Just makes sense - women on boards bring diversity, different expertise

With few exceptions, corporate boards of directors historically have been composed of white men.

That is changing, although slowly, as more companies come to believe that it makes good business sense to involve women in corporate governance.

The latest Catalyst statistics published in December show that 15.7 percent of Fortune 500 board seats are held by women, up slightly from 15.2 percent in 2008 and 2009. Women made up 46.7 percent of the nation's labor force in 2009 and 51.4 percent of management, professional and related positions.

What is meant by “good business sense”?

Nancy Hauserman, professor of management and organizations at the University of Iowa Tippie College of Business, defines good business sense as “having thoughtful people who are providing the broadest view, not only in terms of how they look at issues but what issues they see.”

“The main reason that you ask community members to serve on your board is to provide a community perspective,” said Nancy Evans, who serves on the boards of Diamond V Mills and Guaranty Bank in Cedar Rapids. “In that sense, diversity on a board of directors brings you a diverse perspective, which is a big asset when making decisions. I would think that a lack of diversity would be a constraint on good decision-making.”

Mary Quass, president and CEO of NRG Media in Cedar Rapids, serves on the boards of United Fire & Casualty Co. in Cedar Rapids, a publicly-traded insurer, and Involta LLC, a privately owned computer data storage center in Marion. Quass believes it's important that the boards of public and private companies mirror their customer base.

“They need to look at their corporate board similar to the way they look at how they do business with their customers,” Quass said. “If you're going to continue to grow as a company, public or private, I think you have to start paying attention to diversity in all forms.”

When Bruce Lehrman, chief executive officer of Involta, asked Quass to join the company's board of directors, he was looking for more than just business acumen.

“Bruce was looking for someone with an entrepreneurial perspective and the challenge that comes with that,” said Quass, who formed Quass Broadcasting in 1988, and in 2002 launched NewRadio Group, which merged with Waitt Radio Inc. of Omaha in 2005 to form NRG Media.

Secretary of State Hillary Clinton, in a recent opinion column for Bloomberg News, noted that there are more than 200 million women entrepreneurs worldwide.

“Women earn more than $10 trillion every year, which is expected to grow by $5 trillion over the next several years,” Clinton said. “Facts such as these should persuade governments and business leaders worldwide to see investing in women as a strategy for job creation and economic growth.”

Hauserman said women with education, expertise and track records that qualify them for board membership remain at a competitive disadvantage with men because CEOs, who typically make board appointments, tend to look at candidates within their own personal and professional networks.

“We tend to know those who are the same as we are, whether it's gender, nationality or race,” Hauserman said. “I think it's also about the way we think who is appropriate to serve on corporate boards. As long as we fairly narrowly define what qualifies a good board member, we will get narrow representation.”

While he agrees that CEOs often tend to look within their own circles for board candidates, John Bloomhall, president and CEO of Diamond V Mills, said it's important for companies to look for board members with expertise outside their industry.

“You need people with fresh sets of eyes asking you questions continually,” Bloomhall said. “Sometimes people who aren't familiar with your industry can ask you brilliant and well-thought-out questions.”

Cedar Rapids lawyer Amy Reasner, who also serves on the Guaranty Bank board, compares recruiting a diverse board of directors to developing a balanced stock portfolio.

“One stock may be performing when another one isn't,” Reasner said. “If you only have a homogeneous group of people, they're not going to bring to the table a set of experiences that will help you target a particular market segment.

“When you bring together a number of people with diverse backgrounds, some may not be able to perform well in a particular area, but others will be able to contribute their unique expertise.”

United Fire President and CEO Randy Ramlo said Casey Mahon, an experienced corporate legal counsel, and Quass, with her background in radio sales and broadcast ownership, bring different perspectives to his board.

“Casey has a lot of publicly traded company experience in terms of corporate governance and knowing Securities and Exchange Commission rules,” Ramlo said. “She also has been very helpful with her knowledge of acquisitions.

“Mary also brings a knowledge of the acquisition process and has been involved in the due-diligence process of our current pending acquisition of Mercer (Insurance Group). I think having women on corporate boards brings a balance because they are more focused on facts, whereas men tend to be more ‘gut' focused.”