· 5 min read · Features

Diversity Gender: Women raise the bar

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There are still very few women in leadership positions despite persuasive evidence of their positive effect on profitability. Sian Harrington looks at the gender imbalance in Britain's boardrooms.

Male leaders are more concerned about comparing the size of their cars, or even their jets, than they are about their organisation's goals. No, this is not a statement from a 1970s feminist tract; more worryingly it is from a high-flying FTSE 100 female board member speaking about life as a non-executive director at one of the UK's biggest firms.

To put it in her words: "In general, women have far fewer ego issues. At one organisation I was on a board, full of strong personalities, opinions and egos. Some of the non-executive directors had joined because it was one of the big FTSE 100 boards, not because it was inherently interesting to them, or because they could add value. Individually they were nice but there was definitely a culture of 'my car is bigger than your car'."

No wonder the Walker review of corporate governance and financial institutions concluded more diverse boards were vital for the long-term success of organisations. Labour's deputy leader, Harriet Harman, went a step further when she suggested the blame for the financial crisis lay firmly in the hands of men. "Somebody did say ... that if it had been Lehman Sisters, rather than Lehman Brothers, then there may not have been as much (turmoil)," she said.

This view may well be simplistic yet, despite plenty of powerful evidence that having women in leadership positions benefits performance, there is still a lack of gender balance at the top of UK companies. Women comprise just 11.7% of board directors, according to the Female FTSE Report 2008, and only 16 (10.7%) of the 149 new appointees in the past year were women. Worse is the fact nearly a quarter of FTSE 100 companies still have male-only boards. And, just last month, when the Financial Times rated the Top 50 Women in World Business, only one woman was based in Britain - Angela Ahrents of Burberry. And she is an American ex-pat. Speaking at the launch, Financial Times editor Lionel Barber bemoaned the fact there needed to be a list celebrating high-achieving women in business, saying there should be just one rating recognising the achievements of "people in business", on which women would feature alongside men.

So do women really bring something different to leadership positions - in particular, board roles?

Boardroom consultancy firm IDDAS last month released the results of research into the experience of a fifth of all females currently on FTSE boards: 14 hold one or more non- exec positions; five have both executive and non-exec directorships; while four are executive directors. The age range is 44-68 while 15 are British, eight are from North America and one is from continental Europe.

While the participants are keen to stress the characteristics, skills and circumstances necessary for boardroom success are applicable to both men and women, there is agreement "women at this level have to be extra careful and confident in the value they add because they are such a visible minority", IDDAS chair Helen Pitcher explains.

In fact, the research finds women are so well qualified and prepared for a board role that, as one board member says: "They raise the bar for everyone." The survey identifies characteristics these women have in common that enable them to be effective board members (see below). Important among these is that they see becoming a non-exec director as an active career choice. They spend time finding out about a board and make sure they can add value before deciding to join. As one says: "I always do due diligence. In the US I turned down one role because it did not feel right. Within weeks the CEO was suing the board for dismissing him."

Women also have the confidence to ask questions and challenge in a non-threatening way - something that has prompted the debate about more diverse boards in the City. The high fliers interviewed talk about their "ability to see a shape that no one else does", being "better at spinning many plates" and, of note to HR professionals, about understanding people better and not being embarrassed to talk about the issues.

As for big egos, while acknowledging this is not the sole domain of men, respondents feel female board members are less prone to this failing. "I have to be clear that it is about shareholder value and not for my own personal benefit," says one female director. "For instance, in evaluating an acquisition I believe it needs to be for the good of the business, not for the good of the senior management." Another adds: "I am mostly competitive with myself, not seeking to get ahead at the expense of my colleagues."

Given the benefits delivered from diverse boards (McKinsey finds a correlation between the number of women in leadership and profitability while Leeds University Business School research shows having a women on the board can reduce the risk of bankruptcy by 20%), it is clear UK plc is failing in its duty to stakeholders if it does increase gender diversity at the top. One of the culprits is the chair. This position is crucial in ensuring diverse boards work effectively and without the chair's active soliciting of all views, even the most able of female board members is unable to contribute effectively.

"The gift of the chair is to put women on committees. Without this, they cannot learn," says IDDAS project director Hillary Sears. However, damning reports from the participants show chairs are not always managing the board well. One says: "I had an issue with the CEO who was not respectful and would shut me up." Where was the chair then?

Another female board member recalls: "One chair managed to call all of the three women he was speaking to by the wrong name. I suggested at one meeting he might call all of us Jane."

At least the above director had other women alongside her. All too often the participants find themselves to be the sole female on the board - the 'woman' rather than just another director. As Pitcher says: "If there is just one female they are goldfish-bowled". Sears adds: "They are used to being in the minority and try to make most of it. But it does make a difference when there is a second woman on board."

Given this, it is important a female board member ensures she is not pigeonholed, particularly as the person only interested in the "soft stuff". While many, wrongly, see HR as a 'soft' area, Sue Swanborough, HR director of US food giant General Mills - who is a UK board member - points out that effective directors need to trust themselves to comment on any issue. "My success is down to dealing with both hard and soft issues," she says. "What I have learned is these so-called 'soft' issues are actually the toughest to deal with and most critical to business success."

At General Mills, the world's sixth largest food company, four of the seven presidents in the US retail division are women, as are five of the 13 members of the corporate board of directors. "The majority of General Mills US retail businesses are now led by working mothers," says Swanborough.

Consultancy 20-first believes it is time to move the female focus from the board to the executive committee and has just released a report, the Womenomics 101 Survey, examining the gender balance on executive teams in the top 101 companies in Europe, Asia and the US. In the US, 89% have at least one woman on their executive committee. In contrast, 68% of companies in Europe have no women at all on their executive committee.

Ironically, Walker's own recommendation - to place more emphasis on experience rather than personal qualities in choosing non-exec directors for financial institutions - may have the effect of further excluding women. As Sears says: "Amassing the requisite experience is where women generally tend to do less well than men because of the challenges of combining a high-powered career with child-raising."

While Walker relates specifically to the financial sector, his recommendations set the agenda for all boardrooms. Those responsible for appointing and developing boards must ensure the outcome is not to push diversity in future board composition backwards.

SUCCESSFUL WOMEN BOARD MEMBERS:

- Take their role as non-executive director seriously and choose carefully which board to join

- Are well qualified for the roles they accept and are active about plugging any gaps in their experience

- Bring a different perspective to men

- Are aware of board dynamics and play an active role in building strong relationships and promoting good teamwork

- Are less ego-driven then men and are committed to the organisation's goals rather than their own agenda

- Are adept at questioning and challenging and seek to do so in a non-threatening way

- Bring greater energy, drive and commitment to the role.