Women Advancing onto the Corporate Board

Abstract

In the last decade, there has been increasing awareness of the slow pace of advancement of women onto corporate boards, despite over thirty years of equal opportunities policies. The lack of female representation in corporate decision-making is now an important issue for policy-makers, particularly in Scandinavia where political intervention is underway. Gender diversity on corporate boards is an emergent issue for developing economies such as India and China, and some countries in the Middle East (Tunisia, Jordan, Egypt and Morocco) are also starting to recognise the importance of developing their female talent up to board level. Indeed, until recently, the lack of women on top corporate boards appeared to be a global phenomenon, with women constituting less than 15 per cent of members of top company boards in the USA, the UK, Canada, Australia, New Zealand and many European countries. However by 2005, Norway, Sweden, Slovenia, Estonia, Bulgaria, Romania and Finland had at least 15 per cent female representation on their top 50 corporate boards (European Commission, 2005). In this chapter, we consider theoretical perspectives that shed light upon the persistence of this phenomenon and how positive change can be achieved. We examine the international statistics on women directors, including those from Scandinavia where quota systems have recently been introduced. We then consider the characteristics of companies that have appointed women directors. This is followed by an examination of the characteristics of women directors on large corporate boards, including their human capital. We then consider the links between women on boards and corporate performance, reviewing extant research on the business case, the relationship between gender diversity on corporate boards and firm financial performance, as well as the link with good corporate governance. Highlighting the approaches selected by the USA, UK and Scandinavia, we consider next how different countries have addressed the issue of lack of female representation on corporate boards. We report a new mentoring scheme in the UK involving top chairmen and senior women managers in non-competing companies. We conclude with suggestions for further research. Before we begin, we should clarify the terms for the different types of directors and boards. In the US, the term for a corporate board director with executive responsibility and an employment contract with the firm is 'inside director.' In the UK, such directors are 'executive directors' (ED), but do not include the company secretary, the legal officer who is generally considered an inside director in the USA. Similarly, the American term 'outside director' is equivalent to 'non-executive director' (NED) in the UK, and 'supervisory board director' in other parts of Europe. In the US and UK, single tier boards comprise both inside and outside directors, including both chairman and chief executive, all with legal status as directors. In most European governance systems, there is a two-tier board, with the chief executive running the executive board (whose members do not have legal status) and the chairman running the supervisory board of directors.