Female board members just as experienced as men

2008

The notion that women appointed to corporate boards tend to bring less experience to the table than their male counterparts is bunkum, a new study has suggested.

In fact the experience they bring is simply different to that of men, the research by academics at the Neeley School of Business in Texas and Cranfield School of Management in the UK have concluded.

The research examined new appointees to the boards of the FTSE-100's most highly capitalised blue-chip firms in the U.K, including all 72 women appointed to boards during 2001-04.

It then compared its findings with those of 72 men randomly selected from the 470 appointed during the same time-frame.

Of all 144 directors studied, demographics, educational background, business reputation, international experience and previous board experience were all taken into account.

The career sectors the directors had worked in, such as international, financial, management consulting, public sector and voluntary or charity, were also examined.

What the research found was intriguing. Female directors were much more likely to have MBA degrees than their male peers, and were twice as likely to have earned their degrees from elite institutions.

Male directors generally had much more experience of FTSE-100 boards, yet female directors generally had more experience of FTSE-100 to FTSE-350 boards and international boards.

The female directors had more experience than men, (62.5 per cent against 38.9 per cent) of other types of boards.

The women polled also had a higher likelihood of having a portfolio of career experiences than did the men.

They were likely to have held senior positions both in the private and public sectors, such as in major businesses, government, non-profit organisations, and educational institutions. The men, by comparison, had typically been more singularly focused.

Yet the primary reason men still vastly outnumbered women in corporate boardrooms was that the outdated assumption still persisted that women did not possess the high-level experience necessary to join those hallowed ranks, argued Dr Siri Terjesen, assistant professor of management at the school, which is part of Texas Christian University in Fort Worth.

"It has long been assumed that women possess less business experience than men, and that's the number-one myth we debunked," she said.

"Women are often asked to be on smaller boards and community boards, and are also more likely to take short-term or part-time contracts that help accumulate facets to their experience," she explained.

"They say yes more often to different things. This provides a diverse set of career skills they can bring to their boards," she added.

In recent years, women had slowly been making headway in the boardroom, particularly as non-executive directors, she pointed out.

According to the study, women in 2006 comprised 13.7 per cent of FTSE-100 non-executive directors, up from 9.6 per cent in 2001.

The incidence of female executive directors, however, increased only marginally, to 3.8 per cent in 2006 from 2 per cent in 2001.

This showed women were still not making it into the highest echelons of FTSE-100 directorship, to positions such as chief executive, chief finance officer or chief operating officer, regardless of the depth and breadth of their previous senior-level experience at smaller firms and other organisations, Terjesen argued.

Yet there were increasing numbers of highly-qualified women knocking on boardroom doors, and more major corporations needed to realise the value of inviting them inside, she suggested.

"Corporate scandals such as Enron and WorldCom directed attention to the people on the boards. This led to new guidelines requiring more outsiders on boards. Firms with more directors from outside the company have higher levels of corporate governance," said Terjesen.

"Earlier research shows that companies with more women on their boards tend to perform better," she added.

The study, entitled Newly Appointed Directors in the Boardroom: how do men and women differ?, will be published in an forthcoming issue of the European Management Journal.