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.”
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.
|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.
|Published:||January 14, 2013|