Thursday, November 29, 2012

Future Board Rooms


Blink:
I have always been a strong supporter of gender equality as evident by my years as a volunteer for the WFF (Women’s Foodservice Forum) in my industry.  The United States is slowly making progress.  However, will more women on boards truly make a difference in how companies operate?

Read On:
According to Catalyst, a nonprofit organization focused on furthering women in business, the average number of women on a board in a Fortune 500 company in the United States is only 16 percent – fourth highest in the world.  Detailed below are the top six countries:

Country
Percent of Women on Boards
Norway**
40.1
Sweden
27.0
Finland
25.0
United States
16.0
Great Britain
15.0
Germany
11.2

**Note: Norway passed a law in 2003 to ensure that 40 percent of directors for all public companies were women.  The European Union Justice Commissioner is proposing to introduce a similar law within the year.

There is a long standing economic argument that boards with women have proven to be more competent at decision making, thus companies’ profits are higher and they are more humanely/co-operatively operated.  Numerous research studies have concluded men and women have different value systems.  Some research has directionally indicated that with the greater representation of women (e.g., orchestras) has led to improved long-term organizational performance.   A recent study conducted by Miriam Schwartz-Ziv found that boards with three or more female directors performed better, mainly because these boards tended to ask for twice the amount of information to make decisions that ultimately led to greater results.

While the E.U. is looking to install a quota system, it is still unclear what direction the United States is going to move forward.  Gender equality is our goal, but will it change the way we run our boards?  Will the women that are added to our boards come from the same schooling/business backgrounds as the men already in control?  Or will companies begin to recognize the true meaning of diversity and start selecting women who believe in experimenting, taking risks in order to break through the clutter and truly innovate.  Personally I believe that if we do not change the way our boards currently think and operate, even as more women join them, we will continue experiencing “group verdict” better known as “group think.”

Support gender equality, but more importantly, shake up your current board room.

4 comments:

  1. There have been a number of studies over the last decade or so measuring corporate performance for companies with women on their boards, and/or women executives. It was found that companies with women board members had overall better performance metrics than those without. Here is one reference: http://www.slate.com/blogs/moneybox/2012/07/31/companies_with_women_on_their_boards_perform_better.html
    As you state, the factors driving this this case are indeterminate, tho theories abound. Regardless, apparently you have nothing to lose by appointing women to your board (and everything to gain)!

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  2. Of course companies w/women board members perform better! Duh :)

    If we could give the child bearing to men, it would change drastically.

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  3. Diversity is good. From my perspective, it's diversity in the dimension of domain and function.

    Traditional boards focus far too much on operations, finance and governance. Most have come up through the ranks of accounting and finance.

    Start-up boards show an expansion of capacity in domains of innovation, marketing, and customer-centricity. Which is a start.

    However, look at GM's post-bailout board. There's little innovative guidance coming out of that board to ensure GM doesn't lose track of it's customer again..., too many car people will repeat the past.

    Once one focuses on diversity in domain guidance at the board level, (Less focus on "compensation committees, create an "innovation committee"...) I think we'll see other aspects of diversity, including gender, balance out naturally.

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  4. Hi Jim,

    I particularly like your statement that we shouldn't simply hire on visible diversity factors, but for more meaningful ones like divergent thinking, willingness to experiment and embrace failure, etc.

    I suspect one reason why companies with more women in their boards do better is because they need to prove their mettle in a field where very few women appear. That requires less groupthink attitudes and more willingness to encourage innovative thinking and appreciation of treating every moment as a learning opportunity.

    Interesting aside, a recent study revealed that universities which dropped visible minority quotas for admission actually saw both an increase in visible minority student populations and increase in overall student GPAs. In other words, a win on both ends.

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