Getting from a good to a great board: you can do it through gender diversity. The qualified woman candidate for your board is out there--if you look for her in the right places and with the right process.

• Author: Ellig, Janice Reals
• Position: LEADERSHIP

I'D LOVE TO PUT QUALIFIED WOMEN on our board," asserted the CEO of a major corporation. "We just can't find them."

It's a common complaint, and it's conceivably a key reason behind the virtual stagnation in the number of women directors in corporate America--an average increase of only one half of one percentage point per year since 1995.

It's also a puzzling assertion. After all, women are half of everything--employees, investors, customers, the global community. Women make or influence 80% of consumer decisions and hold more than 50% of managerial and professional positions.

Yet women can still claim only a toehold in the C-suite of corporate America, with fewer than 3% of the Fortune 500 CEO positions and fewer than 16% of corporate officer slots. Since the C-suite is a primary source from which director vacancies are typically filled, there is a need to dig wider and deeper in order to tap into a rich well of female talent.

Recent research from Catalyst, the leading nonprofit corporate membership organization working to advance women and business, supports the view that the search is worth the effort. The study examined the correlation between the number of women on the board of directors and corporate financial performance. The results spoke volumes: on average, Fortune 500 companies with more women directors had significantly higher measures of financial performance than those with the least: 53% higher return on equity, 42% higher return on sales, 66% higher return on invested capital. And companies with three or more women directors performed even better! This mirrored other Catalyst research on women corporate officers and financial performance: more women in the C-suite, on average, correlated to 35% and 34% improvement in return on equity and return on sales, respectively.

So it is perhaps not surprising that a new Catalyst study reveals a strong relationship between the two dynamics: more women on the board predicts more women corporate officers five years later. Bottom line? Appointing more women to corporate boards correlates, on average, with significantly improved financial returns and more women in the C-suite. A very appealing win/win.

So how have some CEOs/boards been able to successfully catapult over the supply hurdle to find qualified women for their boards? The answer rests with the leadership: the board's commitment to expand gender diversity, careful planning, and a willingness to broaden their vision and widen their search. That's what it takes to elevate a good board into a great board.

How can your board do the same? We've identified five practical steps:

1. Analyze the tone at the top

   Getting from good to great starts, as always, at the top. That's where the tone is established and the example set. So step 1 is to analyze the diversity at the top of your organization.

   Since it's a board's task to evaluate the company's strategy and the effectiveness of the CEO, a prevailing sameness in the backgrounds, gender, expertise...