What have we learned in the 10+ years since the dark days of Enron and WorldCom that exposed massive failings in corporate governance?
Not so much.
Today, most Boards of Directors differ in composition and accountability from a decade ago but one change is proving stubborn: increasing the number of women directors.
Studies have unfailingly identified a dual-gender board as superior to the exclusively male convention. As a result, the absence of women in the boardroom has drawn criticism by activists and politicians.
In the U.S., Fortune 500 companies are hammered for having only 16.1% of directors as females; among Canada’s FP500, representation by women has grown only half a percentage point in the last two years (to 14.5%); in the U.K., Prime Minister David Cameron says he will “not rule out quotas” as a way of getting more women onto Boards and also into top executive jobs.
Quotas probably aren’t the solution (are they ever?) but the good news is that more and more executive search firms are focusing on the area of Diversity Search which, as the name suggests, purposely and consciously striving to diversity your Boards or senior management so as to capture the cross-pollination of having different perspectives.
“Our practice group for corporate boards goes back to the 1980’s,” says Cornerstone International Group’s founder, William Guy. Within Cornerstone’s offices in 45 countries the most pro-active development of women’s board issues occurs in Europe. In Madrid, for example, the member firm ExcellentSearch founded a Division of Women on Boards three years ago.
“There are many, many studies identifying the benefits of having women Directors,” says their CEO Elena Terol. “Gender-diverse boards promote greater vigilance over financial reporting and women understand the needs and thoughts of women customers and employees better than men.”
In Vienna, Lehner Executive Partners has also formed a division dedicated to women on boards and CEO Dr. Gabriele Lehner has just published a book on the subject. The firm is currently conducting a wide study of the banking industry to assess the impact of new EU banking regulations requiring women in upper management and board levels.
Incidentally, the Cornerstone group walks their talk: roughly 25% of their firms are managed and/or owned by women.
Although targets are still only being met in isolated cases, the drive for compliance is accelerating. The top 100 companies in the UK, facing a government mandated target of 25% by 2015, reached 15.6% last year, up from 12.5% the year prior. The Nordic-Baltic countries are far in front: women hold a quarter of boardroom posts in Sweden and in Norway, where quotas came into force in 2008, the allocation is 40%.
“The recent financial crisis has naturally pushed diversity issues off the front burner,” says Elena Terol in Madrid. “But it is also true that this crisis leaves Boards needing still greater oversight. Our research confirms that Board diversity is key to restoring trust.”