The Character of the Corporation: Best Buy's Road to Gender Parity in the Boardroom
It’s not about tokenism, it’s about business strategy and doing the right thing.
Kathy J. Higgins Victor was the lone woman on Best Buy’s board for six years, but after many frank board discussions about the value of diversity and the hiring of a new CEO in 2012 who was committed to a diverse C-suite and boardroom, things began to change.
Today, Best Buy has gender-balance in the boardroom. Of the 12 board members on Best Buy’s board, six are women and six are men.
“We didn’t set out to achieve gender parity; we set out to bring in candidates who have the skill sets to support the future strategies of Best Buy,” stresses Higgins Victor, who has been on the board since 1999. “We simple insisted they were diverse. As a result, we have gender parity.”
What Best Buy has achieved is unusual for corporate boards. The most recent data from governance research firm Equilar shows that among the Russell 3000 board seats, women held only about 18%.
The persistently low number is causing growing unease for company leaders, many of whom have accepted the evidence that gender equity on boards bolsters governance and the bottom line. Gender equity in the boardroom is also an environmental, social and governance issue, and one that many institutional investors have focused on. And there’s the small but growing movement in the United States to mandate more women on corporate boards, including a law that passed in California last year, and a proposed bill in New Jersey.
For Best Buy, all these are part of the drive-for-gender-equity equation, and part of the company’s overall focus on being a good corporate citizen and a successful company, says Higgins Victor. “The board has a foundational belief that diversity is important to our business, our employees, our customers and our shareholders, and to long-term value creation.”
The board looks at the issue as a strategic necessity, not a nice-to-have, and that concept is at the heart of their search approach.
“When bringing in skill sets to grow the company, it’s not about a token,” she explains. “When you have diverse voices, you have a much more frank and candid discussion.”
So how did they do it?
Having a CEO who’s passionate about diversity, and social issues overall, helped move the needle, she says.
• The Character of the Corporation. (Intro) Delaware Supreme Court Chief Justice Leo Strine tells Directors & Boards that it is not “sustainable to have societies where large corporations do not have to align their business practices with the interests of living, breathing human beings who deserve a safe environment, economic security and consumer protection.”
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• The Story of "S": What does "social" in ESG encompass? We talk to governance experts about their take.
• Best Buy's Road to Gender Parity in the Boardroom: It's not about tokenism, it's about business strategy and doing the right thing.
• Courageous Boards Can Drive the Profit-People-Planet Agenda: CEO of The B Team talks about the role boards need to play.
• How Can Boards Wrestle the ESG Agenda?Questions to ask the CEO.
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Indeed, chairman and CEO Hubert Joly has talked publicly about the fact that the purpose of a corporation is not to make money. “I believe the purpose of a company is particularly to contribute to the common good: its customers, its employees and to the community in which it operates,” he said in a Twin Cities Business article in November.
On reaching gender equity in Best Buy’s boardroom, Joly tells Directors & Boards: “Over the last few years, our board and leadership team has developed a comprehensive strategy to build a more diverse and inclusive workforce. We are fully committed because if your executive team, your board, your management team, and your employees do not represent the customers and the communities you are serving, you are going to miss fully executing against your strategy.”
The discussions about having board diversity were ongoing, even before Joly joined the company, Higgins Victor maintains. But in the last few years, she adds, their efforts intensified.
Here’s a rundown on how the board did it, according to Higgins Victor:
• Directors had deep and frank discussions about diversity before starting the process.
• They looked beyond traditional profiles such as sitting CEOs since there’s a finite number of those available and few women who hold those positions. They discussed the value of nontraditional candidates, considering whether a president of a division, or general manager of a multibillion dollar company would have the right skill sets for the boardroom.
• Board members decided to go outside their own personal networks, reaching out to people and organizations that weren’t the same old same old.
• Leadership went outside their industry, and to industries into which Best Buy was expanding. For example, a big part of the retailer’s transformation includes moving into health, so they looked for candidates with that type of background.
• Directors were also open to candidates with no board experience, and they committed to mentoring them and providing education.
• They focused on finding good leaders no matter what titles they held. “You look for leadership qualities,” Higgins Victor says. “When we interviewed them we probed in those areas. And we did a lot of background checks and referencing as well.”
• They weren’t satisfied with just a handful of applicants. “We probably looked at 90 to 100 candidates over the last three years,” she says. “We interviewed 12 in that time period.”
• They made sure new members fit the culture of the company and the culture of the boardroom.
• And the board became realistic about the time and effort necessary to find the best diverse candidates. In the last year, as the chair of the nominating committee, Higgins Victor says she spent one to two hours a week on average on the search process, including putting together specifications for the skillsets needed.
“You really need to research this,” she notes. “It requires a deliberate process. Sometimes you get off track but you have to keep going back to what your search criteria is and keep a disciplined approach.”
In the end, it’s about “changing the mindset” that often derails attempts for diversity in the boardroom, she stresses.