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More Women on Boards: A Great Goal, But....

Last year, men held 73 percent of the board seats in Fortune 100 companies. That is up from 71 percent the previous year. So the number of women in boardrooms is declining. And depressing.

In the U.K. where women represent just 12.5% of non-executive directors, there is a movement afoot to do something about it. Headhunters recently announced a pledge that at least 30% of candidates for potential board slots at FTSE 350 companies will be female. This follows an earlier government report by Lord Davies, the former business minister, which recommended that UK firms aim to have 25% female representation.

Before I explain why I think these efforts--though well-intentioned--are flawed, let's examine the business case for changing the status quo.

Advocates for increasing the numbers of women directors usually offer one or more of these reasons:

  • A wider range of experience, perspective and life experience can identify more issues and surface a wider range of solutions.
  • Diversity is a vital bulwark against the kind of groupthink that has wrecked banks and any number of corporations from Enron to News Corporation.
  • Women represent the majority of consumers (now in both consumer and business-to-business purchasing) and as such are closer to the market.
  • And some experts will even argue that the presence of women in management and boardrooms boosts shareholder value.
Wired to Discriminate
The fact that none of these well-reasoned arguments have changed the status quo is a testament to the intransigence of bias. We are all biased - in favor of people like ourselves. As I recount in my book, Willful Blindness, there's a sound neurological reason why this is so. But the fact that we are hardwired to be biased is all the more reason why companies need deliberate processes to make boards more diverse. Without such initiatives, there won't--and isn't--change.

How the UK Initiatives Fall Short
So the UK initiatives are an attempt to create a process to challenge bias--which is a good thing. But they're bad and liable to backfire because neither imagines the possibility of gender parity. As such, they implicitly sanction a world in which women remain outsiders.

It's nice that the headhunters are committed to support women through the selection process - but that still suggests that the problem lies with the women -- when it could be the men who need help to see beyond their own biases. Neither initiative is really prepared to argue for very much change.

At risk of annoying people on all sides of this issue, I must point out some awkward truths:

  1. There may be a correlation between financial performance and the presence of women, but there certainly is not hard evidence that the one is driving the other. There just isn't one simple direct driver of share price, and business is not an arena in which controlled experiments are possible.
  2. Some powerful men still think that women are a bad bet because women have babies. Some, like the chairman of Glencore, the world's largest commodities firm, more or less say this aloud; others just think it. In any case, it's just nonsense. Having more mouths to feed does not make women less serious about their careers.
  3. And these days, most Dads want to know their children while they still are children.
  4. That means the days of myopic executives who cared only about working for the man are over.
  5. Gaining the expertise and track record to qualify as a non-executive director is tough and needs to be - but for men and women alike. The cozy boards of friends and family ought to be anachronisms but they aren't. Selection needs to be rigorous - but for everyone. And there are good business reasons for an independent board.
  6. The idea that caring about your children detracts from your performance at work is feudal. Emotional intelligence, connection with the real world and the emerging generation help build leaders. Vibrant sustainable businesses need employees to bring their whole selves to work, not leave part of themselves at home.
  7. The argument that everything in the business world is fine - why tinker with what's working? - may have been persuasive once. But these days, it is looking increasingly vulnerable and out of touch. It wouldn't be so terrible to do the right thing occasionally for no other reason than to demonstrate that companies can. It does not strike me that the biggest problem businesses face these days is an excess of moral rectitude.
Accepting these awkward truths might mean we can finally see some real, meaningful change. What would that require?
  • Candidate lists should have at least 50% female candidates - or more. After all, there's a shortfall to make up.
  • A wider ranger of educational and ethnic backgrounds
  • A wider representation of generations.
  • Term limits for board members. These should not be jobs for life if you want to keep the conversations and debates fresh and lively.
  • That would also mean that provoking conflict doesn't jeopardize board tenure because that isn't on offer. It might also make Chairmen more adventurous when it comes to appointments.
  • Stiffer requirements around board attendance, committee participation and in-depth understanding of company operations. Boards should not be social clubs.
There's nothing about corporate governance that should give any Chair a sense of comfort or complacency. At a time when many corporations teeter on the edge of being too complex to manage, anything less than rigorous and consistent attempts to improve board performance looks like shirking.

Further Reading
Are You Biased?
Male Stereotypes
Female Stereotypes