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Getting women on boards

Getting more women into the top level of companies’ governance is a sensitive subject. Helen Roxburgh looks at whether it should be done, and discovers which countries are doing it best.

The question of women on company boards – how many to have, and how to get them there – has been one of the key business debates of the decade. Now, according to Thomson Reuters, more than half of corporate boards have at least a 10% female membership. A 2014 study from Credit Suisse concludes board diversity has increased in almost every country, reaching 12.7% globally. And among companies in the MSCI World stock market index, women currently hold 17.3% of all directorships.

But these global numbers mask huge regional differences. Women make up a higher percentage of directors in developed markets (13.4%) than they do in emerging markets (8.8%). And Europe leads the world in terms of gender-diverse boards, with women holding 39% of board places in Norway, 28.9% in Sweden and 28.3% in France.

Many of these higher numbers have been achieved in countries where legal requirements for women’s representation exist, or are being considered. Unavoidably controversial, mandatory quotas have recently also been approved in Germany, Europe’s biggest economy. 

Supporters of quotas argue that they are worthwhile to get more women at the table, and that given the slow rate of change in some countries, companies just weren’t prioritising diversity.

In Italy, for example, female board places rocketed from 8.2% to 22.1% after introducing gender diversity laws. “What’s exciting is that whether it’s voluntary efforts, or legislation, or the threat of legislation, it’s moving the dialogue front and centre,” says Allyson Zimmermann, executive director for Europe at campaigning body Catalyst. “Quotas are just one approach to making change. I don’t necessarily say that I’m for quotas, but what I am for is pushing the dialogue forward.”

But critics say boardroom quotas do not help create a diverse talent pipeline. “We remain of the view that quotas are not the answer,” says Gay Collins, steering committee member at the 30% Club, a UK-based organisation aiming to achieve 30% female board places by 2015. “They are demeaning to women, and more importantly they don’t seem to improve the pipeline of women. Companies need to just tick a box and they don’t work on the longer-term solution.”

Credit Suisse pointed out that, in the FTSE 100 and S&P 500, male CEOs still outweigh females by 20 to one and UK male executive directors outnumber females 10 to one. “While we do not want to dismiss or belittle the change that has happened at the board level, or its positive impact, we would feel more reassured if the presence of women at the board level was matched by their representation in top management,” the report concludes.

But once women do occupy board seats, there is growing evidence to suggest it’s financially beneficial for businesses. The 30% Group found companies with a higher percentage of women on boards were involved in fewer controversies, including fraud or accounting irregularities. A McKinsey study of the 89 European-listed companies with the highest proportions of women in senior positions concluded they far outperformed industry averages. And Catalyst research found that companies with more women board directors outperform by an average 26% return on investment.

“There is a startling disconnect between the make-up of many boards and the customer and employee base of the company,” says James Turley, former chairman of EY. “As we look to the future, over 75% of the employees and over 75% of the customers of nearly all companies will not be white men. Yet too many management teams and boards are over 75% white men. This is not sustainable, nor will it result in the best decisions being made by the board for the future of the business.”

As the diversity debate evolves, another concern is that women are often appointed to roles that involve less decisionmaking. “Women are often siloed in managerial functions such as human resources, public relations and communications, and finance and administration, and are therefore only able to go up the ladder to a certain point in the organisational hierarchy,” recent research from the International Labour Organisation concluded.

“We’re not saying ‘if a board is diverse, it will be effective,’ ” says Jo Iwasaki, head of corporate governance at ICAEW. “We believe that diversity is just the starting point to make a board and company effective. It needs to be done efficiently. The goal is to have a meaningful boardroom discussion and rigorous process and diversity should help achieving it – not to meet a number-based target.”



Women hold 19.2% of S&P 500 board seats in the United States. In the US, diversity advocates have favoured investor pressure and voluntary change over legislative mandates. Between 2004 and 2014 the number of all-male boards fell from 55 to eight in the S&P 500. But the rate of change is slow; although about 20% of board and C-suite positions are held by women, that is just 5% higher than 10 years ago, according to data group BoardEx. The 30% Club launched its US arm in 2014 with a warning that at the current rate of change, it would take more than 60 years to achieve a gender balance. It has broadened its goal to fill 30% of all senior positions with women, and gained the support of 20 big investors, some of whom say they will not invest in a company if it has fewer than three women on its board.


In the UK, a 2011 report by Lord Davies, former chairman of Standard Chartered, sought to level unbalanced gender scales. In a bid to stave off legislation, Davies set a 25% target for female board representation by 2015. A target was also set by the 30% Club, a lobbying organisation set up by Helena Morrissey, CEO of Newton Investment Management. According to Zimmermann, the UK is one of several countries where even just the threat of introducing quotas has helped to boost numbers of women on boards. Boardwatch UK figures show that in the FTSE 100, 37 companies now have 25% or more female directors, and between 2010 and the end of 2014, the number of women directors overall increased from 12.5% to 23%. There are no all-male boards


In terms of gender diversity, Brazil presents some interesting contradictions. The country elected its first female president in 2011, and its stock exchange has been particularly focused on promoting transparency in corporate governance standards, which often helps to build diversity within companies. But women on corporate boards are woefully few. The 30% Club found that women make up 6% of directors, below the average in emerging economies (8.8%). According to Catalyst’s figures, there are no companies in Brazil with three women directors or more. A 2013 McKinsey & Co study into Latin America concluded that if past trends continue, it would translate into just a 2% rise in women on executive boards by 2040. However, Brazil is considering imposing a 40% requirement for women on the boards of state-owned enterprises, so this might be set to change.


The Norwegian government introduced quotas in 2003 for 40% female directors at listed companies, warning non-complying firms could be dissolved. Women’s representation on boards accordingly increased from 5% in 2000 to 40% by 2007. Although some had worried this would decrease diversity by forcing companies to compete for the same women, in fact male directors are twice as likely to sit on multiple boards. However, a 2014 study, led by Marianne Bertrand of the University of Chicago, concluded they could not find that the quota legislation had made any significant difference to the gender pay gap, or to women reaching other senior roles. “The reform had very little discernable impact on women in business beyond its direct effect on the newly-appointed female board members,” the report concluded.

South Africa

In South Africa, the percentage of women on boards has increased from 18.1% to 20% over the last four years, achieving levels much higher than other developing economies. Since 2009 it has been mandatory for companies to disclose the percentage of female employees and those in senior management. PwC’s Mining for Talent study found South African mining companies (a key driver for the economy) had a far higher percentage of directorships held by women – at 18.8%, it put the US (11.3%), UK (10.1%) and China (5.9%) to shame. In addition, the Broad-Based Black Economic Empowerment Act of 2003 sought to bring empowerment to the country’s “historically disadvantaged”, including black people and women. The act has played a key role – one of its objectives was to increase women’s access to skills training and “economic activities”. 


China is first among emerging economies for women holding CEO posts, according to Bloomberg research. More than 550 publicly traded companies in China (about 21% of the total) have women on their boards, and it is home to two of the four listed companies in the world with all-female boards. The one-child policy and strong family support networks, which ease child-care responsibilities, have been key factors to support women in business. Changes to improve corporate reporting are on the agenda – the Hong Kong Stock Exchange now requires companies to disclose whether they have adopted a diversity policy, and if not, why. If this policy is successful in Hong Kong, it seems likely Beijing will consider similar measures for the mainland.


Japan’s companies rate the worst in the industrialised world for board diversity. According to the first global census from Catalyst, only 3.1% of board places are held by women. In 2013, prime minister Shinzo Abe set a goal to increase the percentage of women in leadership positions to 30% by 2020, even offering companies tax incentives. He also set a target to reduce the pay gap – women earn on average 70% of the salaries of their male counterparts. There were high-profile successes, with Chie Shimpo becoming the first woman in 70 years to head the banking arm of Nomura Holdings, and Hideko Kunii appointed as the first woman to Honda’s board of directors. Abe also received international praise for appointing five women to his cabinet last year, bringing female representation up to 26% from 10%. But, in the run-up to the recent general election, Japan’s gender gap was barely mentioned, and only 169 of 1,093 candidates were women.


Eileen Taylor, Deutsche Bank UK chief executive

Eileen Taylor knows a thing or two about achieving corporate diversity. The CEO of Deutsche Bank UK was formerly global head of diversity for the Frankfurt-based company, a post she held for four years. During her time in this role, the bank launched a number of programmes that focused on increasing the pipeline of senior women at the firm, and has won a number of accolades for its focus on corporate diversity.

But the real challenge according to Taylor, who still chairs the UK diversity council for the bank, is no longer about getting more women on boards. At Deutsche Bank the supervisory board is already at 35% female representation. “I’m much more concerned about getting more women into executive positions,” Taylor says. “The more women we get into executive positions, the broader the talent pool we’ve got for board positions down the road. That’s what I would like to see the focus on, and certainly in my tenure as global head of diversity at Deutsche Bank that was my focus.”

She says there is a wider need to recognise that “unconconcious bias” often exists in boardroom meetings. “I think it’s extremely encouraging that people understand that we need to have broader representation among the key decision makers, that we all have unconscious biases, and that we need to try to educate ourselves about our own unconscious bias when we are making people-based decisions.”

She says examples can be where women might be passed over for promotions, or overseas postings, because selection committees assume women with children will not be interested.

“I think we have to consciously catch ourselves not to make assumptions about what people want. I’ve heard people say things like “her husband has this job” – but I know a hell of a lot of people where the women are the principle breadwinner in the family. I would say, don’t make any assumptions about challenges that might require travel, moving countries, different hours based on what you might assume people want.”

In short, progress comes with more diversity across all levels of a business. “I would like to see much more training of managers and leaders, an increase in governance bodies employing diverse people, and diverse selection committees bringing diverse opinions. I think that will start to make a difference.”

Helen Roxburgh

 Originally published in Economia, March 2015.