The opinions expressed herein are those of the author, and not necessarily those of The New Agenda.
WOMEN ON BOARD
Women are underrepresented in corporate boardrooms and in executive offices around the world. Some countries have recognized this and taken action to increase the percentages of slots occupied by women. While the United States has not legislated quotas, there are several US-based organizations working hard to banish the myth that there are not enough qualified women to serve on boards while making progress toward gender parity.
Earlier this week, The United Arab Emirates cabinet made it a requirement that their companies and government agencies appoint women to their boards. Woman make up over 50% of the public sector workforce in the UAE although only about 25% reach board level, according to Shamsa Saleh, chief executive of Dubai Women Establishment, in Gulf News. In the private sector, women make up as little as 1.5% of boards.
Several other countries have introduced quotas or proposals for mandatory female representation on boards including Norway, Italy, France, Spain, Belgium, Malaysia, The Netherlands, and Iceland. Recently, the European Union Commission dropped plans for mandatory quotas for the number of women on company boards. Instead, a new proposal would oblige companies to favor “the underrepresented sex” from 2016 on, until a share of 40% is reached.
Across Europe, women account for fewer than 15% of non-executive board positions in companies with more than 250 staff. In the United States, women make up 47 percent of the workforce but only hold 16% of the Fortune 500 board seats.
Why do Boards Need Women?
Women bring value to the boardroom. While we’re collaborative, we don’t avoid controversial issues. Our collaborative leadership style improves dynamics by increasing the amount of “listening, social support and effective problem-solving,” according to research published by Vicki W. Kramer, Alison M. Konrad, and Sumru Erkut in “Critical Mass on Corporate Boards: Why Three or More Women Enhance Governance.” Some participants in their research found that women are more likely than men to ask tough questions and demand answers that are direct and detailed. Women also bring new issues and perspectives, broaden the content of discussions by including the insights of multiple stakeholders.
The study found:
“The magic seems to occur when three or more women serve on a board together. Suddenly having women in the room becomes a normal state of affairs. No longer does any one woman represent the ‘woman’s point of view’ because the women express different views and often disagree with each other. Women start being treated as individuals with different personalities, styles, and interests. Women’s tendencies to be more collaborative, but also to be more active in asking questions and raising different issues, start to become the boardroom norm. We find that having three or more women on a board can create a critical mass where women are no longer seen as outsiders and are able to influence the content and process of board discussions more substantially.”
Why Does Gender Diversity Enhance Performance?
A study by Credit Suisse Research Institute, of 2,400 companies over six years, found that companies with at least some female board representation outperformed those with no women on the board in terms of share price performance. The study suggested these reasons why gender diversity has a positive impact:
- A signal of a Better Company
- Greater Effort Across the Board
- A Better Mix of Leadership Skills
- Access to a Wider Talent Pool
- A Better Reflection of the Consumer Decision Maker
- Improved Corporate Governance
Another landmark study for 2012 was recently published by the Committee for Economic Development,“Fulfilling the Promise: How More Women on Corporate Boards Would Make America and American Companies More Competitive” offers some of the reasons why boards don’t have more women. Of particular interest was that board nominating committees say that there are fewer women candidates to choose from, although that is not the case. They point to the organization WomenCorporateDirectors, with a membership of more than 1,350 who serve on over 1500 boards worldwide. They believe that nominating committees do not do enough to recruit women to their boards. While “little evidence of overt bias in selection” was found, many mentioned the tendency of individuals to associate with people like themselves, helping to explain the homogeneous makeup of many boards. They conclude that “nominating committees and search firms need to look harder and show better results.”
Organizations that are working to diversify corporate boards
How can you help encourage companies to diversify their boards?
- If you are a stockholder, communicate. Vote for women nominees. If there are no women on the company’s board, write to your Chairman of the Board and CEO and/or call the Investor Relations department. If you know other stockholders, ask them to do the same.
- Invest in and do business with companies that have women on their boards. See Fortune 500 Women Board Directors
- Talk to other women about doing all of the above
- Avoid investing in or doing business with companies that do not have women on their boards. See Fortune 500 Companies With Zero Women Directors
- Talk to other women about doing all of the above
How Corporations can get help identifying women board candidates.
Catalyst Corporate Board Resource connects CEO-sponsored women to board opportunities and gives CEOs opportunities to sponsor qualified women and access their directory of potential candidates.
Women enhance the performance of corporate boards and remain a significant minority of board membership in companies worldwide. While some countries have legislated quotas for corporate board diversity, the United States has not taken such action, although SEC reporting of gender diversity efforts is now required. Several organizations are working to ensure women are better represented and have effectively gathered statistics for measuring success. Among the challenges they face is the myth that the pool of qualified female candidates exists; it most certainly does and there are many ways corporations can access and share excellent information about potential candidates. Change is in the air, but the percentages of women on corporate boards is still unacceptable. A jump from the current 16% to at least 20% of the Fortune 500 board seats would be a vast improvement, but we have work to do to get there.