The U.K. government inquiry regarding women on corporate boards has reportedly rejected the imposition of statutory quotas, but will recommend that 20% of FTSE 350 directors be women by 2013, and 25% by 2015. Lord Davies, former trade minister and author of the report, has warned that board gender quotas may be reconsidered if companies do not voluntarily achieve sufficient progress towards these goals.
Steve Bainbridge, always faster at the keyboard than me, has a post about the controversy here. Lucy Kellaway, FT columnist and board member at a FTSE 100 company, has a column in Sunday’s FT responding to the Davies report, and arguing that:
For me personally, this hunger for women directors is a thoroughly good thing . . . But from a business point of view, the obsession with women on boards seems all wrong.
Her column generated several letters to the editor today (here and here). Kellaway’s full piece is very thoughtful, and echoes some of the cautionary themes that Lissa Broome, John Conley and I highlight in our work on board diversity (see here, here, and here). Says Kellaway:
A while ago I asked the men who were on our board in its earlier, all male days, how much difference it made having two women around. They hummed and hawed for a bit and said that we approached things in a slightly different way. And that we were a good example to the women lower down in the company.
I’m not sure about either point.
Both answers are ones we heard from our respondents. For example, several respondents invoked the allegedly different sensibilities, reasoning processes, and interpersonal skills of men and women. Said one white, male respondent:
Well I think it brings an entirely new perspective to the thinking of a board. It creates a very positive dynamic and [laughs] you’re right; I’ve sat on boards where all of us were silver haired males and the dynamic is different from when you have minorities and women on boards so I guess I just feel that there’s more creative vibes going on [laughs] if you’re on a board where there’s different thinking and different channels of thinking.
But several subjects also suggested that the value of difference derived not so much from gender and race as from specific professional skills or experience. Their narratives extol the abstract value of race or gender diversity. But the ultimate focus turns out to be a particular skill set or background experience, not necessarily connected to the director’s race or gender, that proved valuable: for example, organizational skill gained through high-level military service (an African-American male), or engineering (a white female), or regulatory expertise (an African-American female).
Kellaway makes a similar point:
It is, of course, vital that board members don’t all jump to identical conclusions about everything. But in my experience, gender is less important than profession: a male journalist and a male accountant probably take more sharply opposing positions on business issues than do, say, a male and a female accountant.
Like Kellaway’s male colleagues, many of our respondents (both male and female, white and non-white) also mention the value of a diverse board to female and minority employees. In fact, this is arguably one of the most consistent narratives across our interview texts. Some respondents suggested direct benefits, which we discuss at length here. Others proposed indirect benefits to employees stemming from a diverse board: that corporate board diversity sends an important signal to a company’s employees about the value it places on diversity, and about the availability of role models and mentors at the top of the corporate hierarchy.
For example, an experienced white female board member emphasized that the presence of female board members had been important to her when she was an employee, saying, “I think this is more recognition that, you know, people, that women or minorities are competent, capable and can be in leadership positions, to give you a sense of pride, and a little bit of comfort.” Another white female respondent told us that having women on the board mattered to the senior women management at the company, by providing them with “a comfort level”:
[T]here were senior women in the company and they made a point of, not in the middle of the meeting, but part of board service is spending time, sometimes through dinners or other events that would be arranged with senior people, of speaking to me and I assume they did to [the other female director] as well about how much it meant to them to have a woman sitting there.
But Kellaway hits on a tension in the role model and signaling arguments for board diversity that is the subject of our first paper on this topic: is it just “cheap talk?” Says Kellaway:
Not only is the fuss over women non-execs beside the point, it may end up being counter-productive. Many of the news stories last week named and shamed the companies with no women on their boards. Now all these companies need do to stop such stories is ship in a couple of vaguely plausible female non-execs – which is an awful lot easier than changing anything important – such as how they treat their women managers.
Kellaway makes a good point here: we must be able to assure ourselves that “talk,” through the demographic composition of the board, is sufficiently costly to deter mimics who seek to reap the signaling benefits of board diversity without incurring the costs of altered corporate behavior. Board diversity has been the focus of reform in many countries in recent years. But perhaps it is worth asking whether reform comes easier on corporate boards than within corporate organizations themselves because it is a low-cost means of deflecting criticism. (Along these same lines, see our recent exchanges with Don Langevoort and Larry Ribstein on the possible triviality of much board life.)
Prior posts on board diversity are now collected here.