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Why women should not use the non-profit sector to reach corporate boardrooms

Australian women on ASX200 boards often have strong backgrounds in law, finance, accounting and investment banking.

Australia is one of the worst performers in board gender diversity. In an attempt to combat this, women have been encouraged to head to the not-for-profit sector to gain board experience as a stepping stone to the male-dominated corporate boardroom. Yet this advice is not actually supported in practice. Research shows it is still a corporate career that counts with the big boards.

The opening line on the Women on Boards website is:

The Third Sector is usually a good hunting ground for women seeking directorships. It offers personal satisfaction and rewards as well as valuable experience and networks to up and coming directors. Most ASX directors have at least one Third Sector Board in their portfolio.

In her top five strategies for cracking a corporate board, research professor Carol Kulik suggests starting small and volunteering on a local charitable board.

Korn Ferry managing director Katie Lahey recently included in her top ten tips for getting a board seat, experience on non-profit, government or smaller boards.

This emerging career strategy for women seeking corporate board membership raises two questions. Do women actually move from non-profit directorships to corporate boards? And what is the benefit for not-for-profit organisations?

Do women move from non-profit directorships to corporate boards?

Research conducted in the United Kingdom has highlighted the importance of networks and that women recruited to corporate boards are more likely to have experience as directors on boards of smaller firms.

However, the 2012 Census of Women in Leadership reveals that Australian women on the boards of the ASX top 200 companies often had strong backgrounds in the fields of law, finance and accounting. Many women also had careers in investment banking. Around 25% had public sector experience as regulators, politicians or academics.

The question was not asked, but reviewing the figures and the backgrounds of the women on our major corporate boards, no female director had been recruited from a long career working in the non-profit sector.

Moreover, research suggests that when it comes to head-hunting board members, the search is predominantly not-for-profits seeking corporate experience.

There are many not-for-profits that require unpaid board and management committee members such as local Out Of School Hours organisations. Some such as the YWCA also specifically seek female board members.

Serving on the board of a not-for-profit can be an enriching experience. Aside from the satisfaction that flows from working for the public good, it can broaden one’s resume in skills and experience. It may even lead to new job opportunities.

However, the idea that corporates look to not-for-profit boards to recruit board members is not supported by the evidence.

What is the benefit for not-for-profit organisations?

Not-for-profits, like women, battle unjustified prejudice. The range of not-for-profit organisations is not dissimilar to the range of for-profit businesses. There are small volunteer-operated organisations, services concentrated within states or nationally, and international organisations with Australian subsidiaries.

Similar to other businesses, some not-for-profits are exceptionally effective in governance and operations and some are not. Nonetheless, the sector is often regarded as amateurish, inefficient and in need of the superior expertise of the business sector.

Not-for-profit boards need expertise in governance, finance, strategy and risk management just like corporate boards. However, they also need expertise in fund-raising, resource mobilisation and specific not-for-profit and industry knowledge. Someone with skills and experience in one or more of these areas clearly has value to offer a not-for-profit board.

However, viewing opportunities of not-for-profit board membership primarily as a useful stepping stone to corporate boards is not only misplaced but misses the point. One of the major requirements of not-for-profit boards is a belief in the value of the sector and a commitment to the purpose of its work, whether it be reducing Indigenous disadvantage, alleviating child poverty, protecting our environment or helping the local kids at school.

For the vast majority of the nearly one million Australians serving on the boards and management committees of Australia’s 600,000-plus not-for-profits these causes are of much greater value and indeed more prestigious than being on the board of an outfit that exists primarily to make money for shareholders.

Encouraging women to enter the sector for the wrong reasons may undermine the goals of individual organisations. While the non-profit sector undoubtedly welcomes more experienced women on its boards, it should be on its terms.

The overriding requirement for any directorship needs to be a belief in the organisation’s purpose and values. Women who enter the non-profit sector with the aim of obtaining a seat on a corporate board might be better off considering a career in investment banking.

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