One Woman Is Not Enough

As of this month, every large public US firm has at least one female director. What’s next? 

It’s the kind of announcement that nearly everyone would gloss over—the addition of a new director at an electronic component firm. But that was before the media reports made an important connection.

After Monolithic Power Systems added Carintia Martinez to its board late last month, a new milestone emerged: the firms on the prestigious S&P 500 index no longer have any all-male boards. Experts say that it’s an achievement of representation, although organization leaders should not be resting on their laurels. “There’s been tremendous progress on diversifying boardrooms, but the really important process is that all the voices in the room are treated with equal opportunity,” says Tierney Remick, a Korn Ferry vice chair and coleader of the firm’s Board and CEO Services practice.

The index achieved the milestone for the first time in its 62-year history in 2019 but then lost the target in 2021 after reshuffling the firms it lists for financial thresholds. Women currently hold slightly less than 30% of the available director seats of S&P 500 companies, up from 26% in 2019. As of the end of May, there were 246 S&P 500 firms with a board of directors composed of at least 30% women.

Getting more women on boards has been a major goal for nearly a decade, both in the United States and abroad. As early as 2010, a consortium of board chairs and CEOs in the United Kingdom launched the 30% Club, intending to triple the percentage of women on corporate boards by 2020. They reached their target in 2018, two years ahead of schedule. Multiple governments have issued various laws mandating female representation on boards. Mandates have existed for years in Scandinavian countries and in Germany, while California will start fining publicly traded companies located in the state if they don’t have at least two or three female directors (depending on the firm’s size) by the end of 2021.

But experts say the biggest push lately for board diversity has come from large institutional shareholders. The US-based asset-management giants BlackRock and Vanguard have publicly stated that boards need to add more women. RBC Global Asset Management, which oversees $521 billion, pledged to vote against committee members of organizations where women didn’t represent at least a quarter of the board. (RBC will raise the threshold to 30% in 2022.)

Regardless of the push, experts say organizations shouldn’t just stop at token representation and seeking out women of color for board spots. “Having one woman on the board might satisfy a requirement, but it’s really about the board and CEO finding value in the diversity of the board,” says Joe Griesedieck, a Korn Ferry vice chair and coleader of the firm’s Board and CEO Services practice. Indeed, reports have shown growing evidence that gender diversity on boards can improve an organization’s performance across a multitude of metrics.

Having diverse board directors who can tap from their various perspectives will be critical as the investing world moves to embrace the environmental, social, and governance (ESG) movement, says Jane Stevenson, Korn Ferry’s global head of CEO succession. Investors are increasingly applying these nonfinancial factors as part of their analysis process to identify material risks and growth opportunities. “An inclusive team capitalizes on the multidimensional vantage points of each director both professionally and interpersonally,” Stevenson says.