Forget Blue Monday. I am still high on the potential of this new year and feel enthusiastic that 2013 will prove to be a turning point in the discussion of women’s advancement in business globally and board diversity, specifically.
Several aspects contribute to my sense of enthusiasm that progress – although slow – may be on the horizon. For one, the discussion over equality never seems far from the media’s glare and moments like President Obama’s inauguration address, where he referenced equal pay for women, reiterates that sentiment.
Secondly, the data and research supporting the business case for board diversity particularly keeps growing, and it seems unfeasible that the business community will remain deaf to progress if it impacts board effectiveness.
I’m not alone in my optimism. Helena Morrissey, CEO of Newton Investment Management and founder of The 30% Club, which calls for better balanced boards and whose members include the chairmen of the some of UK’s largest companies says she feels the same.
“We’ve already seen considerable progress in the UK,” said Ms. Morrissey, who received the Commander of the Order of the British Empire for championing the leadership of women in financial services last year. She noted that since March 1, 2012, 49 percent of the FTSE 100’s new non-executive director appointments have gone to women.
“This is now seen as a real business issue, not ‘just’ a women’s issue,” she observed and believes that their goal of 30 percent of UK board roles being filled by women by 2015 is within reach.
One recent study that I found to be particularly hard-hitting focused on the specific impact gender diverse boards wield to shareholders. Miriam Schwartz-Ziv, an economist from Harvard and Northeastern Universities, examined the boards of Israeli companies in which the government holds a significant equity state, requiring it by law to give appropriate representation to women.
In a detailed study of board meeting minutes, Ms. Schwartz-Ziv discovered that boards with at least three directors of each gender are more active, particularly when there is a critical mass of women directors. These boards remain twice as likely to request further information and take an initiative, especially during critical moments, such as when companies are between CEOs. Firms that suffer from poor financial performance, that also have at least three women directors, are more likely to replace their CEO.
This aspect importantly reinforces the notion that the women on these boards pack a serious punch and are not merely window dressing to satisfy a diversity requirement. Bolstering that perspective, Paul Dunn, associate professor of accounting at Brock University, followed an equal numbers of men and women appointed to a corporate board in Canada for the first time. In his study, he discovered that women were appointed to more committees – and more powerful ones — than their male counterparts.
Another of Mr. Dunn’s studies examined the attributes that the first women included on all male boards in Canada brought to the table. He discovered these women who managed to penetrate all-male boards brought specialized skills, such as banking, law or accounting or fell into the category of insider, meaning current or former executive. In short, they provided necessary skills these boards may have been lacking.
In observing his female students, which now compose about 50 percent of the class, Mr. Dunn believes that the cracks in the boardroom gender barrier will keep getting bigger.
“These are very bright women and there is no reason why they can’t be running their own corporations, never mind being on boards of corporate directors,” he added.
To be fair, this optimism needs to be infused with a reality check and the numbers of women on corporate boards appears stark. Women still only comprise 16.6 percent of board seats in the U.S., a number that has budged only incrementally since 2008. In Canada that number hovers under 14.5 percent.
“The data speaks for itself – women and professionals from ethno-cultural minority groups continue to be significantly underrepresented in almost every sector and industry on boards and in the C-Suite,” said Ritu Bhasin, principal of bhasin consulting inc., which emphasizes diversity and the advancement of women.
Yet, Ms. Bhasin, who also teaches in the Governance Essentials Program at the Rotman School of Management and Institute of Corporate Directors, remains optimistic.
“The dialogue is increasing and there are more initiatives in place to address the issue. We’re hearing more women be vocal about their concerns, but also important, men are stepping up to advocate for more diversity. Every bit of this will help,” asserted Ms. Bhasin. She adds that she regularly speaks with senior male leaders who are very vocal about the benefits of women on boards.
Conversation alone will not push the needle on boardroom gender diversity but it remains an important part of the development process. That tipping point may not fully materialize in 2013 and the glass may only be only a quarter full, but it’s still progress.