gender diversity on corporate boards – does it matter? dean’s distinguished speaker series...
TRANSCRIPT
Gender Diversity on Corporate
Boards – Does it Matter?
Dean’s Distinguished Speaker Series University of Auckland Business School
Professor Susan Vinnicombe OBE Cranfield School of Management
Female FTSE Index 1999 - 2008
Female FTSE 100 2008 1999
Female held directorships
131 (11.7%)
79 (6.9%)
Female Executive directorships
17 (4.8%)
13 (2.0%)
Female NEDs114
(14.9%)66
(10.8%)Women holding directorships 113 66
Changes in Board Composition
FTSE 100 Boards 2008 1999
Total FTSE 100 NEDs 763 610
Total FTSE 100 Executive Directorships 353 645
Total FTSE 100 Directorships 1116 1255
Critical Mass: Does the number of Women on a Corporate Board make a Difference?
(Erkut, Kramer and Konrad, 2008)
“Our results show that while individual women directors’ expertise and skills play a role in how much leadership theyexert on boards, they are more likely to be effective leaderson boards that have reached a critical mass or tipping point
of three women.”
Women in Top Roles
There’s been an increase in the number of women holding key positions in FTSE 100 companies:
• Five female CEOs• Two female Chairmen
Alliance Trust is the first FTSE 100 company to have both key positions of CEO and Chairman occupied by women.
Comparison of FTSE Listings
Index%age
Female Board
%age Snr Mgrs
No. Board
Directors
No. Snr Mgrs
FTSE 100 11.7% 12.1% 113 123
FTSE 250 7.0% 13.7% 122 200
FTSE smaller listings*
5.6% 12.76% 660 1217
* Includes FTSE AIM, SmallCap, Techmark100, Techmark All-share, Fledgling
30% – 60% graduate entry is female
30% of managers are female
18% of senior managers are female
14.9% of NEDs of FTSE 100are female
4.8% of Exec Directors of FTSE 100 are female
5 Female CEO FTSE 100
2008
13% Exec Committee Directors are female
Myths around Women and Boards
Myth 1
Women aren’t interested
In a study of women directors on FTSE 350 executive committees, 80% reported that they
would like to have a NED on a FTSE 100 corporate board
(Cranfield, 2008)
Myth 2
Women aren’t seen as having theright leadership style
Once women are appointed onto FTSE 100 boards, they are more likely to hold multiple directorships (14% as opposed to 12%)
(Cranfield, 2008)
Myths around Women and Boards
Myth 3
Women haven’t got the right experience
Male CEOs say there aren’t more women on boards because they lack general management experience and they haven’t been in the pipeline long enough
Female directors say there aren’t more women on boards because of male stereotyping
(Catalyst 1999)
Myths around Women and Boards
Work experience of new FTSE 100 directors 2001 - 2004
Male (n = 72)
Female (n = 72)
Financial Institutions
31.9% 44.4%
Management Consultancy
13.9% 27.8%
Accountant 20.8% 19.4%
Law 6.9% 15.3%
Political 4.2% 11.1%
Academia 5.6% 12.5%
Public Sector 18.1% 31.9%
Voluntary/Charity Sector
13.9% 22.2%
Other/Government 13.9% 23.6%
Previous Directorship Experience
Male (n = 72)
Female (n = 72)
FTSE100 41.7% 22.2%
FTSE101-350 12.5% 16.7%
Minor Board 38.9% 62.5%
Number of individuals appointed to FTSE 100 boards without FTSE 100 board experience
Females = 56Males = 363
Previous Directorship Experience
Myth 4
Women don’t take risksData
Women are more likely than men to be appointed onto corporate boards when the
companies share prices have fallen (Ryan and Haslam, 2005)
Myths around Women and Boards
• By 2010 just 20% of the workforce of the UK will be white, male and under 45. 80% of workforce growth will be among women. Women will form a significant part of the available talent pool. If we select our leaders from only half the population – waste of talent
• Females outperform males at every level of education
• 80% consumer decisions made by women
• Women own 48% Britain’s personal wealth and this will rise to 60% in 2025
• Companies with women on the board perform better financially (ROE) and have better corporate governance
• Better corporate decision making. The biggest difference shown by Canadian Research is in non-financial performance measures by boards with more women (e.g. innovation, CSR, employee satisfaction, customer satisfaction, communication, strategy implementation)
Why does it Matter that so Few Women make it to the Top
• Overall corporate financial status (e.g. in USA Pension Funds vet companies for investment in terms of presence of women on boards)
• Reputation as an employer of choice for women.• Increasingly scrutinised as a criterion in the procurement of
projects
• In a meta analysis of leadership studies in USA in 2002, concluded that women have more transformational leadership styles than men and these styles are connected with a greater effectiveness
• Contributions to corporate women employees in terms of mentors, role models, female retention and better understanding of issues facing women at work
Why does it Matter that so FewWomen make it to the Top
Pipeline to FTSE 100 Boards
139 women on FTSE 100Executive committees
142 women FTSE 250 Execand non Exec. directorships
200 women FTSE 250Exec. committees
Bottleneck, not a Glass Ceiling
149 new directorships 2008in FTSE 100 boards
481 Female Directorshipsin FTSE 350
PlusWomen directors in:- Public sector- Voluntary sector- Unquoted companies- Private equity
Women entrepreneurs
The Way Forward?
TalentedWomen in the Pool
SearchConsultants
Chairmen keen toappoint high quality
women to their boards
1. All directorships in the private sector be advertised (as occurs in the public sector).
2. Long lists for director appointments reflect an aspirational target of 30% female candidates.
3. Search consultants be more proactive in building relationships with potential female NEDs.
4. Companies set gender targets and report on progress in annual reports, including setting and monitoring of KPIs at each level of the pipeline.
5. Consideration be given to female candidates for new board positions in recapitalised banks.
Recommendations from Female FTSE Report