Women are also likely to bring to the board domain expertise in areas of growing importance like HR and ESG.
In the last two years at Diligent Institute, directors have been indicating on surveys and in interviews something that we had long suspected: Many boards are growing overwhelmed. New challenges to business have become existential and interrelated and are changing rapidly. As the issues boards are tasked with evolve and expand to things like environment, social, governance oversight and cybersecurity and regulation, are the right skill sets present in the boardroom?
Director Appointments Bring New Skill-Set Backgrounds
In our July 2021 Beyond the C-Suite report, Diligent Institute set out to find out more about how skill sets in the boardroom were changing. Looking at director appointments dating back to 2019 in Australia, the United Kingdom and the United States, we found that the percentage of newly appointed directors bringing a more traditional CEO/CFO/COO background has been declining—dropping from 59.4% to 56.0% since 2019. Over the same period, the share of newly appointed directors who do not have that experience, but instead bring skill-set backgrounds in other areas like sales, marketing, legal, HR, ESG and technology, increased from 13.0% to 18.9%.
In that report, we also found that the group of newly appointed directors with domain expertise backgrounds in the U.S., UK, and Australia was split almost evenly along gender lines. However, newly appointed directors from CEO/CFO/COO backgrounds were twice as likely to be men. Meanwhile, women represented the majority of new appointments in HR, ESG, marketing and technology, a traditionally male-dominated field.
In our most recent report, a comprehensive look at boardroom composition and diversity called Board Diversity Gaps conducted in partnership with the Women Business Collaborative and 21 other partner organizations, we found that the percentage of newly appointed directors bringing in these domain expertise types was 35% from January through May 2022, looking this time at our global dataset of about 6,000 public companies.
A Closer Look: Female Directors with Technology Backgrounds
According to data in our Board Diversity Gaps report, only about 5% of all director appointments through May 2022 have technology backgrounds. Between 2019 and 2021, this number had increased from 5.9% to 6.5%. Of all director appointments through May 2022, 3.2% were men with technology backgrounds and 1.8% were women with technology backgrounds.
Overall, through May 2022, only 36% of director appointees with technology experience were female. For the full years 2019-2021, this number had increased from 40% to 43%. The U.S. made particular strides in this regard in 2022, where half (50%) of all director appointees with technology backgrounds have been women, well above the global average. This number had been increasing in recent years, from 44% in 2019 to 49% in 2020. Other countries of note are the UK, where female directors made up 63% of appointments with technology experience in 2021, and Canada, where this proportion was 57% in 2021.
“Despite technology having been a traditionally male-dominated field in the past, we are approaching gender parity in some countries when looking at the proportion of female director appointees with technology experience. As more women are added to boardrooms around the world, these women are very likely bringing domain expertise in areas like technology, which is an incredible value-add in our increasingly digital and tech-driven world.”
-Dottie Schindlinger, Executive Director, Diligent Institute and Co-Author, Governance in the Digital Age
Female Board Members and Intersectionality
Our research indicates that when women join a board, they diversify that board along more than just gender lines. Female directors tend to be younger than their male counterparts, bringing new age group diversity to the boardroom. Through May 2022, the average age of female directors is about 60 years, and the average age of male directors is almost four years higher, at 63.5 years.
As stated above, female directors are also likely to bring domain expertise in new areas that are growing increasingly more important to the board’s responsibilities, like HR, ESG/sustainability, and technology backgrounds. Taken together, these findings indicate that though the current level of female directors with technology experience may be relatively low, these leaders will be elevated to the boardroom at higher rates as boards continue to diversify along gender, skillset and other aspects of board composition.
Kira Ciccarelli is the lead researcher at the Diligent Institute, the modern governance think tank and research arm of Diligent Corporation, a leading provider of board collaboration software. In her role, Ciccaelli works to conduct and provide high-level modern governance research to inform director decision-making and identify best practices. Before joining Diligent, she worked in a variety of data-driven research roles, including analyzing global aid funds to the UN Sustainable Development Goals and compiling a meta-analysis of political experimental findings for the Analyst Institute. She holds a BA in public policy from the College of William & Mary.