Two PSAG members share their thoughts on the topic of board diversity: Kristin Holter, managing director/partner at Stakeholder (Norway), a communications consultancy specializing in corporate governance and climate/environmental issues; and Paulina Beato, a board director and chairman of the audit committee for Repsol YPF, Spain’s largest oil company, with operations in Latin America, the Middle East, and North Africa.
In your view, what would be the most effective response to the low level of female representation on corporate boards?
HOLTER: Obviously, the most effective response is to enforce a quota by law. In Norway, state-owned companies and privately owned public limited companies are required to have at least 33 percent to 50 percent of each gender, depending on the board’s size. Since January 1, 2006, every new listed company must satisfy this requirement in order to register. Many—also women—disagree with the use of quotas as an antidiscrimination tool, but this approach has resulted in women on boards in companies covered by the law.
BEATO: Both solutions—setting diversity targets and recommending institutional investors to push for more women on boards—would be effective. Voluntary standards and social pressure do promote advances, but changes are slower than what is desirable. Due to the historical discrimination that women have experienced, legal mandatory targets are justified, but these should be temporary.
What is the business case, from a corporate governance standpoint, for diversifying a board to include more women?
HOLTER: Personally, I find it strange that owners have the guts to leave their belongings in the hands of all-male boards. No offence to men, but homogenous groups are typically characterized by their members being equipped with the same type of radar. This implies that risks and opportunities may go undetected by the board. This is more true now than ever—with a rapidly changing world and, hence, a rapidly changing business environment. One important piece of information in this regard: in the developed world, women have surpassed men at many levels of education.
BEATO: If intelligence and capacity are equally distributed among men and women, if women and men have similar levels of education, then, discrimination of women for boards means routinely rejecting half of the qualified talent. If a company does not have the best talent that it can afford, the company will not be efficient. Moreover, such board discrimination usually permeates throughout the entire company. And when discrimination is extended to the whole economy, the result is a squandering of talent, which costs society a lot of money and effort.
In board meetings, do women directors bring gender-specific traits?
BEATO: I do not think that women directors bring gender-specific traits. However, women on boards do pay special attention to the discrimination issues.
HOLTER: That is an interesting question for researchers. Do men bring gender-specific traits? However, the professional world has changed: it includes women in many, many different roles. It is high time that this simple fact be reflected in board compositions.
What advice would you give women to better position themselves for becoming a board director? Do they need to “buy some boxing gloves,” as one person put it in the Focus publication?
BEATO: Boxing gloves are not the tool. A well-organized professional career in technology, business, and economy is a better option to become qualified for a directorship. My advice to women includes: First, that women should set goals and develop the expertise to be among the best qualified in the field they have chosen; obtaining a board seat seems easier for those with technology, business, or economic backgrounds. Second, women should not be afraid of presenting their abilities and defending their capacities for management positions. Third, women should convince themselves that family care is a shared responsibility with other family members.
Other thoughts on the issue?
BEATO: Boards should choose the best that they can afford. To this end, the board should be aware of the advantages of gender diversity. Two remarks on the subtle discrimination of women:
Women on Boards: A Conversation with (Male) Directors To better understand the opportunities for and obstacles to increasing the number of women on boards, IFC invited over 15 prominent male chairpersons, CEOs, and directors of listed and unlisted companies across a range of industries and countries.