Against The Odds: Women On Public Company Boards

Although they comprise a slim majority of the professional workforce, women in the US and many other countries represent a minority group when it comes to corporate governance roles, according to several sources – and companies are worse off for it

While there may not be a clear correlation between the number of female directors on a company’s board and the firm’s profitability, companies with higher numbers of female directors are likely to realise long-term management and communications benefits, some governance scholars say. 

Only 15 of the CEOs in the Fortune 500 are women, and only about 8 per cent of the top officers of major US corporations are female, according to Douglas Branson, a W Edward Sell professor of business law who has written several books on women in corporate governance. Further, one third of European publicly traded companies do not have any women on their governance board and only 2 per cent of the boards of European publicly traded companies are chaired by women, according to GovernanceMetrics. Worldwide, women hold less than 10 per cent of total board seats. 

‘Between 2009 and 2011, GovernanceMetrics found that women’s share of board seats at the 4,200 firms we cover increased from 9.2 per cent to 9.8 per cent – a glacial pace,’ notes GovernanceMetrics’ report. 

Board senseless 

ION, another international organisation studying the issue, released a March report showing that not even 30 per cent of the 14 regions studied can claim a board comprising a 25 per cent female component. 

‘While the number of women on boards and in the executive suite has gone up only slightly compared with last year, there are more public companies that agree gender diversity makes good business sense,’ says ION president Charlotte Laurent-Ottomane. ‘Educating investors and shareholders about how to advocate for an increased number of women in the boardroom is essential to making change happen. We will continue to work with public companies and their stakeholders to leverage the value of a gender-diverse board.’ 

Canada is doing no better than the US and Europe, according to one group’s study. Catalyst, an organisation focused on measuring women’s progress in the professional world, released a study in early March showing an increase of 7.7 per cent in the number of Canadian public companies with at least a 25 per cent share of women on their boards of directors. The report also found women’s representation as senior officers and top earners had ‘slowed to a crawl’ between 2008 and 2010, however. 

Women senior officers hold 6.2 per cent of ‘top earner’ spots, up from 5.6 per cent in 2008, showing growth of less than 1 per cent. ‘The glass ceiling still exists,’ observes Branson. ‘And one of the obvious failings of US corporate governance is that it just hasn’t accommodated women.’ 

Diverse boards are valuable because they present different perspectives and are thought to help prevent ‘groupthink’, according to Branson. 

Moreover, ‘a lack of diverse skills and experiences can hold back corporate boards and their companies,’ points out John Jarrett, GovernanceMetrics’ director of international research. ‘Increasing the proportion of women on boards is not just a nice-to-have for a firm, but a business imperative.’ 

Breaking through 

Some European countries are trying to remedy the scarcity of women in boardrooms and executive suites, with Norway going so far as to pass a law in 2005 mandating that 40 per cent of all corporate boards be female by 2008. For Norwegian companies unable to hit the mark, ‘the penalties were severe,’ says Branson – a company could be dissolved if it was non-compliant. 

Branson says that while the spirit of the quota law in Norway was genuine, it hasn’t been as effective as it could have been if it were implemented over a longer period of time. As it is, in certain instances, in order to satisfy the statute, ‘trophy directors’ have held seats on several Norwegian boards. 

Quota laws exist in Belgium, Italy and France, too, but Branson says it is unlikely the US will head in that direction anytime soon. ‘Liberal Democrats or conservative Republicans, all of us have a libertarian streak,’ he states. ‘We don’t like being told what to do.’ 

With the cards stacked against them, how should women go about securing a corner office? Branson offers some advice: don’t stick with one company hoping to climb the corporate ladder. Statistics show this is a bad approach. To Branson’s knowledge, only nine women have percolated up through their native company’s ranks to sit on the board. 

The best way for a woman to make it to the top is for her to ‘sidestep’ onto another company’s board after she has been promoted a few times at her first or second company. Non-profit work, government jobs and posts in educational institutions are experiences Branson further recommends. 

‘At Catalyst, we believe that what gets measured gets done,’ says Deborah Gillis, senior vice president of membership and global operations for Catalyst. ‘Canadian businesses are vastly under-using talented women, even though women are the engine of our economies. As organisations refuel and retool, it is in their best interest to ensure this important segment of the employee base is developed for leadership positions. Failure to do so could mean losing opportunities for competitive advantage.’ 


According to information from Catalyst, businesses with a higher percentage of women in top positions will outperform other companies – although Branson contests that the body of research showing direct financial benefits is far from definitive. 

‘Catalyst’s research indicates that companies with more women senior officers on average outperform those with fewer,’ argues Gillis. ‘organisations must commit to accelerating the advancement of women or risk losing top talent. In light of increasingly fierce global competition, corporate Canada has nothing to lose and much to gain by choosing leaders from its full deck of talent, women and men.’ 

According to Branson, however, studies that support increased profitability in companies with higher numbers of female directors are spotty, and the real advantage lies in greater diversity of opinion and a stronger ability to communicate, as well as a greater tendency to be risk-averse. 

‘The studies are all over the place,’ comments Branson, who asserts that it is empirically harder to measure a board’s ability to avert disaster – something he says women will help boards to achieve – than to measure bottom-line economic gains. ‘If they do engage in activity that could impact profits, that activity is long-range strategic planning.’

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