By Bedy Yang
Credit Karma, Canva, and Grab.* What do these companies have in common? All of these companies have either female CEOs or co-founders, and all are valued at well over $1 billion dollars. Coincidence? I tend to think not.
Data has actually proven that gender-inclusive founding teams have greater success in both fundraising and innovation. There is a fantastic study conducted by the Kauffman Fellows Research Center that finds that female-founded companies not only raise more capital than all-male teams, but also provide better returns. Founders also tend to hire people culturally similar to themselves; so a more diverse leadership team inevitably creates a more diverse culture overall.
But there is another important factor to consider: the composition of the board. Board members have quite a bit of influence when it comes to the direction and strategy of the company.
Diverse Boards: Times are changing
So what drives a significant increase in the diversity of boards? I believe that there are two factors at play; government policy and the leadership within the company. Today In: Venture Capital
In the United States, 20.9% of the top 3,000 companies (Q3 2019) have women on their board, and we have seen it increasing quarter over quarter. In Europe, one reported number is slightly better, at 26.7% (Q4 2018).
What we see helps to move the needle is countries with mandatory quotas. The percentage of women on boards shoots up to 37.5%, when there are policies in place that require women on boards. (See figure below.) Given that these policy shifts drive tangible outcomes, there are even talks about setting an EU-wide quota for having women on boards.
Another great example of this is California which became the first state to legally compel corporate board diversity, by requiring that all public companies have at least one woman on their board by the end of 2019. By the end of 2020 the law ramps up, requiring companies with five board members to have at least two women, and three female directors for boards of six people. If companies fail to comply, they face a one time fine of $100,000, and if they continue to break the law, face a fine of up to $300,000 for every seat that should be filled by a woman.
In addition to policy, where we are able to see additional success in bringing more female board members is through strong corporate leadership. Executives who set clear gender equality goals generate a culture that runs top down. Earlier this year, Goldman Sachs CEO David Salomon announced that they will no longer take companies public both in the United States and Europe if they don’t have at least one “diverse” member on their board of directors, with a priority and focus on women. By 2021, the bank will look for two diverse board members. While these numbers are just a start towards equal representation, it’s initiatives like this that are key to shifting mindsets and creating new norms. Goldman Sachs is not the first one to claim this; in 2017, Blackrock first made the plea to increase diversity on boards.
Beyond policy and leadership, how can we help close this gap? Despite these new policies, we need to fill a significant gap in terms of how can women can actually get a board seat. I know many successful women who have both the desire and experience to be a director on the board, but they ultimately don’t know where to begin. If there was a playbook for this, I’d be the first to share it. But since there isn’t, here are three tips from women who’ve been there.
1. Set the intention and don’t be afraid to say it out loud
“It’s not uncommon for women to downplay a desire for something like obtaining a seat on the board of a public company, says Shannon Gordon, CEO of theBoardlist. “It’s important for women to articulate their ambitions and then critical to have a network of mentors and sponsors in place to provide support and introductions necessary to land that first board role”. TheBoardlist is an online talent marketplace that connects CEOs who are looking for qualified board director candidates with women who are peer-endorsed for both private and public company board service. The founder, Sukhider Singh Cassidy, who is a board member at TripAdvisor, StubHub and Ericsson, initially founded theBoardlist to help women with many of the challenges that she faced in her early days, and then later recruited Shannon to drive the company’s growth forward.
A similar sentiment was shared by Claudia Sender, former CEO of LATAM Airlines which is the largest airline group in Latin America. She now sits on the board of Telefonica, LafargeHolcim, Gerdau, Estácio and was Fortune 40 under 40 in 2013. “Being vocal that you want a board position to a relevant and expanded network is the first step” she recommends.
2. Build an incredible network
“Around 90% of board members come from recommendations within a network, which makes it hard to expand to a diverse pool”, says Gordon. This statement is not surprising to me because the same is true for venture; people always look within their network and pipeline for investment. Being Chinese-Brazilian and initially an outsider in Silicon Valley, I was eventually able to join the club of venture capitalists, but I couldn’t have done it without the network that I had built over the years. I know how important it is to help bridge access to new networks, and it’s something I’m now trying to accomplish in both my personal and professional life.
Originally posted on Forbes