Women in the Boardroom: Why and Research Results

Nada K. KakabadseProfessor in Management and Business Research

Northampton Business [email protected]

http://www.kakabadse.com

Women in the Boardroom:

Why and Research Results

10th International Conference on Corporate Governance

World Council for Corporate Governance, Royal Overseas League, London,

9-10 October 2009

Page 2© N.K. Kakabadse

Why Women in the Boardroom?

• Problems are so complex and difficult that boards need all the talent available to solve them

• Absence of diversity (gender, ethnicity, age, skills, etc) from top strategic decision-making bodies, is among the most important problems that face boardrooms.

• Having talented women in the boardroom in sufficient numbers, has potential to changes board dynamics for the better.

• Do we have a sufficient talent pool?


Facts and Research

Facts:

• Financial sector has lowest proportions of female directors (5:1), followed by utility companies.

• In hospitality 1/3 of directors are female; in education 40 per cent.

Research

• Having• One female director on the board appears to cut a company's chances of

bankruptcy by about 20 per cent (in family-run businesses)

• 2-3 female directors lower the chances of bankruptcy even farther,

• 50:50 gender split tapers off benefits

• Study of the Fortune 500 (2006) found that companies with- Highest proportion of women directors far outperformed those with the lowest

proportion.

- More women achieved higher sales and a higher return on their investments, and showed “good governance”.

• Some evidence that women

- Take on a bit less debt and are better at managing cash flow.

- May be stronger at people-management: a lot of HR directors are women.


Our Research

• Gender and behaviour research inconclusive – difference between man and woman exist, but performance varies within each board and strategic context (same person can behave differently in each situation).

• Boardrooms need:

- Diversity of skills

- Talented women and men

- Attention to context

- Attention to competitive advantage/differentiation of organisation

- Interpretation of governance risk, reputation, and vulnerability according to context

- Diversity profile of skills/competencies linked to company purpose/strategy


Need for Diversity

• IJV with Indian companies:

- Of 25 major IJVs established 1993-2003 in India only 3 survived in 2005

- In 2009 no major IJV in India

- Significant mismatch in expectation between partners/falling out

•Since 2005 increasing number of Indian acquisitions outside India

- TCS (retail) and Tata Steel both have more than 50 per cent of non-Indian board directors (i.e. diversity).


Conclusion

More women on the boards:

•Will not solve global problems at a stroke, BUT

•Skilled experienced women will contribute to problem solution - by increasing the reservoirs of human ingenuity, imagination, insight – necessary for addressing problems.

•How power/influence is exercised in the boardroom makes the difference - no difference between men and women.

•Critical is to read context accurately!