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Opening the Black Box

Wednesday, March 25, 2015

The following was published in The Huffington Post

Since 1999 Cranfield University have regularly published data showing the low numbers of women appointed to the boards of FTSE100 companies. This inequality continues in spite of the fact that many bottom line benefits have been identified for companies who have more balanced boards, and thereby mirror the society they do business in.

This inequality in business is mirrored in Europe with intense debate taking place, and the remedy of the state imposing quotas growing in popularity. Recently Germany joined Norway, France, Spain and a growing list of other countries in requiring corporations to meet a quota for women board members. This follows years of campaigning for voluntary action which failed to improve the number of women directors. 

In the UK an important Government report by Lord Davies in 2011 gave new impetus to the drive to increase female appointments. It was seen as a last chance for UK companies to make changes before state intervention imposed a solution on them.

Four years on the picture is mixed. There has been progress but rather slowly. In February 2015, women held 23.1% of FTSE 100 and 17.9% of FTSE 250 board roles. Although this suggests that the target of 25% female membership of FTSE100 boards by the end of 2015 may be met it should be noted that 70% of new board appointments continued to go to men. Newly launched research on women’s and men’s routes to the boardroom illuminates the reasons behind this slow progress.

Opening the Black Box of Board Appointments: comparing women’s and men’s routes to the boardroom combines in depth analysis of 15 men and 15 women seeking board appointments with surveys of larger numbers applying for non-executive roles. The aim of the study was to discover what hinders or accelerates progress.

Amongst the interesting findings are that men and women have similar motivations for seeking non-executive roles, including developing more skills and having a portfolio career.  More women aspire to the FTSE boards while the men seek a broader range of these positions. This latter finding may be due to the much greater attention given to the issue of FTSE boards than other opportunities by the media. Perhaps surprisingly women receive more encouragement to seek non-executive roles from other people than men.

There is a Catch 22 in obtaining non-executive roles in that one of the key requirements for getting on a board is previous board experience. For women having previous board experience is a more important credibility factor than for men. This once again shows how women have to prove themselves whereas men are more likely to be taken on trust.

At a recent launch event for the report examples were given of women who had extensive experience on boards in other countries being regarded as a risk in the UK because they were unknown. Yet once women have a board appointment they get offered others, leading to the comparatively few women on boards having several positions while others struggle at the starting gate.

A trap for women appears to be charity boards. To gain experience they may be encouraged to go for unpaid roles but research shows these rarely translate into commercial board positions. The research also found there is no clear connection between a particular career background and likelihood of success in seeking a non-executive role. Candidate’s previous experience was most helpful when it had given them access to non-executive director networks rather than their specific skills and experiences.

The importance of knowing people is clearly understood by board candidates, networking being the primary strategy of many seeking a board role. Men and women were found to network in similar ways but with the difference that women become over mentored but under sponsored. In short women get advice while men get pushed.

The sponsoring element is very important - people put forward other people. Having a sponsor is having someone fighting your corner. Potential sponsors can be anyone - existing non-executive directors, head-hunters and CEOs of companies. Lots of people want to give advice to women but far fewer want to put women forward.

Overall this research suggests that the importance of increasing diversity, including more women, is seen as important. But the barriers to women getting those positions are still in place - little has changed. The report states, “Overall this research shows that while the climate is conducive to increasing the number of women on boards, the key mechanisms of board appointments have not changed, and networks and sponsors play a significant role.”

The report concludes that without women receiving the same sponsorship opportunities as men the momentum of change will not be sustained. The implication is twofold the need to maintain external pressure and the need for more sponsors for women.

The report does not explore a further possibility - fundamental change in the way non-executives are recruited. Perhaps it’s time to move to an open recruitment process where skills and experience count more than the endorsement of a known person. Valuing the experience and skills that people have from other roles and testing out how a person can use them in a new non-executive role should not be beyond the capability of head-hunters and interview panels.

We need boards to change and thrive in a world which increasingly values diversity, different perspectives and a range of experiences. Boards need the best people and we should be beyond having to shout that this includes women.

Opening the Black Box of Board Appointments: comparing women’s and men’s routes to the boardroom was funded by Sapphire Partners, an executive search agency, and the Economic & Social Research Council. The research was undertaken by King’s College, London with support from the Cranfield School of Management. It is available at: http://www.openingtheblackbox.co.uk/

 


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