of people who’ve been affected in the past, and continue to be affected, by conscious or unconscious bias. That includes categories like gender, race and ethnicity. The focus of the Thirty Percent Coalition is women, including women of color.
Quazzo: The diversity lens that we use is that there should be men and women who bring different kinds of thoughts, insights, perspectives, skills and experience to bear on particular issues facing boards. We look at gender as one proxy for a broader definition of diversity.
MCC: What is the role of the Chief Legal Officer or General Counsel with regard to board governance, nominations, and interactions with the board, and how does that intersect with board diversity?
Quazzo: Chief legal officers are responsible for advising CEOs, board chairs and directors on governance practices. They are often involved in the recruitment of directors. One of the steps they can take, as we put forth in the thought piece, is to make sure that the candidate pool routinely includes diverse candidates. They can also look at unconscious bias, which may exist but by its very nature people don’t realize it’s happening. You would go beyond the typical candidate pool because the typical candidate pool doesn’t necessarily include diverse candidates. You can question the skills and experience that are necessary and not label it by going after a particular title – e.g., CEOs – because focusing on certain titles or positions tends to narrow the pool from which to draw. From there you can assist board members involved in recruiting and the CEO in identifying female candidates who have the skills and experience needed. You can make sure that any third parties you’re working with on recruitment, such as search firms, are committed to recruiting women, people of color, and individuals from different backgrounds, and that these third parties don’t just provide the names of the same five people who seem to appear on every short list of available “diverse” candidates. The goal is to expand the opportunities for those from diverse backgrounds who have the necessary skills and experience and help assure they make their way into the pools of candidates for consideration for board positions.
Cohen: The Chief Legal Officer is a strategic advisor to the CEO, senior management and the board, with responsibility for promoting best practices in corporate governance. Studies have demonstrated that corporations with more diverse boards have better financial and business results. The role of the CLO is to inform the board, particularly the governance and nomination committees, of the importance of diversity in assuring the board has the most qualified candidates and that the firm meets the expectations of its clients and regulators. One example of the interest of Congress and financial regulators in diversity and inclusions is found in the Dodd-Frank Act. That law has required the establishment of an office of minority and women inclusion. It doesn’t impose a legal obligation but encourages financial firms to assure that women are included on the senior management team and on the board of regulated financial firms.
Quazzo: In recent years we’ve seen an increased discussion about diversity in the boardroom. As we speak, the Business Roundtable, a group of prominent CEOs across the country, are revising their principles of corporate governance. One of the changes that they’re making is to incorporate their latest statement on diversity, which states that boards should develop a framework for identifying diverse candidates that will allow a nominating or corporate governance committee to consider women, minorities and others as candidates for each open board seat.
We don’t have a prescriptive approach in this country to having women on boards. The increased discussion of the issue has brought some of the unconscious biases that exist to the surface and has caused people to reflect on the best approach to diversity. How can we get this richness of experience and perspective in our boardrooms and thereby strengthen our performance in creating long-term shareholder value? That’s what boards are asked to do. It’s very helpful to have these discussions to raise consciousness.
Cohen: There was a very interesting article in the August 5, 2016, Financial Times relating to the issue of board diversity and quotas. Various European countries impose mandatory quotas on board diversity, which has led to higher percentages of women on boards. In Norway, for example, the percentage of women on boards is 40 percent. Interestingly, the UK didn’t take that approach, being more similar to the U.S. The UK nevertheless doubled the percentage of women directors for FTSE companies in the last five years, not by using quotas but by encouraging companies to set aspirational goals, including a need to reflect the realities of society’s professional diversity.
That’s one of the things that a CLO should and can do – persuade and inspire the board, via the CEO, to set aspirational goals on board diversity – creating a quantifiable and verifiable metric. Many corporations have diversity and inclusion committees, but when you ask people about actual progress they report only minimal or token accomplishments. That’s why goal setting is so important.
What’s also interesting is that although the FTSE companies had great success in the first five years, and doubled their percentages, things have stagnated and in some cases reverted. That’s because the initiative initially had the backing of the government, but now less so. As a result, many have come to believe that without an implicit threat of mandatory regulation the percentages will remain de minimus – or worse, go back down.
Kramer: The reason we’re called the Thirty Percent Coalition is because we felt that it was important to try to measure progress and to set a target. Thirty percent was not an end target. We ought to reach parity in terms of the percentage of women in the workforce and the population. At the time that we started, the reported percentage of women on corporate boards was about 15 percent. We set a target of trying to double that.
MCC: What are best practices that the Chief Legal Officer can instill in a company’s directors and CEO?
Cohen: The first thing is to ensure that the topic of diversity is not just discussed but becomes an integral part of corporate culture. Then, establish goals and metrics and ensure they are widely publicized so the aspirations become true goals.
Diversity includes not only gender or race but also diversity of experience and thought. Having a board with eight former CEOs or CFOs does not provide a full range of diversity. We know there isn’t currently a large pool of female CEOs and CFOs. If search committees limit themselves to that pool, they will limit the number of qualified women candidates. It would be great to have the ability to tap a pool of qualified candidates that’s at least 50 percent women. A good way to start is to expand the search beyond the CEO and CFO levels to senior level professionals in operations and risk, which includes attorneys with business judgment and strategic experience, particularly in regulated industries.
MCC: Do you have any recommendations to help reduce unconscious bias? I recently read about “blind auditions” for orchestra candidates, where they found that even if they hid the candidates, you could hear the women wearing high heels. This had an impact. When select candidates removed their shoes, thee had a better chance of advancing.
Kramer: I know the study you’re referring to, which is very powerful. Unfortunately, for board positions you can’t put somebody behind a screen. People often are suggested by other members of the board. Their résumés make it very clear whether they are a man or a woman. Similar studies along those lines have shown that if you have multiple candidates who are women or people of color, rather than just one, it is more likely that any group – this goes beyond hiring for boards – will choose a woman or a person of color. If you have only one, that person is perceived as a token. This is a fairly recent study that looked at this very rigorously.
It is important to have a significant percentage of women who are in the pool and who are actually on the short list of those who are seriously considered. Apparently, when there are more, it removes the bias. I did national research that was published about 10 years ago on the critical mass of women on a board – what difference it makes if you have three or more women. What we showed is that when you have only a token woman on the board, she’s often ignored or has to push very hard to be heard. With two women it improves somewhat, but when you get to three or more it makes a profound difference. People stop being viewed as women and are seen as individuals. I think this same thing happens if you have more women in the candidate pool.
MCC: How does boardroom diversity relate to a company’s overall efforts to promote diversity and inclusion in the workplace?
Kramer: That’s an important question. Many companies have robust diversity and inclusion programs for their employees, but they don’t necessarily think about connecting that to the composition of their boards. This is a very important connection because employees look at the leadership, including the board. If they don’t see diversity and inclusion in their leadership, particularly the board, they may be skeptical about how committed the company is to inclusion within the workforce. I think it’s an important link.
Quazzo: I agree with Vicki. It’s an integrated group of actors in a corporation – the board, management and shareholders. If they are not joined with diversity and inclusion programs, your chances of success are not as high. In fact, they may be completely compromised if you have people going in different directions.
Cohen: Setting the right tone and commitment must be initiated at the top. Success in raising the percentage of women in management and senior management is only winning half the battle if the board is still 100 percent, 90 percent or even 75 percent male. In order to demonstrate a coherent and consistent policy on diversity and realize all of the benefits, the result must become part of the ingrained culture on all levels of the organization.
Marcy Cohen is the managing director and general counsel for ING Americas as well as a member of the Thirty Percent Coalition’s Chief Legal Officer initiative. She can be reached at email@example.com. Vicki Kramer facilitated the initiative and is president of the Thirty Percent Coalition. She can be reached at firstname.lastname@example.org. Mary Quazzo is the vice president, secretary, principal counsel and manager of Corporate Legal for Bechtel Group, Inc., as well as a member of the Thirty Percent Coalition’s Chief Legal Officer initiative. She can be reached at email@example.com.