Are Women Using Nonprofit Board Service As a Substitute for The Real Thing?

The Chicago Network has conducted a census of women on boards of directors of the Top 50 Chicago public corporations over the past 8 years. They concluded, in their latest report:

". . . once again [the Chicago 2005 Census] found few gains for women. After eight years of data, the Census shows that highly qualified women remain largely untapped for executive officer and board positions [at public corporations]."

However, for the first time, The Chicago Network also surveyed women in leadership roles at 35 of Chicago's largest nonprofit organizations -- the Chicago Nonprofit 35. There, they found lots of women:

  • 94% of the largest nonprofits have at least 1 woman director
  • 89% of the largest nonprofits have at least 1 woman executive
  • 35% of all executive officers at nonprofits are women

Among the board of director positions at the Top 50 public companies in Chicago, there were 77 women out of a total of 535 board positions (only 14.4%) Among the Top 35 nonprofit organizations in Chicago, there were 370 women board directors out of a total of 1553 positions (23.8%). Almost 5 times as many women serve on nonprofit boards as serve on for-profit boards.

Among the executive officers of the Top 50 public companies, there were 94 women (15.4%) out of a total of 610 possible positions. Among the Top 35 nonprofits, there were 90 women (36.1%) out of a total of 249 possible executive officers. There are over a third more women per entity serving as executive officers of nonprofits as there are serving as executives at the major for-profit firms.

If the skillsets required to serve on nonprofits and corporate boards were the same, we could simply tap the shoulders of the 460 women currently occupying nonprofit boards of directors or in the executive ranks of nonprofits. For we do know that there is tremendous demand, today, for competent, qualified and independent or diverse directors at for-profit corporations.

This resource pool might not contain the skills that are required at for-profit corporations. The performance of women in nonprofits may not be comparable to the performance required in the for-profit economic marketplace.

The Chicago Network did well to provide the analysis of the two groups, head to head, in the same geographic area. Now, an important additional analysis might be an assessment of how well women are prepared and are performing in these two different, possibly substitutable, markets.

In the main body of their 2005 Census, The Chicago Network presents the historic, persuasive, and logical arguments favoring increasing the number of women on public corporate boards:

    1. Positive correlation between positive financial returns and women in executive and board positions

    2. Competitive need for inclusiveness and recognition of the value of highly-talented women.

    3. The need to hold CEOs and board nominating committees accountable for the failure to develop and tap the large pool of eligible female management talent.

While we can agree on the end goal (more competent women on public company boards, more talented women in public company top executive positions), we have to realize that it is not a one-way proposition. It's not only the men who need to act. We also need to begin asking "What part of this problem and what part of the solution do women own?"

Among the recommendations of The Chicago Network, "to make change happen", is the following list of "mandates" for Chicago public companies:

    1. Establish a strong commitment from CEOs, nominating committees and boards of directors.

    2. Promote a visible commitment to gender parity; promote action plans with advancement initiatives.

    3. Provide women with P&L [profit and loss] responsibility.

    4. Educate managers about the danger of stereotyping.

    5. Develop metrics and regular reporting to leaders on the progress toward goals.

    6. Establish transparent succession plans.

    7. Select leaders who reflect the demographics of the employee, customer, and investor community.

What is missing are the action steps, accountabilities and responsibilities on the part of the women who say they aspire to executive and board level ranks in for profit corporations, but who tend to concentrate in nonprofit positions.

Women are economic actors in this marketplace, too. It is not only up to the men to make all of the changes required. Yet, we tend to focus on all of the behavior (human, organizational, communications, and economic) that we believe only one side of the marketplace must make in order to accommodate women within the public corporate economy.

Consider, for example the mandate "Provide women with P&L experience" [The Chicago Network's recommendation #3]. The idea that someone, out there in economic never-never-land, is gathering fairy-dust, called P&L experience, and passing it around to interested men -- but depriving it to women -- is na´ve at best.

P&L experience is not to be found in nonprofits, yet that is where we find that a lot of women have made their economic choice. That choice suggests that nonprofit entities are where a lot of women prefer to be. If women prefer NONPROFITS, then that suggests that women do not WANT P[rofit]&L experience.

Women seem to prefer being on nonprofit boards. Chicago's Top 35 nonprofit boards are huge: averaging 44.4 directors per board (versus an average of 10.7 for the top corporate boards). That's not a board of directors. That is a committee, a social gathering or a fundraiser. That's what women seem to prefer:

foundation/grant making nonprofits (10)18.5 members/board average
arts, culture & humanities (5)92.0
education (5)6.3
environment & animals (5)5.6
healthcare (5)32.2
human services (5)31.8

Women are choosing a different part of the economic marketplace -- substituting the nonprofit sector's perceived benefit stream for the alternative perceived benefit stream of the for-profit world. Women value more highly the economic payback of congregating together and "doing good stuff" at nonprofits more than they value the expected payback of staying in corporate management and breaking through to the top executive and board ranks. Or even creating their own successful entrepreneurial companies and building boards of directors that include other competent women.

Gender parity programs [recommendation #2] and educating about stereotyping [recommendation #4] are ideas that have been around a very very long time. Glass ceiling action plans and succession plans [recommendations #5 and #6] have been tried and, frankly have failed, for the past 20 years. If these ideas had worked by now, women would already be at parity among top executive ranks and on boards of directors. But, we only find women in large numbers on nonprofit boards and in nonprofit executive ranks. So, we better figure out why women prefer those options rather than the for-profit options.

Women and minorities "want" corporations to hire them as leaders in direct proportion to their physical presence in the marketplace [recommendation #7]. The belief that one is "entitled" to a position because of one's share of the market smacks of quotas. We know quotas have not been well supported, politically or economically, in the American marketplace.

We can agree that consumers, shareholders, and employees feel and work better when the tone at the top is heterogeneous and capable of comprehending diversity of markets, workforce, and investment. Those same audiences know when tokenism has placed incompetence at the top for the sake of political correctness. And very few people like incompetent tokens -- we all want capable leaders, first and foremost.

Competent diversity does not translated into a mandate that corporations arbitrarily select one from this bin, one from that bin, and one from every other possible ethnic, religious, or whatever special interest bin that is out there in the marketplace. It does mean a mandate to look for talent in all corners of the marketplace. If competent women are there, they need to make themselves known and available to perform as the marketplace requires -- just like anyone else.

The nonprofit world could demonstrate a greater ability to develop competent, talented women. The YWCA (Young Women's Christian Association) and the Girl Scouts are two of the largest leadership-advocacy groups focused on females. Yet, they do not rank among the Top 35 Chicago nonprofits. Why not?

If we follow the recommendations of The Chicago Network, we should also expect that women's leadership organizations will also "Develop metrics and regular reporting to leaders on the progress toward goals" [recommendation #5]. Should we not expect to apply the same performance standards to women's organizations? Are they succeeding? How are we measuring their success? Do we measure nonprofit women's leadership success by the dollar amounts that they have thrown at the problem? Or do we measure their perfomance by "metrics and regular reporting of their results" -- in the development and promotion of women to executive ranks -- everywhere?

The argument is often made that "women value other things" in the marketplace more highly than they do the traditional financial performance measures, as men in corporate life do. If this is the case, what would motivate corporations to turn the keys of their store over to women who don't perceive that the business should succeed by the same profit standards as men expect and as the women who feed at their table also expect?

Most of us all want more women and people of diverse, independent backgrounds to succeed, to make it to the top executive ranks and to make it to top board-level decision-making positions in our economic marketplace. But, this is not a prom where the girls are just waiting to be invited to dance.

This is a marathon where women have to train and condition themselves for the long-distance challenges which they will face. There is no question that women can do this, just as they can run great marathons on a par with the best, play competitive sports like tennis and golf on a par with the best, and lead great companies and organizations -- just like anyone else in this economy.

No excuses -- women can do it. The more important question, today, is whether women WANT this enough to take the action necessary to accomplish their goals.

Note: The statistics and the recommendations are those of The Chicago Network 2005 Census (CHICAGO, Jan. 22, 2006). The interpretation and opinions are entirely mine.