Marijana Uzelac-Fopma

White Papers - Women in the Board Room

How to Get More Women in the Board Room

From proclamation to policy change that ensure conditions in society that make it feasible
There are many women who would like to be in leadership positions but do not know how to get there. How companies and organizations ensured that there is equal representation of women in leadership positions? This subject can be thought from economical point of view as well as from sociological point of view. In this papers I am going to give a view from both perspectives trying to show how this is interconected and actually how the fact of underrepresentation of women to some extent effect the society as a whole on various levels. Women hold about 50 % of the population. Within last 45 years women with advanced degrees in various applied sciences increase, and number is close to those numbers of men. In some sectors the number of female graduates and post graduates even prevail. At the same time women hold about 15 % of Fortune 500 board seats. Of the top 300 European companies, women make up about 12 % of boards; In Asia, 1.8 % of board slots are taken by women; and In Australia, women directors fill about 9 % of corporate board seats. These percentages changed a needle higher since ten years ago. Gender diversity in the Boardroom is a global problem that over the last decade has gained momentum from a barrage of research from all over the world. The research continually points out the scope of the inequities, and raises more reasons why companies would be more successful if there were more female directors. The most recent report from the Cranfield School of Management on female representation in the boardroom found that in 2010 women made up only 12.5% of directors of the FTSE 100 companies.. Women are more likely to be non-executive directors. According to the report, women filled 15.6% of non-executive roles in 2010. These non-execs are external members on the board who are not involved in the day-to-day running of firms. FTSE 250 companies have an even lower proportion of female directors than FTSE 100 companies, at 7.8%, and nearly half of them do not have any women in the boardroom.Only 5.5% of FTSE 100 executive directors were women The issue has a chance to gain more of a foothold in the aftermath of the global economic meltdown because companies are more accountable to shareholders and stakeholders for demonstrating the kind of leadership that creates more sustainable business success. And, with all that has happened, business as usual doesnt move the trust needle higher. Women in the Board Room change come slowly Sometimes you have to create an earthquake, a tsunami, to get things to change., That is what Minister Ansgar Gabrielsen (Norway, Europe) have done in 2002. He went public with legislation on 40 % quota for women on publicly listed Boards. In the years that followed since other EU countries have adapted their legislation to something similar. That fact says a lot for itself - legislation maker a power breaker. To address the gap in representation, in the last several years, many countries have been far more aggressive than the United States (U.S.). This has included imposing, or threatening to impose, quotas to increase the representation of women on boards to between 20 to 40

Marijana Uzelac-Fopma

White Papers - Women in the Board Room

percent in companies in Norway, Finland, Denmark, Iceland, Sweden, The Netherlands, France, Italy and Spain. In both the United Kingdom and Germany, companies are being asked to voluntarily increase gender diversity on boards with the caveat that government may step in if companies dont succeed. Kuala Lampurs approach has been in two phases: over a five-year period, they increased the percent of women leaders in the public sector to 30 percent; then in May 2011, they passed a requirement that over the next five years, companies will ensure that women make up 30 percent of corporate decision makers. Quotas to increase gender diversity on corporate boards or in public office have the common denominator of trying to address substantial underrepresentation not resolved in a businessas-usual approach. Whether it is women in elective office, women judges, or women on boards, the evidence is overwhelming that increasing the numbers of women in the pipeline is insufficient to overcome women's barriers to office. Gender diversity has become a political issue. Prime Minister John Key remarked, When you look at the small number of women in the boardrooms of New Zealands top businesses (one in 12) you have to wonder whether our companies are making the best use of the talent on offer. Former U.K. Prime Minister Gordon Brown said last spring that it was unacceptable that there were UK firms without any female board representation. Change is happening. Britain, Belgium, Germany and Sweden are considering some kind of mandated percentage of women on corporate boards. They are following the lead of Norways 2003 law mandating at least 40% female representation which Norway has achieved. Spain and the Netherlands have passed similar laws and France is moving toward approval of its law. Well, traditions are different, and mentality as well, It is not very likely that what applies for Europe would necessarily have pass in the United States. However, there are various social, political and legislative sectors that are intertwined and should go hand-in-hand in that process of change. In the United States, the SEC 1approved a new rule that went into effect in spring 2010 requiring corporate boards to disclose how diversity is considered in the director nomination process. SEC Commissioner Luis Aquilar, talking about the value of the new rule (November 2010), pointed to a study done by the California Public Employees Retirement System that found that companies with a high ratio of diverse board seats exceeded the average returns to the Dow Jones and NASDAQ indices over a five year period. The main recommendations of the report include: All heads of FTSE 350 companies should set out the percentage of women they aim to have on their boards in 2013 and 2015. FTSE 100 boards should aim for a minimum of 25% female representation by 2015.. Each year, quoted companies should be required to disclose the proportion of women on the board, women in senior executive positions and female employees in the whole organisation. Company bosses should disclose meaningful information about their firms' appointment processes and how they address diversity in annual reports. Recruitment firms should draw up a voluntary code of conduct addressing gender diversity and best practice covering FTSE 350 board level appointments. Other measures put forward include a call for more women to be promoted to executive committees to ensure there is a more diverse talent pool for companies to recruit female nonexecutive directors from. And for those who say theyd love to have a qualified woman or
1

SEC - the Securities and Exchange Commission

Marijana Uzelac-Fopma

White Papers - Women in the Board Room

minority for a board seat but cant find one, Agenda, a Financial Times publication, has tried to remove that barrier. Agenda developed nearly a year ago a resource for nominating committees called, A Guide to Board Diversity". Benefits of diversity The premise of Women in the Board Room - for the simple, logical reason and this is the fact that women and men see the same problem from different angles. It certainly gives a better perspective and balance in decision making. It should be campaigning for legislative change, influencing practice, and empowering women - and emancipating men - to effect change at the grassroots level. One of the most compelling reasons for diversity in the Board room is the need for companies to benefit from the complexity of thought of their boards not just leaders from different industries and skill expertise, but from qualified people with different ways of seeing the organization, with different paradigms and different points of view to process the same information and perhaps raise points that others might not have seen. That is the value of creating a diverse team inevitably someone comes up with something that shifts the problem and collaboratively, a better solution can be found. Benefit of diversity is elimination of that phenomena in social psychology called closed groupthink2 Documenting the case The business case for diversity must be recognized and supported from the very top. McKinsey recommends the implementing of key performance indicators such as proportion of women in companys various business lines, at each level of management, and among new recruits; pay levels and attrition rates between men and women in similar functions; ratio of women promoted to women eligible to be promoted (McKinsey, study: Women matter: Gender diversity a corporate performance driver (2007). An enormous body of research has accumulated. Often-cited studies have been undertaken by Catalyst, McKinsey, The Conference Board of Canada, The World Economic Forum Corporate Gender Gap Report, and Calvert Investments Examining The Cracks in The Ceiling". to name a few. Operating across the world where they have clients, executive search firms -- like Heidrick and Struggles, Korn/Ferry and Russell Reynolds -- and accounting firms -- like Ernst & Young and Deloitte -- are part of the information campaign writing articles, issuing or sponsoring studies, and hosting or sponsoring forums that address the value of increased corporate diversity. Questions of fairness by themselves seem to get resolved at glacial pace. However, mounting documentation on the extent of the gender inequity has brought with it the attendant media attention that opens Boardroom doors. The work of Nominating Committees has been moved into the public domain. Politicians, governments, investors, activist groups and others are saying things have to change. How ? Social environment, assumptions, risks, political will and change of conditions Apart form the business case for diversity, as empiric proof why and how, as well it should be a political will to pursue gender equalty, through many other aspects of life that effect
2

Groupthink A mode of thinking that people engage in when they are deeply involved in a cohesive ingroup, when the members' strivings for unanimity override their motivation to realistically appraise alternative courses of action (Irving Janis, 1972)

Marijana Uzelac-Fopma

White Papers - Women in the Board Room

the women chances for sustainable professional devleopment and business promotion. One of those conditions is political will that shoud be exercized through organized childcare and parental leave policies that encourage mothers to take up paid work. Might be this sounds like it does not fit in this topic but it does very much so, considering the family as nucleus of the society and the women being biologically determined to carry out offsprings, the facts of childbirth, maternity leave, child sickness leave. and all that time consuming and psychogically significant moments of motherhood and related society expectations. Again, and not surprisingly, the biggest step forward in that matter of parental leave equalty is done in European Scandinavian countries. No one says it went smoothly, because social norms and centuries old unwritten customs and tradition does not dissappear over night. Men (for the purpose of this white papers men presents an example of favorable social group with advantages and benefits set up and kept through centuries) do not give up their favorable position and do not accept easily that their role in society and family matters, and consequently in business sphere, is gong to change irreversibly on any way. However, existence of political will and new policy in place in some countries gives the hope that slow but inevitable change is on a way. Biological determination and technical support Said that and considering biological determination and motherhood, which should not be overlooked - friendly social environment and technical support to mothers (parents) should be set in place. Nurseries (age 6 mo.-3 y), kindergarden (age 3-5) and pre-school (age 5-6) organized care, day care within or associated with elementary schools system (including in day care as well 1st grades up to 4th graders). Those should be organized on community, city, and county level. Those organized childcare organizations (kindergardens) should be equally initiated and funded by both sectors: private (big systems for their employees), and public sector such as community-city-county owned and local government subsidized specialized childcare organizations.. Cases of these kind of childcare organization that are controlled and subsidized by the Local Government Agencies (city, county) are many in Europe. These kind of organizations are equally present and usually hand-in-hand with other kind of educational organizations like elementary schools. That simbiosys is common in majority of European countries for decades (especially in Scandinavia, CEE, and Eastern Europe). Certified professionals that care about children in those organizations (kindergardens) are (should be) certified in a field of pedagogy and child psychology, with medical-pediatrics support available (pediatritian sufficient one professonal per one kindergarten / childcare organization). Eventhough in Europe the public healthcare system covers the 100% expenses for child medical care (age 0 -18). There are special departments at certain collegies and universities that educate future professionals in care of babies, toddlers, kids pre-schoolers and 1st graders, with accent on child psychology, pedagogy, and didactic methods in teaching them to comprehend the world around them. Existing of such technical support, positive social environment, accessability and affordability of such professional childcare organizations to any parent , no mater of income brackets, such environment would be prerequisite for women to decide go back to work. For those sceptics and oponents, who says that they'd love to have a qualified woman or minority for a board seat but can't find one.... they would lose the argument if there will be policy changes. If social environment will be emancipated enough and such conditions would

Marijana Uzelac-Fopma

White Papers - Women in the Board Room

exist that enables women to be a mothers while as well can build their career with no interruption, right from the start. Instead to loose 7-10 years out of building career field, being just stay-at-home Mom, since basic conditions does not exit to enables them to do both simultaneously. That huge gap makes women immediately few steps behind last in track runner compared with their male colleagues. Their male colleagues usually have straight forward career building path, started from college and furthermore, enabling them the years of permanent professional development and business networking. Breaking up the glass ceiling and knowing the rules of the game Said above, would be essential to organize training and networking programs for women professionals, to build up advocacy groups and supportive pool of those alike, to use that pool of qualified professional women to cherry-pick the pearls . Those pearls to be nominated for further training and support to reach the professional network of Boards members. Non-profit organizations, professional and industry association, committees of business leaders, influential politicians, society key opinion leaders, educators, coaches interdisciplinary non-governmental body to be in charge for public opinion shapping and definition of project / programme within their communities. Programme / projects to be organized at community, city, county and national level. Objective and goal: to promote female talents and to enable them further networking through events with those Boards members. Instead of separate women and make a gender squad at certain point - after prior preparation and overcoming a gap in networking and endorsement practice - women should be intertwined with their male professional counterparts in those Board members gatterings . To breath the same air and to get the idea what it is all about, to sharpen their communication, presentation, diplomacy and persuasion skills, thinking strategy and ways of implemetation. Men run in packs, women dont, go create your pack.... Women are so focused on being extremely competent at their jobs and also as a result become very focused internally. Being on a Corporate Board requires something that is Beyond Competence.. It is politics and diplomacy, so to speak. Still to this day a high percentage of Board directors are referrals from existing board directors. The role of Corporate Director is a very artful combination of skills. It is the ability to lead by educating and influencing. To be in a position to lead, to have leadership traits recognized, women must first gain the respect of their fellow Board members. Leadership traits and personality, is something that some individuals are born with and cultivated further (carisma, courage, heart, common sense and wisdom). Second important part that make a good leader is something that can be (should be) learned: business processes, management, strategic thinking, soft skills and diplomacy. Implementation in practice Headhunters must take a lead on radically different approaches to filling executive roles, searches should be based on skill sets and knowledge, and must look beyond the existing pool of experienced all boys club executives to bring new potential to light. Maintaining a transparent and accessible range of available database maintained by public, private and voluntary sector organizations to hold the details of aspiring directors. Leading from the impact of the Gender Equalty Duty on the public sector, Government could help 5

Marijana Uzelac-Fopma

White Papers - Women in the Board Room

by use procurement channels to incentivise businesses to increase representation of talented women leaders. This especially goes for publicly listed companies. Companys Managers and all those involved in recruitment process must be trained to recognize the value of diversity (Organizational Development, Company Governance, HR and Communications professionals) and to identify prejudices that affect decisions. Businesses / companies can encourage womens progression into leadership roles by ensuring there is at least one woman on every shortlist for promotion. Conclusion In that respect the Norwegian legislator intereference requesting a 40 % quota for women in the Board of publicly listed companies is to be seen just as a frame, like all other laws, that set up the rules of the game in any other sector. This legislative quota framework should be seen like an anti-trust and anti-monopoly laws . No more nor less. Having such legislator strong demand it is for sure that on any shortlist list for promotion within organization more then one qualified and competent woman would appear. They are somwhere there, in shadow. If More Women in the Board Room premise, along with proclamation of higher percentage of women in public office, would be left to concience and good will just to social group of those already lomg time favorably positioned, it is not very likely things will change significantly. So far, as statistics shows, just small number of lionesse female professionals suceeded to break up that glass ceiling, after decades of working twice as harder then their male counterparts to earn respect and a chance to be heard in the boardroom. Very often being forced to sacrifice personal life, motherhood and family relationships. We should learn from our life expereince and common history. Therefore support from the society and political will, policy changes, along with women personal ambition, empowering and professional groups support (as described and proposed here before) would be the recipe for a change and better balanced decision making in the Boardrooms. Since for quite some time corporations (special interests & capital) rule the world and indirectly run the politics and influence our lives, and for decades those Corporate Boards are packed with same old boys thinking alike and rotating in a circle - in a light of that fact radical change in the Corporate Board membeship is even more important. Both gender should be as much as possible equally presented in the Board Room. That is common sense, basic principle of democracy, representation, and nondiscrimination. And smart investment in the future for the benefit of society as a whole. Leadership that creates more sustainable business success, reasonable and sustainable global politics, and policies that blow the wind of changes that effect our lives in positive way.

@2011, written by:

Marijana Uzelac-Fopma Social Development & Economic Growth Consultant Zagreb, Croatia Cell: +385 99 8532 263 E-mails: marijana.uzelac2@zg.t-com.hr (main) and marijana.uzelac_fopma@yahoo.com (alternate)