Here's One CEO's Simple Idea for Getting More Women on Boards

At some point or another, anyone who runs a company has to put together a board. And as we saw throughout 2016, diversity on boards is a hot-button issue in Corporate America.

From Facebook's diversity report to the Business Roundtable's Principles of Corporate Governance report, there's a growing recognition that diversity at the top is good for company performance and good for investors. To really stick, diversity initiatives need to be enforced from the top down, which means that boards themselves have to "walk the walk."

And yet the number of women on boards remains stuck at about 20% for S&P 500 companies. One reason is that board seats don't come up very often, which means that trying to change the makeup is a slow process. The other one—which CEOs point to all the time—is that there just aren't enough female candidates to begin with.

Beth Stewart, the CEO of Trewstar, says that's absurd. Her firm specializes in placing women on boards. Over the last several years, she has placed over 30 women on boards at Fortune 500, mid-cap, and private equity companies.

Her method, she writes in an article for Harvard Business School, is devastatingly simple: interview the women first.

When she sticks to her women-first method, Stewart claims a 100% placement rate. That's because once a board is made aware of a slate of female candidates, they always find someone they want. The problem lies not in the lack of candidates, but in the lack of awareness.

Finding female candidates by looking for female candidates doesn't seem novel; but in the world of board searches, it really is. Finding board members is more art than science. It entails a collection of different methods, from hiring an executive recruiting firm to tapping internal and external networks for names of candidates. Many times, board candidates are found because of a recommendation. There is no "national list of board candidates" where potential members are queued up in a line.

The problem, Stewart says, is that these methods exclude women. For one, board members often do not know a wide range of senior women. Two, some board requirements naturally limit the number of women candidates. If a board position requires that a candidate must be a CEO, that is instantly going to disqualify some women who are capable but do not hold the CEO title.

Another problem, Stewart says, is the way recruiting firms make money. She points out that board searches are a "loss leader" for many recruiters, who do it because it leads to more lucrative executive recruiting contracts. Because board searches typically generate less revenue, Stewart says, recruiting firms do not place as many resources behind finding those "needle in a haystack" board candidates; most of their time is spent looking for the right managers and executives.

Stewart argues that if every board on the S&P 500 opened up two seats, then went about interviewing women first for those positions, there would be a "tsunami" of change, resulting in women making up 40% of all boards.

Of course, gender isn’t the only way that boards need to diversify. Today’s boards are also overwhelmingly white and straight. But Trewstar’s methodology could easily be extended to other marginalized groups.

Sallie Krawcheck, the Wall Street veteran and founder of Ellevest, has her own solution to diversity in Corporate America: support and empower more women entrepreneurs and investors. Her company recently raised $10 million, primarily from women investors. Hear her talk about the sea change she’s seeing in the venture world in this Radiate Facebook Live Q&A:

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