14 Jan 2013  Research & Ideas

Few Women on Boards: Is There a Fix?

Women hold only 14 percent of the board seats at S&P 1500 companies. Why is that, and what—if anything—should business leaders and policymakers do about the gender disparity? Research by Professor Boris Groysberg and colleagues shows that male and female board members have very different takes on the issue.

 

Nobody questions that there's whopping gender imbalance in today's boardrooms, despite ample evidence that it makes financial sense to put women on the board. Companies with female board representation routinely outperform those with no women on the board, per a recent study by the Credit Suisse Research Institute. Yet in 2012, women held only 14 percent of the board seats at companies on the S&P Composite 1500 Index, according to Ernst & Young.

"Diversity is about counting the numbers; inclusiveness is about making the numbers count."

The question is what should leaders do about the asymmetry. Should they take the lead from Norway, for example, which in 2003 mandated a 40 percent quota for female board participation? Should they use shame tactics like in Finland, which requires companies without women on their boards to disclose the reasons in their annual reports? Or should they do like the United States—and leave the issue alone?

The answer may lie in determining when, why, and how businesses can thrive by balancing their boards, says Harvard Business School Professor Boris Groysberg, whose research on drivers of individual and organizational performance now incorporates a focus on gender issues. His studies include a comprehensive global survey of board members, as well as a series of case studies that approach the issue of women on boards from an individual, an organizational, and a country level. This year, Groysberg will begin teaching a new elective MBA course, How Star Women Succeed: Leading Effective Careers and Organizations.

"There is a big difference between diversity and inclusiveness," Groysberg says. "Diversity is about counting the numbers; inclusiveness is about making the numbers count. Whether it's about individuals or companies or countries, the conversation has to shift from talking about whether diversity affects performance to talking about the conditions under which you'd expect diversity to have a positive effect on performance."

 

Women's 50th

Events

Women's 50th

This article is part of a continuing series on faculty research and teaching commemorating the 50th anniversary of the first women to enter Harvard Business School's two-year MBA program.

 

Differing takes on quotas

Last year Groysberg teamed up with researcher Deborah Bell on a comprehensive survey of corporate directors around the world. Facilitated by Heidrick & Struggles and WomenCorporateDirectors (WCD), the survey compiled anonymous input from 1,067 directors in some 58 countries.

The researchers were surprised at the extent of similarity in the majority of responses related to economics and politics, not only between men and women but among different nationalities as well. For example, the vast majority of men (69 percent) and women (71 percent) reported the economic recession to be their top political concern as a corporate director, as did most US (68 percent) and non-US (70 percent) respondents. Regulatory pressures topped the list of strategic challenges for women (42 percent) and men (45 percent), as well as US (45 percent) and non-US (42 percent) respondents. Social media topped the list of technology adoption priorities across the board.

"It was almost as if the respondents had one voice," Groysberg says. "We truly felt that we were in a global economy."

But the male/female responses regarding gender diversity were less harmonious. Asked whether quotas (like Norway's) are a positive or a negative for corporate boardrooms, 42 percent of women were pro-quota, versus 16 percent of men. Regarding whether quotas are an effective tool for increasing boardroom diversity, 51 percent of women answered yes, versus 25 percent of men.

"Lack of women in executive ranks" topped the list of reasons that men believe the percentage of women on boards has remained fairly stagnant over the past decade. The primary reason according to women: "Traditional networks tend to be male-oriented."

"The men's point of view was basically, look, this wouldn't be such a problem if we had qualified women to pick from," Groysberg says. "Female board members talked about male-dominated board chairs, nominating committees, and leadership groups. They reported that we have more than enough female leaders from whom to choose for our boards."

Research tends to agree with the women on this one. In a recent assessment of US boards, Groysberg and Bell discovered that female board members actually had far more operational experience on their résumés than male board members, on average. They also found that the majority of female board members reported having actively sought their board seats. The same was not true of male board members.

"Many of the women who sit on boards are referred to as survivors."

"The fact is that if you're a woman you really have to try to get on boards," Groysberg says. "There aren't too many corporate board seats that open up each year. We're not talking about millions. We're not even talking about thousands. Please. Don't tell me you can't find 100 qualified women to sit on boards in the United States of America."

Furthermore, the personal stakes of sitting on a board are statistically higher for women than for men. For example, 90 percent of male board members are married, versus 72 percent of female members, and 90 percent of the men have children, versus 64 percent of the women. The divorce rate among women on boards is 10 percent, versus 4 percent for men. "So if you're a woman seeking a board seat, you have to be overqualified, and on top of that it's really hard to get in, and on top of that, once you get in there are personal costs," Groysberg says. "It's why many of the women who sit on boards are referred to as survivors."

Liberté, égalité, sororité

Groysberg plans to tackle boardroom gender disparity in How Star Women Succeed. "We'll start by asking why do we want to have a diverse board," he says. "Is it about fairness? Is it about better decision-making? Is it about access?"

In the first section of the course, students will explore the career path of one woman, including her experiences as the sole female member of a firm's board of directors. Next, the class takes on the dilemmas of a company tasked with choosing a diverse, qualified board from scratch.

The third section will include the case Liberté, Egalité, Sororité: How Should France Achieve Boardroom Parité?, authored by Groysberg and Hilary Fischer-Groban. The case discusses how French legislators pondered a bill, proposed in 2009, that would mandate businesses to have women in 40 percent of board seats by 2015. (In 2009, the case explains, only 7.6 percent of France's board members were women.)

The case walks students through four possible governmental approaches to tackling gender disparity in the boardroom:

  • enforcing a strictly mandated quota (as in Norway and Iceland)
  • establishing policy in which companies without women on their boards would have to explain why not (á la Finland)
  • providing governmental incentives to promote women in the workplace, such as paternity leave and tax cuts for childcare (as in Sweden)
  • doing pretty much nothing about it (per the United States)

It was a strategic course decision for Groysberg to introduce the issue of women on boards at an individual level, then the organizational level, and finally the country level.

"If students can feel the pain of the individual, if they can see the struggle of organizations, and if they can explore the challenges that countries face, they'll be able to have a comprehensive view of this issue."

About the author

Carmen Nobel is senior editor of Harvard Business School Working Knowledge.

Comments

    • Donna Shavlik
    • Principal, The Timberline Group

    Many of us who have been promoting women's leadership as a matter of equity, but also as a matter of quality in our social organizations, celebrate this project of the Harvard Business School admitting women to the program. I loved the quote: "Diversity is about counting numbers; Inclusiveness is about making the numbers count." Everyone who believes in the importance of women's (in all their diversity) full participation in public life has a personal responsibility to see that we change the meager representation of women on boards. I challenge everyone to ask questions about this, to support companies, governmental organizations, educational organizations and all other public entities that have and seek women for leadership positions. The value of inclusion to everyone is clear, and now is the time to make certain that women take their rightful leadership positions. The last choice--do nothing like in the US--is unacceptable. Thanks for this article.

     
     
     
    • Stephen Honig
    • Partner, DuaneMorris LLP

    I have not read underlying data but, facially, the section on the personal cost of female board membership seems weak. The numbers go to just that, numbers; testing for causation is another matter entirely. And, perhaps a cohort of similar women who are NOT on boards have even "worse" statistics than those who do sit. Decades of working with boards, membership on the NACD-New England board, and service on an advisory board at the Simmons MBA program, all lead me to believe that while the gross statistic is properly identified, its causation and hence an intelligent approach to remediation is by no means clear. It may be that causation dwells in some basic prejudices that people who discuss issues like this would prefer not be surfaced, in the smug hope that the root cause could not possibly be so unpleasant.

     
     
     
    • Ruth
    • Owner/Principal, Winett Associates

    Professor Groysberg's research confirms what I have noticed while researching companies for my business. Some companies have no female board members and no female executives. What kind of message does this give to employees, prospective employees, and the public in general?

    The situation is self-perpetuating. Many women will think that a company that has a male-dominated board and executive team is not a good place to work. They will not apply for a job at this company and won't be in line to become an executive in the future.

     
     
     
    • Maria Dixon
    • President, WISTA-UK

    Good evening to all! WISTA is the Women's International Shipping & Trading Association We are over 1,500 members in 34 countries. WISTA started in UK in 1974, by a group of female brokers in the tanker industry. I have been a member of WISTA for 21 years.

    We could go on and on the pros and cons of diversity and how it has been dealt with in the past; however, I will try to be positive. Women are gradually been accepted in the so called male dominated business world; however, it is up to us to demonstrate we are good professionals.

    In the past, many of the executive or non-executive board members were appointed following the "old boy's club" fashion, but all is changing nowadays; however, we must mention that salaries difference are also notorious. Men are still better paid than women for the same job.

    In 2009, WISTA-UK run a Grand Debate about "quotas" at the annual conference in London; showing mixed reactions, but the majority of nearly 800 persons (mixed female and male audience), voted to give quotas an equilibrium of a 50% chances to both genders.

    Thanks for writing about this topic. Visit wista-uk.co.uk for the press releases or contact me if you need information or to direct you to your national wista group.

    Maria Dixon - President of WISTA-UK & Managing Director of ISM Shipping Solutions - London, England

     
     
     
    • Hugh Quick
    • home, none

    I hope your research has asked how many women want to serve on Boards

     
     
     
    • Anonymous

    I think there was a very good observation in the beginning - the difference between "inclusiveness" and "diversity". There's a thin line between the two - somewhere along the path each of them reinforce the other, but at other times they become a statistic to prove our commitment to the rest (without standing by it).

    In fact I run a small part of my organization's business with nearly a 1000 people in the services space and serving customers globally.

    There was an interesting finding as we researched the data (along with some of my lady managers). We started off with hiring college grads in equali ratio - literally 50:50 (and we do hire quite a lot of them every year). But as we measure the ratio of men to women as we moved levels - we found it steadily decline 60:40; 70:30; 80:20; 90:10... It was a big surprise when I saw the data.

    We tried to look at the duration that people spent in each level; the appraisal rating patterns; differences between people working for a lady manager compared to a man manager; the age patterns of the men and women at various of the levels. We could not find anything that would statistically prove a bias. If any there was a marginal tilt towards women at some of the levels.

    This made it even more perplexing. In fact given that the average women would take about 8 - 9 months of break for maternity, I was surprised with the above findings.

    So still trying to figure out, how to look at it. I have a reasonable hunch that there's a role society (and expectations from women about managing the home) are playing a role in the majority of the cases.

    So I think this is an area - where we really need to work and understand how can we be "inclusive". What's the true measure of "inclusiveness"?

     
     
     
    • Anonymous

    Very good article, and I also loved the quote: "Diversity is about counting numbers; Inclusiveness is about making the numbers count." I've read there is a "tipping point" of about 30% when women/minorities stop being tokens and can show diversity within gender as well as among genders. To me, that also argues that quotas to overcome the "comfort" factor may be needed to start to gender balance boards and achieve beneficial results.

     
     
     
    • Rita Izaguirre

    As a HR compliance practitioner I've said many times we should not count heads but make heads count. Gallup's research indicates that inclusion creates engagement, which in turn results in higher profits and increased retention. If, beyond lip service, organizations believe that women's leadership tendencies are more likely to engage employees while staying focused on results and that women create the right conditions for businesses to thrive, we have a compelling argument to add more women to all levels in organizations, including boards!

    Professor Groysberg keep doing what you're doing. Whether we like it or not, we do need more male voices like yours and Stephen Honig's to surface the root cause, as ugly as it may be.

     
     
     
    • Nancy Slabine
    • Principal, BoldMoves Consulting

    Excellent article. Examining the the effficacy of these alternative policy choices would be very helpful in determining how to move this country's gender equity forward.

     
     
     
    • John Taabavi
    • CEO, J&J CONSULT

    This topic is of concern to African Governments as gender activist advocate for female appointments to higher offices.Is it possible to research the African situation and make the findings available?

     
     
     
    • Helen Forlani
    • Non-Executive Board member

    Of course there is a fix, but it is not a question of fixing women, but fixing the men in executive positions. Once the men realise that : 1/ more than half of the consumers are women, 2/ that women are making about 80% of the spending decisions in a household, 3/ that they do change consumer habits, 4/ that working together they challenge and innovate decision making 5/ and that they need to help women conciliate work and family, because maternity is not an illness,

    Women may just get promoted to that executive position to move towards a board member. Society needs to understand, that the working environment needs to evolve and adapt to accommodate for change.

    Women when they do reach the top position, must not be compared to men, Women are different, but THAT is diversity, which brings richness to the working environment. Thank you for the article.

     
     
     
    • Kapil Kumar Sopory
    • Company Secretary, SMEC(India) Private Limited

    Despite the organisational capability of women who are generally more loyal, focused and productive, they still occupy a back seat as far as higher positions such as on the boards are concerned. There is a misnomer that women are less resilient and not able to shoulder certain resposibilities. We have examples all around thar women do equally well if not better. A company with no woman on the board gives a gender-biased impression. There needs to be a variety in the board to arrive at proper decisions on female-centric HR issues. Yes, females are not comfortable to apply for jobs in a company with few female seniors and this trend is not in the interest of any company as a large available talent gets ignored.

     
     
     
    • Deborah O'Donnell
    • H.S. Teacher, Calif. State Prison

    I have worked for the state for 12 years. I was told the state encourages individuals to promote. My experiences were that the principal I worked with only chose men who were republicans, and Christians. If you were not in these groups you were out. I was made the brunt of jokes, accused of being emotional, and was not given educational leave to finish my masters degree. It is an uphill battle. Even if a woman is more qualified, if her manners and looks don't qualify her, she ends up being pushed out.

     
     
     
    • Tuhina Chatterjee
    • Project Associate, IDF-OI

    very interesting and quite agreeable distinction made between diversity and inclusion. The basic cases/models identified have been - 1) Quota 2) Providing an explanation , thus a physiological mode 3) Incentives 4) No particular/specific effort. However in term of approaches i am quite curious to learn if there is any 'enabling' model, which develops strategies within the organization to enable/empower women to rise up to leadership positions. These 'strategies' could be a comprehensive series of initiatives designed across levels of management to bring about 'inclusiveness' at all levels.

     
     
     
    • Anonymous

    Men in traditional male-oriented businesses (e.g., engineering, manufacturing, et cetera) will never allow women to lead unless forced to do so. Period.

     
     
     
    • Anonymous
    • Head of HR

    I totally agree with Helen's comment: women and men ARE different, and should remain like that. As a woman in a top position, my feeling is that we have to educate our companies (and the men) about this difference. We need to learn how to integrate our personal and professional lives - and this is OUR challenge. The board seat looks too far away once we are still juggling to "survive" the next steps. But I'm an optimistic, I believe we do add a different perspective and that we will see a positive shift in the near future - this is what I'm working for. Groysberg, I wish success in your course.

     
     
     
    • Sandra Currie
    • Retired

    The issue that rarely gets addressed is the one of male culture, and how offensive it is to many women. Of course, the decisions would be better with the input of women - we are more reality based and results oriented. Since we have always had to take responsibility for our decisions, they are better decisions. And men will have to start pulling their weight in the home.