Peter Crow
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Is the rush to place women onto boards driving the best behaviours?

2/4/2015

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The rising tide, expressed as an increasing number of women receiving appointments onto boards of directors, is now well-established. Some countries (Norway, Germany, for example) have driven change via quotas, whereas others (Australia) have utilised peer pressure by requiring companies to report the gender mix of their boards in annual reports. Others are just getting on with it.
The latest drive, in India, has seen some interesting behaviours emerge. The Indian Companies Act now requires every board of every publicly listed company to have at least one female director, with a compliance deadline of 31 March 2015. The Bloomberg reporter used "scramble" to describe recent behaviours, as if to imply that the motivation to appoint female directors is driven by compliance rather than performance. While the scramble may satisfy the statute, and some inspired appointments will be made, there is a very real risk that some boards will be encumbered with a 'token' female who does not have sufficient skill and expertise to contribute effectively.
If companies and societies are serious about achieving high business performance, then at least three things probably need to happen:
  • The strong norms of privacy and self-serving interests that pervade some director groups and shareholding interests needs to be challenged. The best interests of the company, and of all shareholders, needs to prevail over those of any individual director or shareholder.
  • Researchers need get inside boardrooms to find out how boards can have an impact on performance. However, this will require researchers to embrace a new generation of more sophisticated research methods. Standing on the outside of boardrooms and counting things, or interviewing or surveying directors about what supposedly happens inside the cloistered boardroom, is unlikely to reveal meaningful knowledge.
  • A commitment to continuing professional development, for all aspiring and incumbent directors, needs to emerge, to build a sizeable pool of highly capable 'board ready' directors for shareholders to select from.
If these things (and others, no doubt) occur, then the unhelpful patterns of behaviour witnessed in India will, hopefully, be consigned to history. However, this hope is predicated on an underlying [cultural] change taking place, whereby the focus of shareholders and boards moves from conformance and compliance, to performance. Is this something worth pursuing, or might it be a bridge too far?
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Dr. ​Peter Crow, CMInstD
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