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.
Several factors contribute to my sense of enthusiasm that progress – although slow – may be on the horizon. First, the discussion about equality never seems far from the news media’s spotlight and moments such as U.S. President Barack Obama’s inauguration address this week, in which he referred to equal pay for women, reiterates that sentiment at the highest level.
Second, the data and research supporting the business case for board diversity keeps growing, and it seems unfeasible that the corporate community will remain deaf to progress if it were to improve board effectiveness.
I’m not alone in my optimism. Helena Morrissey, chief executive officer of Newton Investment Management and founder of The 30% Club, a London-based organization that calls for better balanced boards and whose members include the chairmen of the some of the United Kingdom’s largest companies, feels the same.
“We’ve already seen considerable progress in the U.K.,” said Ms. Morrissey, who was named a 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 per cent of the FTSE 100’s new non-executive director appointments had gone to women.
“This is now seen as a real business issue, not ‘just’ a women’s issue,” she said. She believes her organization’s goal to have 30 per cent of U.K. board roles filled by women by 2015 is within reach.
A recent hard-hitting study focused on the impact gender-diverse boards offer shareholders. Miriam Schwartz-Ziv, an economist from Harvard and Northeastern universities, examined the boards of Israeli companies in which the government holds an equity stake, meaning appropriate representation by women is required by law.
In a detailed study of board meeting minutes, Ms. Schwartz-Ziv found that boards with at least three directors of each gender are more active, particularly when there is a critical mass of women. These boards were twice as likely to request further information and take action in difficult times, such as when companies are between chief executives. The study also found that companies with poor financial performance, and also have at least three female directors, are more likely to replace their CEO than boards that have fewer than three women.
These findings reinforce the notion that women on boards pack a serious punch and are not merely window dressing to satisfy a diversity requirement.
Another study, by Paul Dunn, associate professor of accounting at Ontario’s Brock University, followed an equal number of men and women appointed to a corporate board in Canada for the first time. In his 2012 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 found these women brought specialized skills, such as banking, law or accounting; or fell into the category of insider, meaning they were a current or former executive of a company in that field. In short, they provided necessary skills the boards may have been lacking.
Mr. Dunn believes the cracks in the boardroom gender barrier will keep widening, and notes that women now comprise about 50 per cent of his students. “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 said.
Such optimism, however, needs to be infused with a reality check and the numbers of women on corporate boards still appears stark. Women hold only 16.6 per cent of board seats in the United States, a figure that has moved only incrementally since 2008. In Canada, that number hovers below 14.5 per cent.
“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 Toronto-based Bhasin Consulting Inc., which emphasizes diversity and the advancement of women.
Yet Ms. Bhasin, who also teaches in the governance essentials program at University of Toronto’s Rotman School of Management, 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 importantly, men are stepping up to advocate for more diversity. Every bit of this will help,” Ms. Bhasin said.
Conversation alone will not push the needle on boardroom gender diversity but it is an important part of the process. The glass may only be only a quarter full, but it’s still progress.