Gender Diversity on Corporate Boards – Does it Matter? Dean’s Distinguished Speaker Series University of Auckland Business School Professor Susan Vinnicombe.

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

• Profile of FTSE 100 boards

• Myths of women and boards

• Why does it matter?

• What can we do?

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

Multiple Women on Boards

22 all-male boards

39 boards with multiple women

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

New Appointee Pipeline…

149 new appointees to FTSE 100 boards

Only 16 (10.7%) went to women

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

“Frankly, Dinsdale, we like the look of you”

Homosocial Reproduction -Can women ever get past this?

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

Key Change Makers

Chairmen

CEOs

Women Directors

Search Consultants

Government

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