Abercrombie and Fitch recently nominated four new independent director candidates to the company's board -- all of whom are women. Their election would make 33 percent of Abercrombie's board female, which is around twice the national average.
While an increasing number of corporate boards give lip service to diversifying their ranks, the latest Catalyst Census showed the U.S. weighing in below eight other countries, with only 16.9 percent of women on boards in corporate America. Less than one-fifth of organizations had one-quarter or more female directors in both 2012 and 2013. One-tenth of companies had zero women on their boards. What's more, for the past two years, less than a quarter of companies had three or more women serving jointly on their boards.
Over the years that Catalyst has been charting these trends, there has been little to no increase in women's board participation, making Abercrombie's relatively high percentage of potential female board members stand out all the more. Could Abercrombie's bold move put pressure on other organizations to do the same? From a business standpoint, every company in the nation would be smart to follow suit. A separate report from Catalyst that examines The Bottom Line revealed Fortune 500 companies that had three or more women board directors in at least four of five years significantly outperformed companies with zero female board directors. The former firms experienced an 84 percent better return on sales, 60 percent better return on invested capital and 46 percent better return on equity compared to the latter.
Abercrombie's announcement resurrected a conversation I've had numerous times regarding the lack of women on boards. Last week, as I sat around the dinner table with friends in Telluride, Colorado, we discussed the fact that over the past several years, corporate governance issues and changes to corporate business models have created increased demand for experienced board members with strong business acumen. I shared with my friends that despite this increased need for qualified executives, I frequently encounter women who are clearly "board ready" but fail to claim a seat at the table.
Part of the challenge is that many women don't understand the steps to take early in their careers to best position themselves to get on boards; therefore, they miss the boat. According to a Heidrick and Struggles 2012 survey, it takes women six months longer to get on a board than men (on average 2.3 years vs. 1.7 years). When I speak to accomplished women executives, many believe that the primary reason why there are fewer women on boards is because they lack access to closed networks that lead to board appointment. Men, on the other hand, often attribute the situation to having fewer women in executive roles from which to choose for the limited board opportunities.
Whatever the primary reason behind the disturbing gap, there are concrete ways that women can better prepare themselves for board membership to overcome both of these perceived obstacles.
In the next post, I'll share five practical steps you can take to increase your chances of getting on a public company board -- and stay tuned for SHAMBAUGH's Executive Forum this fall on Becoming Board Ready.