The WHY of women on boards

Should there or should their not be quotas for women on the board? It seems to be a ever present question for legislators around Europe and now it has surfaced again in the UK. Here a UK government-backed panel has investigated the role investors can play in boosting the number of women on company boards. The panel, headed by former Standard Chartered Chairman Lord Davies, has recommended that FTSE100 listed companies should be aiming for a minimum of 25% female board member representation by 2015 – although it stopped short of advocating strict quotas. However, they fail to answer a vital question that is essential for both the women and the organizations that they could be leading, namely – Why?

There is plenty of evidence to suggest what impact that gender have on organizations but it seems that this research is to a large extend ignored by organizational executive managers and governments alike. Normally we would like to think that our leaders are relative rational in their decision-making processes but it would seem that when it comes to gender it is all about how you feel.   

In my own research have looked into this subject and I have found plenty of evidence that would suggest that organization can benefit from taking a gender perspective on their performance. In this context they question of why it would seem to me is of the utmost importance.

So when the Financial Reporting Council is called upon to amend the Corporate Governance Code and to require listed companies to establish a policy concerning boardroom diversity it is more a “feel good” amendment than anything else. This is highlighted by the recommendation that firms should periodically advertise non-executive board positions to encourage greater diversity in applications again not confronting the ever present question of – Why?

The Davies report says that the “The Financial Reporting Council should amend the UK Corporate Governance Code to require listed companies to establish a policy concerning boardroom diversity, including measurable objectives for implementing the policy, and disclose annually a summary of the policy and the progress made in achieving the objectives” and that investors should pay close attention to its recommendations when considering re-appointments to a company board. “Investors play a critical role in engaging with company boards.” This would indicate that investors have a clear interest in more boardroom diversity but where is the evidence?

So because the board and executive managers can’t come up with any good reasons why women should be on the board we should leave it to activist shareholders to implement change? I don’t want to sound to bitter but it is a bleak picture that is being drawn out there and I know we can do better than this.

Furthermore the review states that “A separate section of the annual report should describe the work of the nomination committee, including the process it has used in relation to board appointments. Chairmen should disclose meaningful information about the company’s appointment process and how it addresses diversity in the company’s annual report including a description of the search and nominations process.” So now companies have to disclose meaningful information about themselves this is truly innovative and new (a hint of sarcasm can be inserted here). That they would even commit these words to papers seems beyond reason.

One good thing about the review is that it calls for full disclosure of the number of women on boards and in companies as a whole. This information can be used by researchers and opinion makers to move the debate from the arena of feelings and “feel good” statements to facts and science.

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