Interactive model examines scenarios for achieving greater gender diversity on corporate boards. The Conference Board, the global business research and membership organization, released an innovative scenario modeler designed for companies seeking to increase the gender diversity of their boards.
Developed by The Conference Board and Georgetown University’s McDonough School of Business in partnership with The SAIS Center for Transatlantic Relations at Johns Hopkins University, the model draws on historical data from 2,749 U.S. public companies to examine the evolution of gender diversity on U.S. corporate boards each year between 2011 and 2040.
The interactive model allows users to adjust board characteristics to assess how departures from today’s prevailing corporate governance trends could accelerate or impede the progress toward greater gender parity in coming decades. Four key board characteristics can be adjusted in hypothetical scenarios:
- Average number of directorship positions on corporate boards
- Percentage of newly-created directorships for which women are appointed
- Average turnover (attrition) of existing directorship positions
- Percentage of attrition-based directorships for which women are appointed
Drawing on these variables and historical data, the model enables users to evaluate overall gender diversity trends for public companies, with further details and projections based on company size, such as Fortune 500 and Fortune 250 membership. The model also breaks down gender diversity trends by sector.
For the first time, we now have a dynamic analytical model that quantifies the length of time it will take to achieve gender balance on corporate boards in the United States under a variety of scenarios,” said Susan Ness, Senior Fellow at the SAIS Center for Transatlantic Relations.
“The sobering base case shows that if we continue with business as usual, gender balance in the boardrooms of U.S. companies will not be achieved in our lifetimes. But the model also demonstrates that if U.S. companies focus on boardroom diversity as a component of good corporate governance, significant progress can be made — and repeated studies have shown that diversity leads to improved performance. This new model is an essential tool in any policy discussion of corporate governance and diversity.”
“This interactive model provides an interesting opportunity for executives, policymakers, and other interested parties to estimate the proportion of female directors serving in future years on U.S. corporate boards,” said Professor Jason D. Schloetzer of the McDonough School, who worked with The Conference Board on developing the model.
“Board diversity is becoming a greater concern,” said The Conference Board CEO Jonathan Spector. “There are many factors that determine how quickly gender diversity can be increased. Our model was built to help companies identify those factors and gauge their impact on the future make up of their boards. In offering this scenario modeler for board diversity, we’re hoping companies will be able to examine this issue, and all its complex components, in a newly critical and analytical way. We want to empower companies to set bold, attainable goals that will leverage diversity at the highest level to grow their businesses.”
“On the boards of Fortune 500 companies,” Spector added, “the percentage of women has risen painfully slowly in the last 15 years — from 9.6 percent in 1995 to 15.7 percent in 2010. At current rates of change, it will take not years, but decades, to approach true gender parity.” Indeed, the model calculates that if, over the next eight years, 25 percent of the Fortune 500 board seats that became vacant annually were filled by women, the percentage of female directors in that sample would be approximately 23 percent in 2020. This outcome is well below the 40 percent expected in those European countries that have recently adopted legislation introducing a gender-diversity quota system for corporate boards.
The model is available for download at www.conference-board.org/board-diversity. It inaugurates a wider Board Diversity Initiative from The Conference Board; as part of the initiative, and in collaboration with the SAIS Center for Transatlantic Relations and others, The Conference Board is engaging with nominating committee chairs, business leaders, and other experts in the field to develop new research and formulate forward-looking recommendations.
The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world’s leading organizations with the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501(c)(3) tax-exempt status in the United States.
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