Is there a business case for promoting women executives to serve on corporate boards? Data revealed in a new report by the Committee for Economic Development (CED) argues that giving women a seat at the table and providing adequate talent development not only can deliver measurable business gains but is the key differentiator in future global success.

A panel of experts in New York this week discussed the implications of “Fulfilling the Promise: How More Women on Corporate Boards Would Make America and American Companies More Competitive,” as well as recommendations for improving the talent development and promotion of women to senior management roles. Ernst & Young’s Beth Brooke, global vice chair of Public Policy, moderated the panel, and Chairman and CEO Jim Turley, who has been a visible advocate for cultural diversity, gave the opening keynote. Ernst & Young is No. 6 in the 2012 DiversityInc Top 50.

The other panelists were: Joanna Barsh, Director at McKinsey & Company; Nels Olsen, vice chairman and co-leader, board, and CEO for Korn/Ferry International; and Gail Becker, chair for Canada, Latin America and U.S. Western Region at Edelman.

Why Talent Development for Women? 

The report provides evidence that U.S. businesses need to make talent development for women a top business priority to retain global competitive advantage. This will be necessary to attract, retain and develop the best female talent, a group that is increasing in economic influence, according to its findings.

The biggest implications for developing female talent are global demographic and economic shifts. “Executives are 70 to 75 percent white men but, if you look forward, demographic shifts in gender and ethnicity show that employees and customers will not be,” explained Turley. “Boards need to be more actively engaged with who they represent.”

“Women can be quantified as an emerging market. They are the No. 3 economic power in the world today, behind only India and China,” added Brooke. “Women are an untapped engine for American competitiveness.”

• Women are highly talented: 36.8 percent of master’s degrees now are earned by women. In 2010, more women earned bachelor’s degrees  than men (20.1 million compared with 18.7 million, respectively), according to census data. Read Women’s History Month Facts for more.
• Businesses with more women directors perform better: A Catalyst study of 2004–2008 data shows that companies with the highest average of women directors (top quartile) outperformed companies lacking representation at senior levels (bottom quartile) by 26 percent in return on invested capital.
• America is falling behind: Currently, 15.6 percent of U.K. board members are women. The percentage of U.S. women on corporate boards ranges 12.1 to 12.3 percent, with Fortune 100 companies averaging about 11 percent women and Fortune 500 companies averaging 15 to 16 percent.
• European countries will continue to promote women: The United Kingdom announced in March a strict diversity goal to obtain a minimum of 25 percent women board members for FTSE companies by 2015; the European Union’s justice commissioner has noted that legislation on the issue could be passed since self-regulation has not brought enough progress. Quotas of 40 percent are being considered in Norway, Spain, France, Italy, Iceland and Belgium, cites the report.

Talent Development: The Solution?

Referencing The Atlantic’s provocative “Why Women Still Can’t Have It All” cover story, the panelists discussed how male-oriented corporate cultures can be a roadblock to developing women executives. The main challenge, cites the panel and the article, is in managing time between a high-performance career and equally important family responsibilities.

As for the solution to removing gaps in gender among corporate leadership, the panel says there are a few factors that need to come together:

• Accountable leadership with CEO commitment. The pipeline of female talent is there “but it really comes down to leadership. Everyone has to be on the same page and communicate that focus on diversity down through the recruiting process,” said Olsen. Watch this diversity web seminar on CEO commitment for best practices in communicating top management commitment to diversity and inclusion.
• Champions for change. “We need a series of CEOs to come forward and say they’ll become U.S. companies of change,” said Barsch. That focus and business case then needs to be communicated by the CEO and his management team to shareholders and investors to drive the change.
• Changing representation at the top. “Until you get more women onto boards and on management teams, the discussion doesn’t change enough,” added Turley. “Corporate culture needs to change so that merit is not about face time but what executives produce.” This will allow a more inclusive environment and give women the ability to take advantage of flexible work schedules, work-from-home options and other work/life benefits. Watch this work/life web seminar for best practices.
• Improve sponsorship initiatives: “Women traditionally are not as good at sponsorship. It’s something we need to make a cognizant effort of,” said Becker, noting that women tend to share credit with their team, which makes it more difficult to identify top performers. Companies should look to assign women sponsors as well as mentors. Watch this diversity web seminar on talent development for additional best practices in identifying female talent.
• Women helping women: All the panelists agreed that women also need to take more actionable roles in promoting their own careers and raising their sights. “About 36 percent of men said in a [McKinsey & Company] survey that they aspire to get to the top, compared with only 18 percent of women,” said Barsch. Women executives need to share their stories and how they manage work and life responsibilities to prove to others that it can be done, added Becker. This is in addition to continuous networking and publicizing to managers how high up the ladder you’re aspiring to go. Read how this strategy helped Beth Mooney become the first female CEO of a major bank.

For more on global diversity and the changing role of women in business, read our exclusive global research in 17 countries: Why Is Global Diversity So Difficult? Also, watch the video below of DiversityInc Senior Vice President and Executive Editor Barbara Frankel presenting the most recent findings.