Over the past several decades, businesses have become more inclusive of women, dismantling many of the traditional barriers to women’s advancement. Although progress has been significant and is reflected in the number of women managers at the world’s largest companies and professional firms, it has been slow at the very top. Earlier Catalyst findings showed that Fortune 500 companies with the highest representation of women board directors and women corporate officers, on average, achieved higher financial performance than those with the lowest.
In Advancing Women Leaders: The Connection Between Women Board Directors and Women Corporate Officers, Catalyst analyzed the relationship between the percentage of women board directors that a Fortune 500 company had in 2001 and the percentage of women corporate officers the same company had in 2006. The analysis controlled for the effects of industry, revenue, and the percentage of corporate officer positions held by women in 2000. These controls allowed for a more precise depiction of the effect women board directors have on women corporate officers. Results showed that there is a clear and positive correlation between the percentage of women board directors in the past and the percentage of women corporate officers in the future.
To illustrate the effect of women board directors on women corporate officers, consider the following example: at two companies (Company A and Company B), in 2001, women hold 12.0 percent of corporate officer positions. The companies are in the same industry and have the same Fortune rank. at Company A, however, 30 percent of the board seats are held by women, whereas Company B has no women board directors. The analysis showed that in 2006, Company A would have 45 percent more women corporate officers than Company B—women at Company a would hold 17.4 percent of corporate officer positions, while women at Company B would still only hold 12.0 percent.
Furthermore, the analysis showed that, when ranked by percentage of women board directors in 2001, companies in the top 25 percent—the highest quartile—would have 33 percent more women corporate officers in 2006 than companies in the lowest quartile in 2001.
Finally, the analysis indicated that companies with two or more women board directors in 2001 would have 28 percent more women corporate officers in 2006 than companies with one woman board director in 2001.
Significantly, women board directors had a greater impact on the growth of women corporate officers in line positions—those making or selling the company’s products—than on the growth of women corporate officers in staff positions. This is critical because line experience is a de facto requirement for CEO and other top leadership appointments.
Put simply, women board directors are predictors of women corporate officers. The numbers tell the story—a gender-diverse board promotes continued success for women and for business.