Nada K. Kakabadse Professor in Management and Business Research Northampton Business School [email_address] http://www.kakabadse.com Women in the Boardroom : Why and Research Results 10th International Conference on Corporate Governance World Council for Corporate Governance, Royal Overseas League, London, 9-10 October 2009

Why Women in the Boardroom? Page © N.K. Kakabadse Problems are so complex and difficult that boards need all the talent available to solve them Absence of diversity (gender, ethnicity, age, skills, etc) from top strategic decision-making bodies, is among the most important problems that face boardrooms. Having talented women in the boardroom in sufficient numbers, has potential to changes board dynamics for the better. Do we have a sufficient talent pool?

Problems are so complex and difficult that boards need all the talent available to solve them

Absence of diversity (gender, ethnicity, age, skills, etc) from top strategic decision-making bodies, is among the most important problems that face boardrooms.

Having talented women in the boardroom in sufficient numbers, has potential to changes board dynamics for the better.

Do we have a sufficient talent pool?

Facts and Research Page © N.K. Kakabadse Facts: Financial sector has lowest proportions of female directors (5:1), followed by utility companies. In hospitality 1/3 of directors are female; in education 40 per cent. Research Having One female director on the board appears to cut a company's chances of bankruptcy by about 20 per cent (in family-run businesses) 2-3 female directors lower the chances of bankruptcy even farther, 50:50 gender split tapers off benefits Study of the Fortune 500 (2006) found that companies with Highest proportion of women directors far outperformed those with the lowest proportion. More women achieved higher sales and a higher return on their investments, and showed “good governance”. Some evidence that women Take on a bit less debt and are better at managing cash flow. May be stronger at people-management: a lot of HR directors are women .

Facts:

Financial sector has lowest proportions of female directors (5:1), followed by utility companies.

In hospitality 1/3 of directors are female; in education 40 per cent.

Research

Having

One female director on the board appears to cut a company's chances of bankruptcy by about 20 per cent (in family-run businesses)

2-3 female directors lower the chances of bankruptcy even farther,

50:50 gender split tapers off benefits

Study of the Fortune 500 (2006) found that companies with

Highest proportion of women directors far outperformed those with the lowest proportion.

More women achieved higher sales and a higher return on their investments, and showed “good governance”.

Some evidence that women

Take on a bit less debt and are better at managing cash flow.

May be stronger at people-management: a lot of HR directors are women .

Our Research Page © N.K. Kakabadse Gender and behaviour research inconclusive – difference between man and woman exist, but performance varies within each board and strategic context (same person can behave differently in each situation). Boardrooms need: Diversity of skills Talented women and men Attention to context Attention to competitive advantage/differentiation of organisation Interpretation of governance risk, reputation, and vulnerability according to context Diversity profile of skills/competencies linked to company purpose/strategy

Gender and behaviour research inconclusive – difference between man and woman exist, but performance varies within each board and strategic context (same person can behave differently in each situation).

Boardrooms need:

Diversity of skills

Talented women and men

Attention to context

Attention to competitive advantage/differentiation of organisation

Interpretation of governance risk, reputation, and vulnerability according to context

Diversity profile of skills/competencies linked to company purpose/strategy

Need for Diversity Page © N.K. Kakabadse IJV with Indian companies: Of 25 major IJVs established 1993-2003 in India only 3 survived in 2005 In 2009 no major IJV in India Significant mismatch in expectation between partners/falling out Since 2005 increasing number of Indian acquisitions outside India TCS (retail) and Tata Steel both have more than 50 per cent of non-Indian board directors (i.e. diversity).

IJV with Indian companies:

Of 25 major IJVs established 1993-2003 in India only 3 survived in 2005

In 2009 no major IJV in India

Significant mismatch in expectation between partners/falling out

Since 2005 increasing number of Indian acquisitions outside India

TCS (retail) and Tata Steel both have more than 50 per cent of non-Indian board directors (i.e. diversity).

Conclusion Page © N.K. Kakabadse More women on the boards: Will not solve global problems at a stroke, BUT Skilled experienced women will contribute to problem solution - by increasing the reservoirs of human ingenuity, imagination, insight – necessary for addressing problems. How power/influence is exercised in the boardroom makes the difference - no difference between men and women. Critical is to read context accurately!

More women on the boards:

Will not solve global problems at a stroke, BUT

Skilled experienced women will contribute to problem solution - by increasing the reservoirs of human ingenuity, imagination, insight – necessary for addressing problems.

How power/influence is exercised in the boardroom makes the difference - no difference between men and women.

Critical is to read context accurately!