Posturing about the balance between men and women on company Boards continues. The European Union is taking the matter seriously at last. The European Parliament is pressing ahead, with proposals which might become law, to enforce a 40% quota for female non-executive directors on the Boards of large companies. Its aim is to improve the corporate governance of those organizations through the gender balance of senior leadership.
EY recently produced a helpful report which supports diversity in Board membership. However, the report is largely configured with pictures of men towering over women, which is unfortunate in the self-selected context being examined which is partly designed to highlight the gender issue and the importance of women on Boards.
Diversity is seen, among other issues, in terms of differences in age, background, ethnicity, nationality, professional experience, training and gender.
The EY report published in 2014 and entitled ‘Time for Diversity. Accelerating performance in corporate boardrooms’ hits a home run in relation to the argument for additional diversity. The report recommends Board Chairs become more proactive to:
- Set the right tone at the top by creating a boardroom environment where different perspectives are encouraged and valued. Ensure that all board members understand the business case for accelerating diversity.
- Start preparing for the introduction of quotas now to avoid a skills shortage later. Companies in male-dominated industries and those with a background in private equity will need to put in extra effort immediately.
- Take caution from Norway’s example — women should avoid leaving line-management positions early to join boards. It can be counterproductive in the long run if board candidates leave their jobs before they reach their potential.
- Broaden board recruitment processes to include entrepreneurs and individuals who have board experience not necessarily acquired with listed companies.
The Norwegian experience seems rather parochial and unhelpful juxtaposing discussion about ‘golden skirts’ and ‘golden suits’, and what talent men and women can bring to the table, with a recommendation that women should not rush or be rushed in to Board positions.
Boards in many countries are composed of a healthy mix of executive and non-executive directorships, often backed by legal requirements designed to counter the potential short run perspective of the Chief Executive Officer and those on the Board tempted to focus on short term operations.
Women should not be held back. Additional women non-executive directors on Boards can assist with: monitoring the performance of the management team, corporate governance, risk management, financial controls, succession planning and remuneration.
Women may also add to decisions of boards in other ways – which Kate Christ and Roger Burritt are examining, as noted in a recent publication on ‘Women’s role in corporate sustainability’.
For further information contact either Kate Christ or Roger Burritt.
Roger Burritt 