More women are on boards, but few are chairs or lead directors

Unfortunately, in practice, the old label is still almost always accurate.

Although women comprise 27% of board directors at Russell 3000 companies, only 7% of board chairs and 13% of lead directors are female, according to data from the latest Inside the Public Company Boardroom report by the National Association of Corporate Directors. Slip down a notch, and the figures are more encouraging: Women now lead 26% of audit, 25% of compensation, and 32% of governance committees, having made strong gains over the past few years. 

A long history of gender discrimination in the boardroom partly explains why we’re seeing slow progress for women in the top jobs. Because fewer women have been appointed to boards in years past, even fewer women are seen as having enough experience to lead, says Cari Dominguez, chair of the NACD’s Center for Inclusive Governance and former chair of the U.S. Equal Employment Opportunity Commission. There has also been less churn in the chair role since the pandemic began, while tenures have increased.

Still, unspoken rules and preferences about who makes an effective chair or lead director must be examined, says Dominguez, who has also served on several corporate boards and is a former assistant secretary of labor. In the latter role, she launched The Glass Ceiling Initiative in 1989. The groundbreaking work revealed men tend to get promoted because of their potential, whereas women are rewarded for their performance. The same dynamic plays out on boards, forcing women to prove themselves, says Dominguez. “It’s like, ‘Let’s not move on to this board chairship yet. Let’s see how she does,’” she explains. “With men, maybe because they’re serving on each other’s boards or because they go to the same associations of CEOs, there’s greater familiarity.”

There are also fewer female CEOs, and boards have generally defaulted to choosing former chief executives as chairs or lead directors, limiting women’s movement, Dominguez adds. But forward-thinking boards ought to start looking at where a company is going—ask who’s ready to deal with technological change or a fast-growing diverse population—to find their next chair, rather than assume a former CEO is most qualified. 

What’s more, Dominguez argues, succession planning at the board level needs to be rigorous; it should ensure that women and candidates from diverse backgrounds are being positioned to lead.

Tiffany Trzebiatowski, assistant professor of management at Colorado State University, who studies the experiences of women in male-dominated workplaces, also believes that boards should expand their definition of an ideal chair candidate. In the meantime, she finds that female directors often try to get around the unwritten requirement that chairs be CEOs by taking extra board training at a university or institute. “Some women in our sample loved those [programs] because it gave them extra knowledge about how to run board meetings effectively or participate in board meetings,” she explains. But others worry that women now face a gendered expectation that to ascend to a chairship, they must seek extra education. For men, that remains optional. 

Could time alone help fix these inequities? The NACD reports that women comprised 41% of new director appointments in 2022 and 17% of outgoing board members. Perhaps as more women join and remain on boards, a larger share of women will finally become chairs and lead directors.

However, Trzebiatowski says it’s also possible that women are landing committee head roles instead of becoming chairs. At some companies, committee leadership assignments may not be stepping stones but tools for virtue signaling, particularly when corporate boards promote diverse candidates in response to social pressure rather than their own convictions. 

Lila MacLellan
lila.maclellan@fortune.com
@lilamaclellan

Noted

“The celebration of this year’s Black History Month arrives with heightened relevancy and implications for Americans and a stark reminder that Black History is American history.”

—Shawn Dove, managing partner at philanthropic venture fund New Profit and founder of the Corporation for Black Male Achievement, in Fortune

On the Agenda:

👓 Read: "Black history is American history, and it lives in the bones of your Black employees, leaders, and stakeholders," writes Fortune senior editor Ellen McGirt in a recent edition of sister newsletter raceAhead. Her missive shares expert-sourced advice for authentically honoring Black History Month in the workplace.

🎧 Listen: Meta is using artificial intelligence to learn more about its users without gathering more data from them, a workaround to Apple's recent privacy changes. Use your natural intelligence to learn more about it in this Tech News Briefing podcast from the Wall Street Journal. 

📖 Bookmark: Leaders, especially boards, must not fall victim to FOFO or fear of finding out. James Pomeroy, director of global health and safety at Arup, explains on LinkedIn how this medical term has relevance inside organizations. 

Onboard/Offboard

Salesforce appointed Arnold Donald, Sachin Mehra, and Mason Morfit to its board after three activist investors, including Elliott Management, took a stake in the company. Donald is the former CEO of Carnival, Mefra is the CFO of Mastercard, and Morfit is the CEO of ValueAct Capital. Two longtime Salesforce board members will not stand for re-election. Starbucks appointed Land O’Lakes CEO Beth Ford to its corporate board. Twitter cofounder Biz Stone joined the board of Chroma, an audio-visual startup. Allstate tapped Monica Turner, president of Procter & Gamble North America, as an independent director. Carolyn Everson, former president of Instacart, and Patrick Whitesell, chair of Endeavor Group Holding and former co-CEO of WME,  joined the Under Armour board, where director Harvey Sanders is stepping down.

In Brief

- Calling all Chicago-area business leaders: Your mayor needs you to step up, become the poster CEO, and champion a city that’s seen major companies skip town.

- It isn’t just Shopify that launched a war against unnecessary meetings. Several companies are squeezing would-be meetings into emails or video messages, allowing employees to reclaim their time.

- Are we at sea? In earnings calls, news releases, and SEC filings, the word “navigate” more than doubled in the second quarter of 2020 compared to the year before. These days, CEOs and directors are still navigating more than normal, writes the New York Times.

- What do companies lose when they conduct layoffs? The list of hidden costs is long.

- Charlie Munger wants the U.S. to be like China and ban digital currencies. Crypto is "a gambling contract with a nearly 100% edge for the house," he writes. 

Editor’s Pick 

“Strategic incompetence” may be an unfamiliar term, but it describes an all-too-common behavior that likely shows up in your boardroom. Do you have a colleague who gets flustered over spreadsheets or event planning, leaving the drudgery and unpaid volunteer work to someone else? That colleague is typically male, writes Ross McCammon in a fantastic essay for Fortune. “This behavior is obviously unfair to those who are left doing the real work, of any gender or race. But it’s also corrosive to those asserting this privilege themselves and to companies. It suppresses risk-taking, innovation, and ‘psychological safety,’” he says.

McCammon’s insights into the reasons men resort to this tactic are illuminating. So too are his many candid recollections about being that guy at the office.

Here’s an example:

“A woman colleague and I were looking at some printed materials and needed to FaceTime someone who was working remotely so that he could weigh in. I didn’t have my phone on me, so I asked my colleague if she could use hers. ‘Sure,’ she said. The task required her to hold her phone toward a wall for about 15 minutes as we talked about things we wanted to change. I thought nothing of it, but for weeks after that, I felt a chill in communications with her. Eventually, it became clear to me that the phone incident was the reason. I was defensive and confused. I didn’t think what I’d done was even remotely objectionable behavior.”

Read the rest here and keep your phone on you this weekend.