Women needed on boards and research shows
mix teams are more innovative, effective
I HAVE been following
the Barclays scandal in the United Kingdom and the Parliamentary cross
examination of Bob Diamond, the ex-CEO, and Marcus Agius, the chairman. What is
crystal clear is the MPs (members of parliament) are challenging both men for
their failure to ensure the right “Tone at the Top” and the right culture
throughout the organisation or to put it another way, they are being asked to account
for the apparent lack of righteousness in Barclays “on their watch.”
What struck me was the
best questions were asked by a lady MP: precise, detailed and to the point.
They also were the ones that exposed most clearly problems of process not just
in Barclays but perhaps also in the regulators. The other fact to strike me as
I was watching was that when she was given unsatisfactory answers, she was very
polite, but did not let go; she returned to the issues she was concerned about
effectively. No member of the parliamentary committee was better than her at
pinning the Barclays CEO and chairman down; and at making the deputy governor
of the Bank of England uncomfortable.
I cite her as an example
because research from Norway suggests this is something women are particularly
good at. To quote a Norwegian company chairman: “Women are more interested in
getting the facts. Much more prepared; ask many more questions. Men tend to shoot
from the hip.
Women on boards are also
more interested in how the organisation will actually work. Think of an
acquisition or a re-org to take a company more global. When women are in the
discussion, they ask questions like: “Don't just show me the Powerpoint. Who
are these people? What are their responsibilities?” Matrix type questions.
Women tend to see the organisation as more of a living thing. Not surprisingly,
that was exactly what she was doing.
Not afraid'
Research in other
countries suggests women on boards are not afraid of asking so-called “silly
questions” for clarification and they are not afraid to say: “I don't
understand” and to say it again when the explanation given remains
unsatisfactory (as was the case with the Barclays testimony). Men on the other
hand seem to find it much harder to do this because of a fear of loss of face
and of harming their relationships with the other board members with whom they
socialise and play golf.
Again research suggests
that by having women on the board who are not afraid to do this gives men the
“permission” to admit they do not understand either and to then ask the awkward
questions they were uncomfortable asking.
Diversity
This difference between
men and women is the result of social dynamics and groupthink. As Ansgar
Gabrielson, Norway's Minister of Trade said in 2001 when he made it mandatory
to have 40% of the board consist of women: “I am not a feminist. I am a conservative.
I am practical, rational and I want Norway to flourish. This is about
shareholders rights. This change gives shareholders more choice about a key
element in value creation in a company, diversity Too many boards have seven,
nine, 11 people who are made in the same factory, very often with the same
education, very often in the same year. They go sailing, boar hunting and
fishing together. They dine in the same restaurant. They are very alike. I
believe in the opposite. It is important that people think their own, different
thoughts, and get to say what is needed, not what is wanted.” So he put women
on boards, because they did not go sailing, hunting and fishing together.
Research findings
Finally there is the
business case. Research from different sources on four different dimensions
suggests companies with better gender balance do better:
● Return on equity (ROE).
Companies with at least 25% women in their senior leadership team make 35%
higher ROE (Catalyst Research);
● Ranking: Companies with
at least 25% women in senior leadership team are consistently in the top
quartile of their peer group (McKinsey);
● Innovation and
effectiveness. Teams that are of exactly 50:50 male/female mix achieve
substantially higher results in terms of both innovation and effectiveness
(London Business School)
● Earnings: From 2000 to
2009, women-managed hedge funds earned an average of 9% while a composite Hedge
Fund Research (HFR) index averaged only 6%. During the downturn of 2008, while
the HFR composite dropped 19%, funds managed by women declined on average by
less than 10%. (Hedge Fund Research Inc.)
So what is stopping
women getting on boards? Many women choose not to go onto boards because they
have to balance more responsibilities than men at work and home; or because
they do not like the role models they see on boards. Many men have a vested
interest in keeping women off boards after all they are going to take their
places. Until we work out “what is in it for the men” who will have to give up
their places to the women coming onto their boards, we will need targets and
maybe even temporary quotas, because insufficient progress will have been made
because of vested interests keeping women off boards. That said, it is our
responsibility to ensure women who get onto boards by 2016 are at least as good
as the men. Then the doubters will be silenced.
Source : The Star
Date : 20 July 2012
afternoon
highlight (20/07/12/128/602)
