Companies & Boards

 

Successful organisations address their governance as a serious matter. Abundant evidence shows that balanced governance bodies help deliver successful results. Balance is about differentiated experience, but also about demographic diversity in a globalizing consumer marketplace. In this section organisations that would like the latest evidence and methods for improving the diversity of their governance bodies will find testimonials and examples of how to make it happen. Research arguments for why it makes sense to go for gender diversified boards are abundant.


Why work on Gender Diversity ?

Why work on Gender Diversity

Better boards mean better business. Firms that capture the right talent and foster creative decision-making environments have a competitive advantage that generates business success.  Evidence shows that diversity on boards is a characteristic of the best companies. They perform better financially, are more innovative and have a better ear for their customer needs.  But how to argue for balance between men and women in your company? Here is a checklist of the major arguments for why companies should work to get more gender diversity on their boards:

Business Case/Bottom Line/Financial Impact

The most convincing argument for any business leader is the bottom line.

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Corporate Governance Performance

The recent shake ups in the financial world have put a spotlight on corporate governance and developed new training and expertise on governance.

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Corporate Social Responsibility

Companies who believe they have responsibilities to society and their communities need to take seriously the ways that they include different visions from society in their decision making.

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Changing (Legal) Environment

Since Norway introduced quotas for corporate boards in 2003, 20 of the EU 28 of the European Union have introduced measures to increase the participation of women on boards [European Commission DG Justice 2015].

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Shareholders and Investors

Increasingly investors express ethical concerns about the businesses they invest in and make demands on companies to reflect on their governance and practices in terms of the highest values.

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Reputation

Enhancing the presence of women at the top of a company, and publicizing this strengthens a firm’s reputation and customer pull.

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Tailored to Size: Arguments for SME’S

Most of the research about women on boards has focused on large firms, but many of the arguments about reputation, innovation and business results are equally relevant for small firms and their markets.

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How Can We Do It?

How Can We Do It

 

 

It is easy to be convinced that a more diverse board could add value to your business. Much harder is to achieve it. There are many crucial factors for success.  Here you will find examples of key success factors for ‘gendering’ decision-making bodies in your firm.


Policy Commitment

Policy Commitment

All studies of successful balancing of men and women in decision making at all levels identify the crucial factor of leadership and commitment. Official commitment, often combined with sanctions for non-performance, produces measurable change in the representation of women and ethnic minorities in leadership positions. It is only with committed leaders, who translate their vision into hard policy that change occurs. Leadership needs to be continuous so that action plans are monitored and evaluated.

A common belief is that ‘time’ alone will bring change. Most of the firms that have successfully brought women into the highest echelons did not wait for ‘time’ to do its work, but took committed action to identify leaders, search out talent and nurture it. They faced up to resistance and roadblocks in their companies. Such leaders make convincing public statements backed up by policy that links rewards to managers fostering women on their way to leadership. Without a commitment to changing gender balance from the top and the board itself, change may be merely cosmetic. Below find examples of leadership practice, and policies that enable companies to move towards more gender diverse boards.

“We need to give talented women more support through initiatives like coaching, greater exposure to the board, and providing the right preparation.”  Glenn Goovaerts, HR Country Head for Deutsche Bank in Belgium.

Role of Leadership

Often times a single change agent, a hero or heroine is held responsible for bringing gender diversity to the board, but bringing about sustainable change means that a critical mass of leaders must be convinced of the necessity of gender and diversity balance for the organisation’s well-being.

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Role of Formal Policies on Board Structure

A crucial step is a revision of the formal policies on appointments to boards.

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Recruitment

RECRUITMENT

Where are the women? A frequent excuse for the low representation of women on boards is that there are no women candidates. Companies can use a variety of strategies to address this. However, absolutely crucial is the realization that there are more than enough viable candidates. The recent experience in Norway shows that companies have found qualified women when they have been forced to look for them.

 

Questions companies need to ask:


What kind of directors and with what qualifications do we need? Can directors with experience from other domains be useful?


How do we look for board members? Using search organizations and directories can turn up unknown potential. For example: the organisations in European Women on Boards provide indexes of women who are ‘Board Ready’ but headhunting organisations also specialize in looking for innovative candidates.

Increasingly major consulting agencies such as Price, Waterhouse Cooper, McKinsey and Ernst & Young all provide clients with advice about recruiting and diversifying their management and boards.

The UK Equality and Human Rights Commission warns against the pitfalls in recruiting to the board, recommending that companies “Take particular care with criteria related to subjective, unspecified concepts such as ‘chemistry’ or ‘fit’, which may result in a board recruiting in its own image.” And that they “avoid relying only on personal networks and word-of-mouth recruitment as this significantly restricts the pool of applicant."(as cited in Equality and Human Rights Commission, 2016, p. 5-6)

The following sections highlight practices to find candidates both within your firm and outside to diversify your board.

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Growing your own Candidates: the Pipeline

Ensure that your pipeline does not have leaks, so that there are potential candidates moving into higher management.

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Finding Qualified and Diverse Candidates: Fishing in External Pools

Too often the search for new board members occurs in closed circles that are often quite homogeneous.

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Sponsorship and Mentoring Programmes

One of the most widely spread strategies to move more diverse people into leadership positions is through mentoring.

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Practices in Nominating Committees

A solid and structured nomination process is key in building a diverse and qualified board.

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Making It Work Well

Making It Work Well
Just adding women and stirring will not produce a successful recipe for reaping the advantages of gender diversity on boards.  A major social science contribution is the idea of critical mass. A single woman or ethnic minority can become a token in a group. Balance in the total board structure insures that the added value of diversity is realized. This is why many regulatory schemes require a ratio of at least one third of the underrepresented group. Also crucial is the ability of an organization to create an inclusive culture, so that each board member can contribute to their maximum capacity.  The following practices can be important in aiding board member efficacy.


Socialisation of New Board Members

Socialisation of New Board Members

Finding the right and complementary member who adds the desired competencies yet does not clone other members is a delicate job. Your company has found its ideal candidate, with all the right qualities. However, the realisation that every board is a special family is important. Bringing the new member into the board is extremely important if he or she is to function well. Successful corporate governance also includes a socialisation package for new members. This might include having a mentor, and surely includes information about the history and results of the company, and the formal and informal practices. Even though the number of new additions is few, working on bringing new members in (providing them with information about the other board members and their affiliations, company history, and board minutes) is an important investment in board success.  This is especially true when the new member is different (gender, age, business experience) than the majority of old board members.

Trudy Norris-Grey is general manager worldwide public sector for Microsoft and chair of WISE (Women in Science and Technology).  She describes how she works with mentoring, coaching, buddying, unconscious bias training and director training, which are all key elements in getting aspirant board members ready. ‘They stem from the personal development plans I work on with individuals. The plans are tailored, focusing on both the individual and team performance to reach higher potential".

Read more from the interview here

 

Example:  Successful Induction of New Board Members

Lady Barbara Judge, Chairman of the U.K. Institute of Directors highlights the benefit of professional board induction for all non-executive directors newly appointed to a board, irrespective of background, as general good board practice. This helps new non-executive directors to contribute confidently and appropriately. At board level, she suggests two types of induction should be offered systematically: Subject matter induction (industry and company specific), Board interaction/behavior induction” (EWoB 2016, p. 20). She says, “I’ve encountered some non-executive directors new to a board, being rather overbearing in their style of contribution, for instance, particularly those with purely executive backgrounds.” Professional board induction programmes help all new non-executive directors gain both sector-specific knowledge and behavioural self-awareness to add value. (as cited in Gender Diversity on European Boards, Realizing Europe's Potential: Experiences and Best Practices, EWoB 2016, p. 20)

Liselotte Hyveled, employee representative board member of Novo Nordisk in Denmark has seen the benefit of sector- specific board training in particular, which her firm offers to all board members. Liselotte Hyveled is a Project Vice President in Global Development with a sectoral MBA focused specifically on Medical Business Strategies. She says, “The shareholder-elected board members often come from different industries, therefore training focused on the pharma industry and sector and company-specific challenges is very beneficial in my view. As I already have a broad knowledge of the pharma industry, I attended this training both to learn more about specific areas which were new to me such as the production side of our business and, more particularly, to network with the newly-elected board members. A solid understanding of the diversity of board members’ competencies and personalities, in my view, increases board effectiveness. In addition, as I am new to the board role myself, the company paid for me to attend an executive board education course at Copenhagen Business School which I found very helpful.” ( as cited in Gender Diversity on European Boards, Realizing Europe's Potential: Experiences and Best Practices, EWoB, 2016, p. 20)

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Board Practices that capitalise on Talents/Diversity

In this section, you will find examples of board practices that capitalise on talent.

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Keeping it going

Keeping it going

Bringing in different sorts of talent into a board means adjustment on all sides, but change is a process, and the appointment of new members needs to be part of a long term strategy, so that balance is more than a motto, but a way of life. Gender diversity on a board is one element in a larger governance strategy that needs to be monitored as part of the company’s results.

 

Evaluation and Monitoring

A company may carry out an extensive gender analyses and make investments in action plans, but without an adequate follow-up, many plans remain only plans.

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Succession

“Companies have traditionally distinguished between board succession and management succession (excluding the CEO and CFO) when defining the role of the nomination committee.

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Public Relations and Communication

Reporting on board composition is not only for the Annual Report, but can become an additional tool for public relations.

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Facing and Overcoming Common Barriers: Tools

The most difficult obstacles in achieving gender balance are not usually the visible ones such as rules and policies, but rather the subtle set of beliefs held by people inside organisations. Social beliefs about how men and women should act are carried by all of us, and have not changed as fast as the social position of women today. Even though overwhelming research indicates that women are as ambitious as men and expect equal opportunities, leading figures in management and politics continue to hold stereotypic ideas. This is all the more so in cultures which have traditional ideas about gender roles. The ILO Women in Business and Management report ranks family responsibilities, gender stereotypes and masculine corporate cultures as the top three barriers to women’s advancement to leadership. (see ILO, 2015, p. 16)

FACING AND OVERCOMING COMMON BARRIERS: TOOLS

EWoB report: Gender Diversity on European Boards, Realizing Europe's Potential: Experiences and Best Practices provides numerous insights into the barriers: “The Gadhia Review cites research by Columbia Thread needle Investments which found that just seven per cent of funds in the U.K. are managed or co-managed by women. Even assuming that the dedicated environmental, social and governance (ESG) specialists within investors see board gender diversity as important, often the final voting decision sits with the fund manager not the ESG team; sometimes ESG specialists may not

attend company meetings with the fund manager. This contributes to gender diversity often being raised at best on an ad hoc basis. Also, some active fund managers may look primarily at financial metrics and diversity may not always sit easily within their current analytical framework.” (EWoB 2016). (suite…)

Gender Expectations

This is the most treacherous area; the beliefs held by both men and women that women do not want top positions enough or that there is only one kind of management style and career are beliefs formed early in life and widely shared in society.

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Discrimination and Resistance

Explicit discrimination in Northern and Western countries is becoming more and more exceptional, but it still exists in much of the rest of the world.

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Unintentional Bias

Gender beliefs go so deep that even those who are firmly convinced of the necessity for gender equality may find themselves nonetheless showing bias despite their best will.

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Interview insights

inga-beal

Tackling Unconscious Bias and the ‘Old Boys Club’, by Dame Inga Kristine Beale DBE, CEO, Lloyd’s of London

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gerry-brown

Diversity Leads to Fewer Scandals and More Effective Boards by Gerry Brown, Chair and Independent Director

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(C)2015 DAN KENNEDY

Companies are the Architects of Diversity by Lady Barbara Judge, Chairman of the Institute of Directors

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kerstin-gunther_deutsche-telecom

Being a Good Leader Means Being Authentic by Kerstin Günther, engineer in electronics with an MBA in finance

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>> READ ALL INTERVIEWS