Passage of the Sarbanes-Oxley means more seats available in North America’s boardrooms
The passage of the Sarbanes-Oxley Act (SOX) in the United States has companies in Canada and the U.S. reviewing their governance standards. SOX is a response to a corporate governance system that allowed the debacles at Enron, WorldCom and others to go unchecked until executive pillaging brought firms to their knees.
For business women across North America SOX brings a reason to celebrate. The act is having a bullish impact on their ability to compete for notoriously unattainable seats at the board of director’s table.
Most boardrooms are filled with the usual suspects: white males, many of whom may have known each other personally before joining the board. But SOX is fuelling the need for corporations to search outside the traditional cast of characters to fulfill the required roles of “independent” directors. For an individual to qualify as independent, there must be no material relationship with the listed company directly or as a partner, shareholder or officer of an organization that has a relationship with the company.
SOX also requires corporations to find more candidates with financial backgrounds. Once companies start looking beyond the white male CEOs for candidates, they will find a lot more qualified women — for example the women who comprise 13.2 per cent of the partners at top accounting firms, up from less than five per cent in 1992.
A further sign that more spots are opening up at the top is the increased number of boards that are placing limits on the number of boards on which outside directors can serve — up to 37 per cent from 17 per cent, according to a 2004 Mercer Delta Consulting study. Given all these corporate governance changes, industry pundits are predicting that as many as half of all board seats could open up in the next three years.
Current directors also have reason to find sitting on multiple boards less appealing. Directors reported spending, on average, 188 hours a year on board issues in 2004, up from 156 hours a year in 1999, according to the same study. Couple that increased time demand with a heightened exposure to personal liability, and watch CEOs’ eagerness to sit on multiple boards diminish.
Making the corporate climate even riper for evolution, big investors are starting to focus on board diversity as a key to better board decision-making. JPMorgan Chase, Coca-Cola, Johnson & Johnson, Pfizer, Proctor & Gamble and Time Warner all have included a commitment to board diversity (by gender and race) in their charters.
At the same time, directors are starting to rethink their roles, with more focus on their potential responsibility for the long-term health of the company. According to a new McKinsey study of more than 1,000 directors, “around 70 per cent of the directors wanted to know more about customers, competitors, suppliers, the likes and dislikes of consumers, market share, brand strength, levels of satisfaction with products and so forth.” Since women are responsible for more than 80 per cent of all American purchases, who better to help boards get closer to customers?
All of this means that women have an unprecedented opportunity to find a seat at the table. The corporate governance environment is on their side because there will be more seats available and more boards who are working to fill those seats with people other than white men.
At the same time, in the wake of public punishment for corporate malfeasance, corporations are searching for CEOs and directors who don’t suffer from “blue” qualities many men have, such as poor communication skills and inability to compromise or create win-win situations. Taken to the extreme blue qualities result in a lack of empathy, particularly for shareholders and employees. The “pink” traits many women have — reflecting a belief that connection and relationship have business value — are starting to look a lot better to big businesses that used to denigrate them.
Michael Eisner, the notoriously blue CEO of Disney, is being replaced by a more approachable and low-key Robert Iger. Pink Patricia Dunn has taken over as chair of HP with the ouster of Carly Fiorina, whose style was very blue. Whether imbued by a man or a woman, pink personality traits at the top make a lot of sense in a highly scrutinized environment.
Given this new tilt in their favour, what do women need to do to close the deal? They need to get in the habit of asking. Research has proven that women still don’t ask, with negative career consequences. While strong pink empathizing skills and sensitivity to relationships can create real business advantage, that same sensitivity to others’ concerns can keep women from asking for support, resources, opportunities, line jobs or visibility.
Not only is the face of corporate America changing, but so is its culture. Women are facing an unprecedented opportunity to take a seat at the table and they should not wait for it to be offered.
Ronna Lichtenberg is president of Clear Peak Communications and author of “Pitch Like a Girl: How a Woman Can be Herself and Still Succeed.”
For business women across North America SOX brings a reason to celebrate. The act is having a bullish impact on their ability to compete for notoriously unattainable seats at the board of director’s table.
Most boardrooms are filled with the usual suspects: white males, many of whom may have known each other personally before joining the board. But SOX is fuelling the need for corporations to search outside the traditional cast of characters to fulfill the required roles of “independent” directors. For an individual to qualify as independent, there must be no material relationship with the listed company directly or as a partner, shareholder or officer of an organization that has a relationship with the company.
SOX also requires corporations to find more candidates with financial backgrounds. Once companies start looking beyond the white male CEOs for candidates, they will find a lot more qualified women — for example the women who comprise 13.2 per cent of the partners at top accounting firms, up from less than five per cent in 1992.
A further sign that more spots are opening up at the top is the increased number of boards that are placing limits on the number of boards on which outside directors can serve — up to 37 per cent from 17 per cent, according to a 2004 Mercer Delta Consulting study. Given all these corporate governance changes, industry pundits are predicting that as many as half of all board seats could open up in the next three years.
Current directors also have reason to find sitting on multiple boards less appealing. Directors reported spending, on average, 188 hours a year on board issues in 2004, up from 156 hours a year in 1999, according to the same study. Couple that increased time demand with a heightened exposure to personal liability, and watch CEOs’ eagerness to sit on multiple boards diminish.
Making the corporate climate even riper for evolution, big investors are starting to focus on board diversity as a key to better board decision-making. JPMorgan Chase, Coca-Cola, Johnson & Johnson, Pfizer, Proctor & Gamble and Time Warner all have included a commitment to board diversity (by gender and race) in their charters.
At the same time, directors are starting to rethink their roles, with more focus on their potential responsibility for the long-term health of the company. According to a new McKinsey study of more than 1,000 directors, “around 70 per cent of the directors wanted to know more about customers, competitors, suppliers, the likes and dislikes of consumers, market share, brand strength, levels of satisfaction with products and so forth.” Since women are responsible for more than 80 per cent of all American purchases, who better to help boards get closer to customers?
All of this means that women have an unprecedented opportunity to find a seat at the table. The corporate governance environment is on their side because there will be more seats available and more boards who are working to fill those seats with people other than white men.
At the same time, in the wake of public punishment for corporate malfeasance, corporations are searching for CEOs and directors who don’t suffer from “blue” qualities many men have, such as poor communication skills and inability to compromise or create win-win situations. Taken to the extreme blue qualities result in a lack of empathy, particularly for shareholders and employees. The “pink” traits many women have — reflecting a belief that connection and relationship have business value — are starting to look a lot better to big businesses that used to denigrate them.
Michael Eisner, the notoriously blue CEO of Disney, is being replaced by a more approachable and low-key Robert Iger. Pink Patricia Dunn has taken over as chair of HP with the ouster of Carly Fiorina, whose style was very blue. Whether imbued by a man or a woman, pink personality traits at the top make a lot of sense in a highly scrutinized environment.
Given this new tilt in their favour, what do women need to do to close the deal? They need to get in the habit of asking. Research has proven that women still don’t ask, with negative career consequences. While strong pink empathizing skills and sensitivity to relationships can create real business advantage, that same sensitivity to others’ concerns can keep women from asking for support, resources, opportunities, line jobs or visibility.
Not only is the face of corporate America changing, but so is its culture. Women are facing an unprecedented opportunity to take a seat at the table and they should not wait for it to be offered.
Ronna Lichtenberg is president of Clear Peak Communications and author of “Pitch Like a Girl: How a Woman Can be Herself and Still Succeed.”
