In 2013 — after more than 30 years in the utilities sector — Susan Story moved up the ranks from CFO to CEO and president of American Water in Voorhees, the nation’s largest publically traded water utility.
It might have been her college degree, she said, that helped her reach the pinnacle of a business career. One that, for her, started as a nuclear power plant engineer.
“Nine of the 51 women CEOs in the Fortune 1000 have engineering degrees,” Story said, making engineering the most common college major among female chief executives in that group of companies. “I think it’s because, in the science and technical fields, you must demonstrate confidence that you can build and lead teams.”
Left unsaid was the following: Especially if you’re a woman.
By the numbers: By any measure, women are winning
A study conducted by researchers at the University of British Columbia found boards that had women on them paid less of a premium when acquiring companies.
Better returns (CEO level)
The return for the S&P 500 index over a CEO’s tenure averaged 69.5 percent — for female CEOs alone, 103.4 percent, according to Forbes magazine.
Better returns (Director level)
Companies with female directors outperform companies with men directors, including return on equity (52 percent higher) and dividend payout (22 percent higher), according to Credit Suisse.
Better returns (Board level)
Companies with the most female board directors outperform those with the least by 16 percent on rate of return on sales and 26 percent on return on invested capital. If a company is able to sustain at least three females on its board for at least four years, those numbers jump to 84 percent for return on sales and 60 percent for return on invested capital, according to Catalyst.
Story exemplified such confidence as she delivered her keynote to a room of more than 200 at the Executive Women of New Jersey’s “A Seat at the Table” breakfast last month, which not only celebrated and connected companies that have appointed three or more women to their boards of directors, but also the release of the organization’s second biennial study on advancing gender diversity in the state’s corporate boards.
“At EWNJ, our advocacy for the advancement of women to positions of leadership focuses on boards of directors and executive suites,” said Barbara Kauffman, chair of the board appointments committee of EWNJ and executive vice president of the Newark Regional Business Partnership.
“This study, done in collaboration with PricewaterhouseCoopers, capped a year of activity that included a newly launched series called ‘Breakfast with the CEO’ as well as a continued partnership with the Inter-organizational Network (ION), a national organization advocating the advancement of women to boards of directors and executive level positions.”
But a seat at the table, Kauffman said, is simply not enough.
“There are important roles that we can play,” she said. “But it all still amounts to a man inviting his golf buddy to join his board instead of looking for skillsets or using recruiters who know the candidates to shape what the board looks like.”
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Male favoritism is just one of the many obstacles facing women’s paths to the board, said Catherine Bromilow, partner of the center for board governance at PwC.
Here’s what they had to say:
■ Caren Franzini, president, Franzini Consulting
Former CEO of the New Jersey Economic Development Authority;
■ Boards currently served: NJM Insurance Group; New Jersey Business & Industry Association; Horizon Foundation for New Jersey; New Jersey Community Development Corp; New Jersey Future; New Jersey Alliance for Action.
“When I joined the NJEDA, I put myself out there to all the business groups in New Jersey. … I got to be on all these boards because I told them they needed me on their boards. … I was probably serving on seven different boards when I was at the NJEDA. … I wanted to better myself by learning about different industries to better position myself to be on other boards.”
■ Joanne Pace, a global Fortune 100 senior executive
More than 30 years of financial and operating experience in complex regulated businesses;
■ Boards currently served: Independent board director and senior advisory board director in finance and investments; chair of the Audit Committee for the Oppenheimer Funds and board member of Horizon Blue Cross Blue Shield of New Jersey and advisory board director for The Alberdeen Group and Massey Quick & Co; co-chairs the 100 Women in Hedge Funds’ Women on Boards initiative.
“A sponsor is often not going to be able to be your adviser all the time, so it’s important to know the difference between sponsors and mentors. They were both so important to my professional and board careers. … Board search is like searching for a job in that it takes a lot of time, effort and networking. So knowing what the difference between a sponsor and a mentor is, how to position oneself, and how to translate skills and what one’s done to what the board is looking for, is crucial. … You need someone inside the boardroom to help you navigate the landscape.”
■ Candace Straight, private investor and investment banking consultant
Co-chair of Gov. Christine Todd Whitman’s Budget Advisory Committee;
■ Boards currently served: Rutgers University (appointed by Gov. Chris Christie); New Jersey Sports & Exposition Authority (appointed by Whitman); former vice chairman of the NJSEA.
“Decide what skills you have and what you want to continue with. … Be in organizations of likeminded people. See how those people have gotten into corporate boards. … (For example), if you want to be on the board of Disney — a huge communications and entertainment company — they need technology and social media skills, so find out which skills you might bring to something like that.”
■ Erin Hamrick, founding partner, Sterling James
Works extensively with board members, CEOs and other senior executives in all sectors of the insurance industry;
■ Boards currently served: Sustainable Lawrence, promoting an ‘eco-municipality’ in Lawrence Township.
“When a headhunter calls and asks about who you know, the best thing you can do is pull out a list of women and give them five names. It’s not necessarily important that they are spot on — that is just what women do. We’re so critical that, if we’re going to give a referral, we have to make sure that they’re absolutely A plus — but that is not what men do. Men always just refer their friends to help take care of them and their network. Women historically don’t feel comfortable doing that, but if we could all do that, it would change the landscape within a generation.”
“If it’s a predominately male board looking for new directors, unless they are deliberate about it, they will look for other men for the board,” Bromilow said. “This is how we get into echo chamber effects — if you only have people in your network that are like you, if you say something, they will say the exact same thing back.”
It’s a difficult cycle to break. According to Spencer Stuart — which tracks the S&P 500 — the median age of board directors has increased to 63.1; 30 percent of boards that specify a mandatory retirement age set it at 75 or older; 16 percent fewer new directors were appointed in 2014 than 2004; and only 3 percent of boards set term limits.
“In our country today, only half of college graduates are female, and over half of managerial and professional positions are held by women,” Story said. “Yet only 22 percent of senior managers are women, and 5 percent of Fortune 1000 CEOs are women.”
In New Jersey alone, those numbers aren’t far off.
According to EWNJ’s “A Seat at the Table” report, women hold fewer than 16 percent of board seats in 99 of New Jersey’s public companies in the Russell 3000 index. While this is slightly better than the national average of 13 percent, 25 percent of these New Jersey companies have no women on their boards at all.
That may be due to the fact that, while a majority of women directors view board diversity as an effective and profitable attribute (63 percent), only 35 percent of men agree. Furthermore, only 18 percent of male directors believe there are sufficient numbers of qualified diverse candidates, compared to 46 percent of women.
It’s no wonder the number of companies in New Jersey with a female CEO (four) and total female top earners (10 percent) has remained unchanged since 2013.
While a New Jersey company has yet to reach 50 percent board membership for women, American Water has come closest with women holding 44 percent of its board seats.
“When you look at a typical board composition, a third of board members are or were CEOs, a third are or were CFOs, and the other third are C-suite executives,” Story said. “While we’re trying to get more women onto boards, we need to get more women into the C-Suite. We have to do both.”
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EWNJ’s “A Seat at the Table” report not only provides statistics on the representation of women on the boards of New Jersey, it also attempts to provide concrete solutions.
“In our report, we chose to focus on the mechanisms needed to increase the number of women serving on public company boards in New Jersey,” Kauffman said. “Without specific strategies and a concerted effort to change the status quo, the number of women serving on boards will remain unacceptably low.”
For example, gender-blind board selections — based solely on skillset inventories — are largely supported to identify gaps in knowledge not covered by existing members.
“You can increase your odds of getting onto a board by having a niche area of expertise, such as cybersecurity or social media and marketing,” Story said. “Boards must have the varied competence to deal with such matters in order to protect themselves.”
And while the use of professional search firms has also proven successful in creating diverse pools of candidates, identifying internal senior and midlevel women with the potential to serve on the board of directors is even better.
“The biggest job that we have as a leadership team is to make sure that we are developing people who represent and understand our customers, our shareholders, our employees and so forth,” Story said.
Women candidates can also help their own cause by continually seeking opportunities to gain exposure and experience in targeted nonprofits and small business boards.
“It is critical that CEOs find those with potential and help cultivate their paths to the board,” Kauffman said. “That’s why it’s so important to learn how to network early — and not just to say we’re connected on LinkedIn or Facebook, but how to make meaningful partnerships and connections with people that can help you to make sure you’re making the right choices.”
The top female CEOs in N.J.
■ Denise Morrison
Campbell Soup Co.; Camden
The Fortune 500 company leads New Jersey companies in gender diversity with five women on its board of directors.
■ Jane Elfers
The Children’s Place; Caldwell
Three women on the board,
three women in the executive suite.
■ Susan Story
American Water; Voorhees
Four women on the board,
seven women in the executive suite.
■ Cynthia Sullivan
Immunomedics; Morris Plains
Two women on the board;
one woman out of the top four earners.
However, the biggest mistake that companies can make, Story said, is to rely on simple quotas.
“You don’t say, ‘We need a woman,’ or, ‘We need a minority,’” Story said. “You say, ‘We need this skillset, and we’re going to do everything we can to find a diverse pool of candidates so that we can find the best person.’”
“Otherwise, you are sending a message that you have to compromise if you want a woman or a minority, and that is just not true.”
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The forecast for women aspiring to sit on boards remains weak — but every new experience, regardless of statistics, can be a tremendous asset.
“In my 33 years of working, I had 21 different jobs — 15 of which I had never done before,” Story said. “I learned. Go out there and do the things that force you to step out of your comfort zone.”
As CEO and a second-time winner of EWNJ’s Corporate Board Gender Diversity Award, Story is committed to continued excellence for American Water.
“I consider the most important job I have in my role as president and CEO is to make sure that whoever takes my place is better than I,” she said.
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