Leveraging the value of female directors

Ethical Boardroom | Summer 2019

By Alfredo Enrione, Donna Finley & Gordon Allan

Abstract

“Why do women directors regularly receive lower peer evaluations than men? The truth is, it has little to do with performance.”

While there is still a lot of room for improvement, corporate boards around the world are finally tackling the gender bias in their composition. 

Fortune 100 corporations have increased female director representation from 19.6 per cent in 2011 to 25.7 per cent in 2019. Most noticeably, corporations, such as GM, Viacom and Best Buy, are going beyond the 50 per cent threshold for female board seats, even in countries without mandatory quotas imposed by law, including Norway, Finland and Italy. Yet, a dark secret seldom told – and which the authors have experienced first-hand in different parts of the world – is that female directors tend to receive poorer evaluations than their male peers. However, these lower evaluations have much more to do with board culture and biases than with women’s performance per se.

 This article argues that women directors and board performance overall can be improved by addressing these biases and correcting the misperceptions of gender performance gaps. 

The case for diversity in boards of directors 

The pledge for gender equality – understood as equal ease of access to resources and opportunities, including economic participation and decision-making – is probably thousands of years old. Yet, the case for a significant presence of women on corporate boards is much more recent. In fact, it’s just a few decades old. Two forces are pushing the agenda for change. The first one, is scientific and evidence-based, which attempts to prove how women on boards have a positive effect on corporate performance, and the second force addresses inequality as an ethical problem and a political issue. 

The first force could be categorized into three lines of research. One underlines the positive effects of diversity in decision-making and group performance. The second addresses how specific feminine traits, like different cognitive abilities and values, improve board and, ultimately, corporate performance. The third builds on specific female behaviours and their influence on board dynamics – for instance, the fact that boards with a larger female presence increase their monitoring and strategizing tasks. 

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