Diversifying the Boardroom
Q&A with Kay Koplovitz of Fifth & Pacific on the benefits of bringing women and minorities on company boards
For the last 40 years, Kay Koplovitz has been helping women and minorities gain better representation in corporate America.
The chairman of Fifth & Pacific Cos.—which owns lifestyle brands Juicy Couture, Kate Spade and Lucky Brand Jeans—is the former chief executive and founder of USA Network, now a division of NBCUniversal Inc. Considered one of the most successful women in business, Koplovitz also helped launch the Sci-Fi Channel in 1992, facilitated the first cable coverage of Major League Baseball and founded New York investment firm Boldcap Ventures LLC in 2001.
In the midst of these accomplishments, Koplovitz’s efforts to help women grow as professionals has not ceased. Boldcap, for example, is backed exclusively by high net worth women looking to do deals in the media, technology and healthcare sectors.
Her work was recognized by former U.S. President Bill Clinton, when he appointed her to chair the National Women’s Business Council in 1998.
Mergers & Acquisitions sat down with Koplovitz during NYSE Euronext Co.’s event “Moving the Needle: Building Effective Boards with Qualified Diverse Candidates,” which took place on July 18 and 19.
While public companies have come a long way in diversifying their boardrooms, “there’s still a long way to go,” says Koplovitz.
What are the benefits of bringing diversity to corporate boards?
The insights, the interests, the backgrounds—all of these add to a broader discussion and gets boardrooms out of “group think.” If you’ve been in an industry for a long time, you can get tunnel vision. That doesn’t necessarily add to performance. It limits it, because you’re not taking into consideration a global view. Women and minorities bring more of a global view to the boardroom today. You certainly see diversity impacting a board of 10 to 12 members when three of them are women, especially for companies that are in consumer products. Nearly 80 percent of consumer purchases are influenced by women.
What strategies do you suggest companies take in making boards more diverse?
People have been talking about this for decades, and we have not made great progress. For years, CEOs would feel most comfortable among people like themselves. That attitude prevailed for a long time. If everybody looks like the CEO, then you are going to get a bunch of people who are largely white men. In order to understand the value of having varied opinions and experiences around the table, number one, make it a priority. Number two, skills and experience should prevail over friendship. Ask yourself, “What does this company need?” The third strategy is that no available seat should be filled until the board has screened a diversified list of candidates. It could be by gender, race, and ethnic background or by geographic location. In a global environment, people need more of an international point of view. The fourth is each board should set their own goals. I don’t think there’s one magic number. Having been the only woman on boards, that’s not ideal by any means. There is a “group think” that prevails if you’re the only one who thinks differently. Minorities might feel the same way. It starts with three on a typical board of 10, and once you get enough critical mass, you see the dynamics of the discussion change.
Which companies stand out when it comes to embracing diversity?
Media companies—publishing, television, radio or cable—usually are more cognizant of women as great contributors. Healthcare and pharmaceutical companies have more women on average—companies like Aetna and WellPoint. General Electric has at least four women on its board. You see a lot fewer women when it comes to heavy-industry companies, but interestingly DuPont has a woman as a CEO. We recently saw Marissa Mayer become CEO of Yahoo. She is an engineer, highly analytical, highly competent and she just went on her first outside board just a month ago with Wal-Mart, which has quite a few women on its board. Then, in taking this new post, there’s much being made about how she’s expecting in October.
Are there any innate challenges in trying to diversify a board?
People still say they don’t find enough women and minority candidates to increase the diversity on their board. But they just don’t look hard enough. Say you’re on the nominating committee and your job is to find the best-qualified candidates. You might even have a diversified slate but pick a white gentleman to serve that role, because it turns out that he’s the best candidate. That’s fine. But to say there aren’t enough candidates, that’s absolutely wrong. Search companies only fill 30 percent of the board seats. So if you have a search going on for multiple boards, you can just compare the lists given by different search firms and predict who’s going to be on those lists. They’re very similar. This is why we’re participating in “Moving the Needle.” To bring together a new crop and registry of people who can serve on boards and are qualified. We want to broaden the list.
What in your career inspired you to take a strong stance?
In 1987, when I was CEO of USA Network, I had an interesting conversation with Reuben Mark [then chairman and CEO of Colgate-Palmolive]. He said, “You know, Kay, you can’t expect just because you’re a woman and the CEO of this company that people are going to assume that you’ll work harder to get women in key roles. You have to make it a priority; you have to put it in their performance measurements. Make a point of it.” I had never thought of it that way. I just thought people would follow my example, but they don’t. I learned very early on you have to make it a performance goal. I spent 40 years trying to help women. But boards have to assess their own objectives and set their own diversification standards. I’m sitting on one right now—CA Technologies—that I have harped on to have non-U.S. passport holders as board members. We aspire to be a world-class global board, and I said we’re not. If we are going to sit here and say we’re all Americans and we know everything about how to operate in different countries and under different cultural rules—we don’t.
Since then we have diversified. The last two board members we’ve brought on we’re non-U.S. board members, and they’re from different regions of the world, and it’s very important. Now that wasn’t saying women or a particular minority, but it was saying we need diversification and we need global and ethnic diversification. You have to be relentless. You have to want to make it happen.
For more on diversity and recent efforts to increase opportunities for minorities in corporate America, read “PRIVATE EQUITY PERSPECTIVE: The RLJ Rule."
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