Despite some gains and evidence of financial benefits, women who serve on listed company boards say sentiment towards them is driven more by the need for compliance than by a genuine wish for them to make a contribution.
The results of a recent survey facilitated last year by Professor Boris Groysberg of the Harvard Business School and the global membership organisation Women Corporate Directors, confirm that women are not only underrepresented on corporate boards, but that behaviour toward them and their contributions still shows evidence of crude stereotyping. They say that men are presumed to be competent and in touch with the business issues, but women continually have to prove themselves and work on their credibility to be taken seriously. They also say that when a woman expresses an opinion it needs a male board member to say the same thing and to validate it before the board pays proper attention.
Women are assumed to be better at the “soft issues” and are less likely to be appointed to the more powerful sub-committee positions, such as the chairman of the audit committee or the remuneration committee, than their male counterparts.
Despite being undermined in this way, there is increasing evidence that when women are on boards the company performs better and there are significant financial benefits. The Research Institute of Swiss banking group Credit Suisse surveyed the share price and overall performance of more than 2,400 companies from 2005 over a period of six years and found that companies with at least some female board representation outperformed those with no women on the board. Large-cap stocks performed more than 26% better.
Net income growth for companies with women on their boards averaged 14% compared to 10% for those with no female director. Boards with female directors had a lower debt-equity ratio, and repaid their debt more quickly. They also managed risk more effectively.
With so much compelling evidence one would have thought that the issue would be a no-brainer. And yet we are nowhere near the ratio advocated by President Jacob Zuma in his speech at the United Nations last year, where he said that new legislation scheduled for 2013 would be the Gender Equity Bill whose objective will be full, 50/50 gender equality across government, public and private sectors. He referred proudly to the fact that South Africa is rated fifth highest in the world, behind Norway, Sweden, Finland and the US, for women on corporate boards.
With quotas for South African boards to be legislated the drive to be compliant will be strong. The question, however, will be whether this will change behaviour towards women. In the Harvard and Women Corporate Director study women are quoted as saying “the primary reason that the percentage of women on boards is not increasing stems from the fact that traditional networks are male dominated.” This suggests that female directors see a real need to gain access to “the kinds of networks that men have historically enjoyed if women are to make gains in the boardroom.”
While feminists may find such male-imitating opinions to be offensive, the question remains: as women increasingly settle into board roles will men adapt to their presence and acknowledge their significant contribution? Will men change their own behaviour?
The wider issue is whether this kind of discriminating behaviour by men,reported strongly by women, constitutes a subtle but insidious form of female abuse?Are there particular sectors of the economy where this is more prevalent?
With so much turmoil in the mining sector and so many questions about the governance of mining houses, Bloomberg notes that “mining lags behind every other industry including oil and gas in terms of gender diversity with women occupying just 5% of board positions.” It also notes that “Of the seven companies of the UKs benchmark FTSE 100 index with all-male boards five are miners. Four of the five biggest mining companies trade out of London.”
“If I chaired an all-male board I would set about getting some women on it straight away,” said Sir Mark Moody-Stuart, the chairman of Anglo American who appointed Cynthia Carol to her position as CEO.
The Credit Suisse study shows that women are more likely to serve on boards where the company operates closer to the consumer. The further away from a direct involvement with consumers the less likely the board is to appoint women. This tit-bit again confirms by stereotype that women do a better job when the business is in the consumer industry. The question is: shouldn’t the heavy industrial and mining companies pay serious attention to the fact that it is women who manage risk more effectively and are more likely to speak out on issues such as corruption, collusion or unfair labour practices? It is women who ask the difficult questions and are not afraid to break ranks. And would that not have done some good, for example, in the construction industry when the big projects were being shared out anti-competitively? DM
Johann Redelinghuys is a partner at Heidrick & Struggles the international leadership consulting business, which bought the firm Redelinghuys & Partners of which he was the founder. He has been deeply involved in career management and executive search all his life. He is the chairman of the South African company and now heads up its board practice working with chairmen and CEOs focussed on CEO succession, strategic leadership review and board evaluation.
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