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The Value of Women on Boards—What Statistics and Common Sense Tell Us

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This year’s GovernanceMetrics International’s “2011 Women on Boards” report offers a number of insights into the progress, or lack thereof, being made to bring more women onto corporate boards around the world. The biggest and most depressing news is that “40 percent of the world’s largest publicly listed companies have not appointed even one woman to their boards.” The report also describes a discernable European trend to legislate quotas (undoubtedly in response to the lack of voluntary action on the part of most corporate boards). For example, Norway has established a quota requiring 40% of boards be composed of women), Spain has a quota requirement in the pipeline, and France’s National Assembly has recently passed a quota law. Laws are also under consideration in the Netherlands, Belgium, and Italy.

This year GMI saw value in reporting not only on women on boards in the aggregate but also on the number of companies in each country that had at least one, and at least three, women on their boards. “It has been suggested that boards with at least three women directors have a greater effect than those with less than this number, so examination of trends of these larger concentrations of women is of some interest,” the report states.

GMI also looked at the gender diversity of board chairs, committee chairs, and committee membership because it is increasingly apparent that the quality of decisions made by accounting and remuneration board committees, which have almost without exception been heavily dominated by men, contributed to some of most damaging impacts of the most recent financial crisis.

Diversity on Corporate Boards

GMI does report a slight increase in female chairs of committees: in 2011 6.9% of audit committee chairs were women, up from 5.9% in 2009; 6.4% of governance/nominating committees were women, up from 5.8% in 2009; and 7.0% of remuneration committees were women, up from 5.7% in 2009. However, most of the results of the report were of a more discouraging nature: since GMI began collecting data in 2009, of the 4,200 companies covered by its survey over that period the global aggregate percentage of board seats held by women has increased by only a meager amount—from 9.2% to 9.8%. Even more disheartening, only one in 50 companies had a female chair in 2011—the same proportion as in 2009.


Highlighting progress made on a country-by-country basis, GMI looked at the differences among those countries for which it had data on at least 20 companies.

The three top-rated countries in terms of the highest aggregate percentage of female directors were Norway (35.6%), Sweden (27.3%), and Finland (24.5%). Those with the highest percentage of companies with at least one female director were Finland (100%), Sweden (100%), and Norway (96%). On the other end of the spectrum, countries with no companies with at least three female directors, were Indonesia, Japan, Malaysia, and South Korea.

Although the SEC has made some weak movements to support efforts to bring more women on corporate boards, requiring boards to disclose how they consider diversity in identifying nominees for directors, GMI reports that “minimal change” in overall board diversity has resulted. “The aggregate percentage of female directors has barely budged from 12.1% to 12.3% in the last three years,” the report disclosed. “Not only is it is highly unlikely that gender quotas would be enacted, but the gender diversity issue is far less visible than in Europe. It would appear that the United States is on a path to cede further ground to European markets.”


In France 20% of boards will be required to be female in three years and 40% within six years. As a consequence, from 2009-2011 the aggregate percentage of women on boards has increased from 8.4% to 12.7%. “These substantial increases were among the largest for any market covered,” the GMI report states.

However, at a recent Columbia University sponsored conference, “Bolder Policies for Diversity at the Top,” Sheila Hooda, senior managing director and head of strategy at  TIAA-CREF, noted that the imposition of quotas should be a “last” resort measure when all else has failed. She maintains instead that efforts to increase the number of women on boards should be approached more holistically. “Corporations need to build pipelines for diversity,” she noted. “It has to be part of corporate DNA. Senior management has to be focused on it and have a well balanced plan for diversity.” She also asserts that corporate boards need to put in place recruitment plans to bring more diversity onto boards and should conduct audits of those plans. Only if all else fails should regulators, policymakers, and legislators resort to quotas.


Of course the ultimate question is, will putting more women on boards improve board decision-making? GMI has reported that its top 10 S&P 500 rated companies have an average of 22% women on their boards, and its bottom 10 S&P 500 companies have an average of 13% women on their boards. But perhaps the best argument for bringing more women on board can be made more on common sense grounds than by citing statistical measures. Clearly better decisions almost always result when a greater diversity of opinions and life experiences are brought to bear on a given problem or challenge. This position argues that boards should cultivate more diversity in the broadest sense among their members—in terms of sex, race, age, ethnicity, and socio/economic background—to minimize the biases that arise from “group think” in their decision-making processes.

–Susan Arterian Chang writes on sustainable investing and finance, and is Director of Content Development for Capital Institute, an organization exploring the transformative role finance can play in promoting a more sustainable economy.

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Here's a collection of stats and references that my HBA team assembled for the Healthcare Businesswomen's Association and published 2 years ago. Cause and effect are hard to pin down, but the clear trend is to better business results with more diversity at the top. There is certainly reason to try a few experiments of Boards with more women.
See: https://www.hbanet.org/getdoc/dcb11629-7c04-4fa2-af58-001bd1ea7892/HBAdv2009-The-ROI-of-Women-at-the-Top-by-Anne-Cami.aspx

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