LONDON (Reuters) - If your company strives to have a board with a well-rounded view of the world, staffed with pragmatic directors who do their homework and aren’t afraid to ask the tough questions, then it’s probably looking for a few good women right now.
Companies across Europe are being urged to respond to pressure for greater gender diversity in top management, and those which have already embraced their high-flying female executives have discovered that mixed boards broaden perspective, focus more closely on performance and may reduce reckless, ego-driven behavior.
Some countries, such as Norway and Spain, have introduced quotas requiring a minimum level of female representation on boards. Former British trade minister and ex-Standard Chartered boss Mervyn Davies wants FTSE 100 companies to have 25 percent women on boards by 2015 and EU internal market commissioner Michel Barnier has put gender diversity for bank boards on his radar in the wake of the financial crisis.
But why the sudden push for more women?
The answer seems to be because a lot of research shows that companies with women directors or even just more diverse boards tend to do better than those with executive teams made up entirely of men.
“Women have a different perspective, which can sometimes lead to better decision-making,” said Elin Hurvenes, founder and chair of the Professional Boards Forum, which she set up after the Norwegian government made its demand for more women directors on company boards.
Hurvenes said a lot of the chairmen who opposed the imposition of quotas in Norway are now pleased with the results.
“The point is not to focus on whether one gender is better than the other - it’s the mixture that counts.”
There has been some progress in Britain since Davies published his report “Women on Boards” in February.
Since March 1 this year, more than a fifth (21 percent) of board appointments to FTSE 100 blue chip companies have been women, according to BoardWatch, set up by the Professional Boards Forum to monitor progress in women’s appointments.
In May, British engineering services firm Premier Farnell appointed Valerie Gooding as chairman. Gooding is also a non-executive director of Standard Chartered and the BBC.
Last month, ASDA, the British supermarket chain, promoted Judith McKenna, its current finance director, to be chief operating officer.
The proportion of women on FTSE 100 company boards has risen to nearly 14 percent as of the beginning of July and the number of all male FTSE 100 boards is currently 14, down from 21 in 2010.
A group of chairmen of British companies - including Roger Carr of energy company Centrica and Douglas Flint of HSBC — have launched the “30% Club” to help bring more women on to boards.
They argue that having a better balance — at least 30 percent senior female leaders — positively influences both a company’s culture and the decision-making process.
But companies need to do more if they are to meet Davies’s demands.
Davies, who was asked by the government last year to review this issue, stopped short of recommending quotas to speed up the process even though he said the rate of increase in the numbers of women board directors in Britain was too slow.
One immediate benefit in Norway was that women tended to do their homework for board meetings more thoroughly than men.
“One chairman was delighted he no longer saw colleagues discreetly opening envelopes full of board documents in the elevator up to the boardroom,” Hurvenes said.
A number of studies have pointed to the benefits of gender as well as ethnic diversity on corporate boards or in top management.
Research by British law firm Eversheds in March this year found that better performing companies tended to have a higher percentage of female directors.
A survey last year sponsored by recruitment firm Heidrick & Struggles and WomenCorporateDirectors found that women directors appeared to be more assertive on a number of “hot button” issues, including evaluating their board’s performance and backing more oversight of corporate governance and executive pay after the financial crisis.
Women have a different experience of the world from the typical male corporate executive. They are often not afraid to look stupid by asking the most basic or difficult questions.
“Women are more likely to avoid posturing,” said Denise Jagger, a partner at law firm Eversheds.
“They can often be more direct because they are pragmatic and don’t want to waste time getting to the point. Women’s egos are less likely to inhibit debate,” she said.
“I’ve heard four men repeat essentially the same point one after another in a board meeting because they are competitive and each wants to have their say.”
Jagger, who was also company secretary and general counsel at retailer Asda and holds several non-executive roles, said that women can often be more empathetic and are less likely to shy away from potentially sensitive-relationship driven discussions.
“Men don’t often retrench - it’s more difficult for them to change their minds which they may regard as a sign of weakness, not understanding.”
Margaret Johnson, group chief executive of advertising firm Leagas Delaney and a non-executive director of UK insurer Admiral, said a diverse team does performs better.
“It’s not just about male and female it’s about different skills and behaviors, how people deal with conflict.”
She accepts that it will take time for men to get used to having women around the top table.
“50-plus men as a cohort have not grown up with women in senior roles - they are a little bit scared. A lot of senior men are not used to women who talk in a direct, confident way.”
But a big obstacle to getting more women into the boardroom as non-executives is having a broad range of suitable candidates.
“The main problem is how to get a bigger pool of women candidates. The head-hunters are a major problem factor. They tend to be very conservative and put up predictable and safe lists. Left of field suggestions are seen as impossible by them,” said Bob Garratt, visiting professor at the Cass Business School.
Garratt is lukewarm on quotas as a way to boost the numbers of women non-executives.
He said quotas in Norway and South Africa, for example, had led to a small group of women getting a lot of the appointments.
In Norway, he said these women are known as the “diamond skirts” and in South Africa the “black diamonds.”
But Garratt believes diversity is crucial in helping a board navigate and plan a company’s future.
“They need more skills to make sense of a chaotic world with all the changes in the physical, social, technical environments.
If the board is diverse you will get a better sense of the trends and patterns in that future.”
But he said it was difficult to get genuine diversity because many women who make it on to boards have got there by learning to play traditional corporate and boardroom politics.
“Many of the brightest women executives don’t want to join a board and play those silly games,” he said. “They prefer either to break away and form their own businesses or continue to have more influence through their existing managerial roles,” Garratt said.
“These women will form the next generation of mid-sized companies which tend to grow faster and be more profitable.”
Edited by Paul Casciato