Dysfunction in the boardroom

Dysfunction in the boardroom

For years, women have sought greater representation on corporate boards. And most boards say they want more diversity. So why did women hold only 16.6% of Fortune 500 board seats in 2012?

It’s unclear why women have not made greater inroads. To learn more, in 2010 we began a series of annual surveys in partnership with Women Corporate Directors and Heidrick & Struggles. We were especially interested in the backgrounds, trajectories and interactions of female directors – who are the women who get onto boards, and what do they encounter there?

There were three key themes we discovered in the data:

  • Women had to be more qualified than men to be considered for directorships. Women also seemed to pay a higher personal price to become board members than men did.
  • Although boards say they like diversity, they don’t know how to take advantage of it. We found a stark disconnect between female directors’ experiences and their male colleagues’ perceptions. Women told us they were not treated as full members of the group, though the male directors were largely oblivious to their female colleagues’ experience in this regard.
  • Great talent alone is not enough to create a well-functioning board. Boards need formal processes and cultures that leverage each individual member’s contribution as well as the directors’ collective intellect.

Portrait of the female director

The female directors tended to be younger than the male directors – probably because, on average, the women had joined boards relatively recently, whereas the men had served on boards longer.

We found 76% of the female directors (versus 69% of the male directors) were employed in an operational role; 68% (versus 51% of the male directors) were in a lead role. These findings suggest that to receive invitations to boards, women might need to be more accomplished than men. They also contradict the popular belief that female board members have mostly nonoperational or support-function experience.

Another distinction we discovered between the backgrounds of female and male directors was that, by and large, the women on boards worked for private corporations. A majority of the male board members worked for private corporations as well, but a higher percentage of the men worked for public companies.

The data also indicate that female board members may have made different trade-offs on their way to the top. In comparison with male directors, fewer female directors were married and had children. A larger percentage of the women were divorced.

On average, the women in our survey were serving on two boards and the men on three. Given that, it wasn’t surprising that more than half of the female directors wanted to serve on more boards. But the women also expressed greater overall career aspirations with 27% of the female directors wanting to lead or continue leading a company, compared with 19% of the men.

We also wanted to know what strengths directors would say they brought to their boards and, by implication, what skill sets and areas of expertise they thought were most important to board operations and dynamics. Asked to write in their strengths, the men and women gave remarkably similar answers. One significant difference was that a lot more women than men cited the ability to communicate effectively. Many female directors noted that they were more likely than their male counterparts to ask tough questions or move boardroom discussions forward in skilled and effective ways.

Another notable difference was the greater percentage of men who cited global experience as a strength. We’ve found that women are often not considered for international assignments, because of the assumption that women with families find it more difficult than men with families to relocate or travel for extended periods. The unfortunate consequence is that women don’t get equal access to international roles.

Benefits of diversity

According to research by our Harvard Business School colleagues Robin Ely and David Thomas, organisations and boards have three major approaches to diversity. They may pursue it as a way to:

  1. Institute fairness and rebuke discrimination. Government interventions have sensitised most boards to the fairness argument for diversity.
  2. Build a deeper understanding of and access to desirable customer bases and markets, such as female consumers.
  3. Incorporate new perspectives and generate learning. When this is the goal of a board, diversity is integrated into all its practices and informs all discussions and decisions, producing the greatest impact.

To better understand what directors think gender diversity can offer boards, we asked respondents whether women bring special attributes to the role – 90% of the female directors thought they did, compared with 56% of the male directors.

While slightly more than half of the male directors said that women bring a fresh perspective to the boardroom, 19% said that gender should not be a factor when selecting directors; instead, selection should be based solely on qualifications and experience.

Gender and board dynamics

Though boards say they want diversity, what happens once women get on them? We found 87% of female directors reported facing gender-related hurdles.

We also asked the male directors if female directors face hurdles that men do not. The majority – 56% – said no. According to some women’s accounts, many male directors seem unaware that they may create hostile board cultures, fail to listen to female directors or accept them as equals, and require them to continually re-establish their credentials.

Far more male than female directors (28% versus 4%) pointed to a lack of board experience and industry knowledge as a handicap for women, but our findings indicate that men and women may come at the qualifications question from very different perspectives. Men seemed to view inexperience as a fixed and disqualifying trait, whereas women saw it as something that could be addressed through learning and development. The high percentage of female directors who held operational roles and were leading organisations implies another disconnect between women’s qualifications and men’s perceptions.

Both male and female directors repeatedly named open communication, well-run general meetings, a candid but collegial tenor and productive relationships with senior management as attributes of a successful board. Yet research suggests that too many boards ignore the need for those qualities, and recent efforts to overhaul governance have clearly failed to address the question of how to compose a knowledgeable, inclusive body that possesses them.

It takes more than great talent to make a great board. Companies increasingly recognise the distinction between diversity and inclusiveness: diversity is counting the numbers; inclusiveness is making the numbers count. Boards need to improve on both dimensions.

Boris Groysberg is a professor of business administration in the organisational behaviour unit at Harvard Business School, and the co-author, with Michael Slind, of Talk, Inc.

Deborah Bell is a researcher of organisational behaviour whose work focuses on leadership and organisational effectiveness.

COMMENTS

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments