Category Archives: Women on Boards

The “Glass ceiling” is cracked but not yet broken!

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Maile Carnegie, Google Australia Director, Amy Hood, CFO at Microsoft, Marissa Mayer, President and CEO of Yahoo, Sheryl Sandberg, CEO of Facebook… Progress has been achieved in corporate governance diversity practices and we can notice cracks in the glass ceiling but still, in 2013, women only account for 10.5% of board seats in the world(1).

gender diversity

Gender equality is a worldwide issue and is now becoming a priority for companies and their Boards. Recent research has shown that companies with more women in charge survived the 2008 financial crisis better: concerning French companies with a highly feminized management, at least 38%, declined less than the CAC 40… Hermès was the only large company whose share price rose and it has the second largest feminized management (55%). On the contrary, companies with mainly male management recorded the highest declines…(2)

Having more women on Boards seems to in a way protect companies from the crisis mostly because women behave differently to men, according to gender studies, women tend to take fewer risks and focus on long term priorities. The presence of just one woman as director can reduce the risks of going bankrupt by 20%!

Greater female representation on Boards also leads to increase the company’s performance. Boards with high female representation experience a 53% higher return on equity, a 66% higher return on invested capital and a 42% higher return on sales(3).

The close relationship between corporate performance and female directors proves that having “women on the Board is no longer just the right thing but also the smart thing to do” as said by Chris Bart, McMaster University business professor.

Women take decisions differently than men by reviewing more factors and competing interests to make the decisions fairer whereas men base their decisions on rules and traditions. Women directors will also answer in a better way to the needs and expectations of their female customers. This is significant since women account for 85% of purchasing decisions. They also bring value to the boardroom by expanding the content of discussions, raising new perspectives, asking more questions and promoting collaboration.

Studies show that one woman alone can make important contributions and bring value to Boards, adding a second woman to a Board helps but it takes the presence of at least three women to change boardroom dynamics and enhances everyday governance(4).

(1) GMI Ratings’ Women on Boards Survey
(2) Michel Ferrary : financial times
(3) Joy et al., 2007
(4) Critical Mass on Corporate Boards: Why Three or More Women Enhance Governance


CEO turnover and succession planning

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HandShake

Selecting a new CEO is one of the board’s most important responsibilities and represents a critical moment in a company’s history. A smooth transition is necessary to maintain the confidence of stakeholders. This is why a well defined succession plan is needed.

The annual study, by Booz & Company, on CEO turnover among the largest 2 500 public companies revealed that in 2012, 15% of CEOs left office. This is the second-highest rate of CEO turnover since 2000. With this rate rising, companies are becoming more proactive about the CEO succession process. The amount of planned successions reached 72% in 2012, the highest in the 13 years history of the study and forced turnovers represented 19%, their second-lowest share ever. This indicates that companies take a more thoughtful approach to transitions and to ensure they put in place new leaders who will best serve the company for years to come. These new CEOs are for the most part familiar faces. Indeed, 71% were people already working in the company when they became CEO. This represents a significant decrease from previous years with an average share of insiders of 80%.

Interestingly, in planned successions, the share of insiders has dropped from an average of 82% between 2009 and 2011 to 70% in 2012. With careful and thoughtful plans, it seems that companies feel stable enough to take a bit of a risk on an unknown leader. Moreover, these risks were reduced since 56% of the outsiders came from the same industry as their new company.

Also, 81% of the new CEOs were from the same country as the company’s headquarters and 95% were men. The proportion of women reaching a CEO position has risen from an average of 3 % over the last 3 years to 5% in 2012, but still remains a tiny share.

Regarding the apprenticeship model, (the outgoing CEO remains or becomes chairman of the board and can “apprentice” the incoming CEO), this happened in 29% of turnovers in 2012. In this case, the share of an insider named CEO reached 92%. Companies in Brazil, Russia, and India had the highest increase in turnover rates between 2007 and 2012 (15.4% to 23.9%) and the highest increase in share of planned turnovers (8.8% to 15.5%). The telecom and utilities industries had the highest turnover rates in 2012 (both at 24%), closely followed by energy (21%). The lowest turnover rate was in the consumer discretionary industry with 9%.

> Read the full study by Booz & Company

Everyday Governance: “in-camera sessions”

When a board decides to discuss private matters like management, employee negotiations, law enforcement matters, reviewing the functioning of the Board… They have an “in-camera session”, this refers to a closed meeting of the board where only board members and possibly specifically chosen others may attend. All non board members and management such as the CEO, are “recused”, this means removed from participation in a decision on a matter because of a conflict of interest or a position.

This allows the board to discuss freely about some topics which could be difficult if the people concerned were present, especially when it concerns their performance. This provides an opportunity for the board to share their views, discuss results and develop recommendations for the future of the company. Except for the absence of some individuals, the session unfolds like an open session. There is an agenda and the same decision making process.

Note that in-camera sessions should be held regularly, for instance 15 minutes at the end of each board meeting; otherwise it may put a lot of stress on the management since they will suspect that a special request for a private session is to talk about them.

Increase the number of women on corporate boards? Some business women gave advices…

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Here, you can read some advice from business women about How Can We Increase the Number of Women on Corporate Boards?

business-woman-400

Adele Gulfo, Pfizer, Regional President, Latin America

“Before we see a trend-break in the percentage of women in the boardroom, we need to solve the “leaky pipeline” that diminishes the potential talent pool. Start by encouraging women to find “sponsors,” not “mentors.” Simply put, mentors help you personally, acting as a coach and helping with decisions or challenges. But sponsors have significant influence inside an organization and advocate on your behalf, especially when high profile assignments are being discussed and names considered. Getting more women on boards begins with getting more women in mission-critical P&L roles. And sponsorship is critical to opening doors to these jobs.”

Grace Lieblein, Vice President, Global Purchasing and Supply Chain, General Motors

“If you look on boards, one of the primary reasons we are not seeing more women joining them is that typically they are looking for candidates who either have board experience or are leading large operations. We are locked in a kind of vicious circle: Because there aren’t many women on boards today and also not enough women in CEO or in key positions, they aren’t seen as natural candidates for joining boards.”

Ilene H. Lang, President and Chief Executive Officer, Catalyst

“Let’s talk about what’s not holding women back. It’s not lack of CEO experience. Almost half of F500 board seats in 2011 are occupied by directors without CEO experience. And it’s not a supply problem with respect to board-ready women. If you look at only one potential source of directors—current Executive Officers of F500 companies—you will find over 700 women, enough to fill every board seat that comes available in the next year (with women to spare). When you consider that boards often seek directors with international expertise, and you add women in top leadership positions at companies in just four countries (Australia, Canada, Great Britain, and Israel), your pool expands to over 2,000 women.

“So why the lack of progress? Men join boards every year at a higher rate than women. When Catalyst analyzed new appointments to F500 board seats from 2009 to 2011, we found that men filled 81 percent of the new seats! Thus, women’s appointments to boards have only been sufficient to maintain the status quo, rather than move the needle.”

Liz Mohn, Vice-Chairwoman, Bertelsmann Foundation

“For many women it remains difficult to have it all: career, children, partner, and household. And major decisions on all those issues often come to the fore between the ages of 30 and 40—the “rush hour” of life. For many people, especially mothers, rush hour is all day. A woman’s work is never done, as they say. It is here that employers must play a role. They must move away from office time towards flexible working hours and focus on results. By doing so, organizations and their leaders can serve to encourage women.”

Rossana Fuentes Berain, Editorial Vice President, Grupo Editorial Expansión

“A major initiative is needed to bridge the gender gap and use it as one of the variables to measure a country’s competitiveness. What is the path for achieving it? Education, mentoring, and support in the careers of women must be a priority to improve conditions for diversity in the business world, and make way for a generation that has been prepared and is ready. There are no excuses.”

Susan Segal, President and CEO, Americas Society and Council of the Americas

“One of the key reasons is an unwillingness to take a risk. Existing CEOs, boards, and headhunters appear unwilling to take the risk to incorporate new people and different perspectives—so the easy path is just more of the same: same pool of candidates, same process, and same ideas.

“Women must also take some responsibility for the current dilemma. They must promote themselves better and proactively find mentors willing to fight for them inside and outside of their companies. Women also need to network more effectively and aggressively, while standing up for their goals and ideas.”

 

His article is extract from: How Can We Increase the Number of Women on Corporate Boards?

 

Term limits essentials to boost women on boards!

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Different reasons of positive consequence of term limits for women on boards, are they reasonable ?

 

” The portion of female corporate directors has been stuck at about 16 percent in the U.S., in part because board members can hold their positions for decades, Anne Mulcahy * said at a conference sponsored by the Women’s Forum Inc. of New York last week. That leaves little opportunity for new blood, she said.

With term limits, “your pool would inevitably be more diverse,” Mulcahy said. “That’s a very obvious reason this isn’t working,” she said, referring to slow progress in U.S. corporate efforts to narrow the gender gap.

Women often aren’t considered for boards unless they have prior board experience, Dublon said. Executives should focus first on moving women into positions running business units, she said.

“Boards are the tail of one’s professional career,” Dublon said. “We’re trying to force the increase without having more people in executive management.”

The research, which includes data from 2,360 companies, shows a greater correlation between stock performance and the presence of women on the board after the financial crisis started four years ago. Globally, female board representation increased to 59 percent last year from 41 percent at the end of 2005, according to the report.”

 

* former Xerox Corp. chairwoman and chief executive officer and a director at Johnson & Johnson, Target Corp. and The Washington Post Co.

 

 

To read the full article :  BLOOMBERG NEWS

read more: POISED FOR LEADERSHIP

To Get Women on Company Boards, Make Men Leave

How diversify your boardroom?

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`The number one issue in corporate governance is the diversification of boards.

The results confirm this as the Canadian Board Diversity Council found. Only 150 out of 1000 Canadian companies had any diversity on boards.

What is the business case for diversity on boards?

 

There is also evidence that women make better monitors of management and that performance of men increases when women join boards. The other business case for diversity is a simple talent issue.

 

So how do boards diversify themselves? What are leading practices the best boards are doing?

 

 

Step 1: Recruit directors solely on the basis of competency, not on whom you know.

A board is a team. Team members have different abilities. “Competency” can include experience, skills, knowledge and behaviours. A good board draws up a matrix of competencies it needs on one axis and individual directors along the other. It defines the competencies and the scale, and then individual directors assess themselves relative to each other.

 

Step 2: Recruit directors whom you do not know personally and who are first-time directors.

Once you have the desired director competencies, the next step is to recruit directors who fill this gap. Cast your net wide and go beyond personal and professional networks. Have a diligent way of short-listing resumes and ask candidates to address the specific competencies you need.

Don’t be afraid to short-list diverse candidates whom you likely will not know, including first-time directors who have stellar qualifications your board needs.

 

Step 3: Link director time on the board to performance.

Have on boarding, coaching and development for new directors. Then, assess each director on his or her contribution at regular intervals.

 

Step 4: Be prepared to be accountable.

Consistency and follow-through are the only means by which diversity can be achieved. We can expect that some current directors may object to these best practices. Change is difficult and upsetting the status quo is threatening.

 

Finally, you should disclose the basis upon which directors are recruited, developed and assessed so shareholders can vote meaningfully on each director at the time of renewal or removal. This sets the tone that the board holds itself responsible and accountable to shareholders in the same way it expects management to be accountable to itself. Your board and organization will be the better for it.`

 

This article is extract from: Four Steps to a More Diverse Corporate Board

Initiatives to Place Women on Corporate Boards of Directors

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By R. Christopher Small,

The Harvard’s blog on corporate governance wrote an article about the initiatives to place women on corporate BoDs.

You may have heard about the idea of quota system  for women in Boards (France for example), but now in Austriala another program is considered : The Australian Stock Exchange (ASX) has adopted a “comply or explain” diversity disclosure requirement which emphasizes gender diversity.

“In the paper, Initiatives to Place Women on Corporate Boards of Directors, forthcoming in the Australian Corporate & Securities Law Review, I investigate initiatives to place women on corporate boards. In the United States, the representation of women on corporate boards of directors has been flat for 6 years now. By contrast, elsewhere around the world the topic is a hot button issue. This includes Australia where the proportion of board seats held by women has suddenly jumped from 8% in 2010 to nearly 14% today. The Australian Stock Exchange (ASX) has adopted a “comply or explain” diversity disclosure requirement (for emphasis termed an “if not, why not” disclosure requirement), which emphasizes gender diversity. The requirement is even more stringent than the London Stock Exchange (LSX) comply or explain regulation adopted after the Lord Mervyn Davies Report on women in corporate governance appeared in February 2011. The Australian Institute of Company Directors also has instituted a mentoring/sponsorship program, the first of its kind in the world, designed to obtain board seats for women. This article reviews these Australian as well as global developments, including enactment of quota laws (especially Norway and France), certificate and pledge programs (“Rooney Rules”), and hard law disclosure requirements (United States).

As part of a study group which includes governance scholars from Norway, the UK, the U.S., Australia and New Zealand, we interview women company directors, along with company chairpersons and representatives of adjective organizations interested in the subject of diversity on corporate boards of directors. Examples of adjective organizations who have undertaken efforts to place women on corporate boards are, in the U.S., Catalyst, Inc., or Women Corporate Directors (WCD), or in Australia, the Institute of Company Directors (AICD) or the Australian Business Council (ABC). The expected outcome of our study group endeavor is to describe how various women actually have attained elevation to corporate boards and senior management positions, as opposed to the anecdotal and other non-empirical accounts which have dominated the literature to date.

In 2010, at the New South Wales State Library in Sydney, the group interviewed 16 women who serve as directors of publicly held companies, 5 company chairmen, and 4 representatives from adjective organizations. A subsidiary goal is to repeat the process in several countries, developing a comparative as well as empirical model of pathways for women to corporate board seats.”

To read more : blog.law.havard.edu

Women in Finance: Focus on board diversity is the tip of the iceberg

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By Yasmine Chinwala

 

Yasmine Chinwala, the new article’ author deals about the diversity in boardroom. She has seen a significant increase in the number of women in Board of Directors in United Kingdom. 

When the movement thrives, it should be pointed out”

 

“Not a week goes by without headlines about the growing recognition of the importance of women on boards. The figures in the UK at least are promising: women now hold 16% of FTSE 100 board positions, up from 12.5% last year.”

“In the light of such positive news, and with gender diversity making headway on the corporate agenda, the findings of the fifth annual Financial News Women in Finance survey are sobering. Of the 650 female respondents to the survey, all of whom work in the financial services industry, two thirds said their gender made it harder for them to succeed and a similar proportion said they felt they needed to work harder than male counterparts in order to be viewed at the same level of achievement by managers.

Ruth Grant, a litigation partner and co-chair of the diversity committee at law firm Hogan Lovells, said: “There is a mismatch between what’s being done and outcomes. There is a difference between management having projects and structures that they put in place and actually embedding those ideas into the corporate culture and how the business makes them part of the daily life and DNA of an organisation.”

The survey results are a timely reminder that, while top-level management of financial firms is largely convinced that change is necessary and has begun to implement programmes, there is still more that needs to be done. The challenge, particularly in depressed market conditions, is keeping gender diversity on the priority list.

Helena Morrissey, chief executive of Newton Investment Management and founder of the 30% Club, which has had notable successes encouraging chairmen to bring more women into board roles, said: “There has been a very long, slow burn over the understanding of gender imbalance, but a sharp pick-up and growing momentum for change over the past 18 months. The financial services sector, and especially bigger companies, are trying very hard, partly in an attempt to rehabilitate their reputation. It is a paradigm shift for many people.” …

Read more on the efinancialnews website

 

Why boards need to adopt social media

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Lucy P. Marcus is a board chair and non-executive director who is challenging conventional wisdom inside and outside the board room. She has emerged as the voice setting the agenda on future proofing boardrooms and companies around the world. The CEO of Marcus Venture Consulting, she is Professor of Leadership & Governance at IE Business School and she speaks and writes about boards and leadership. Lucy has been awarded the Thinkers 50 “Future Thinkers” Award.

 

EU groups in push for women in top roles

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By Andrew Hill

“Some of Europe’s biggest companies on Thursday responded to political pressure by publishing their targets for increasing the number of women in senior corporate roles and launching a database of female board candidates.

The twin initiatives – under the umbrella of the European Round Table of Industrialists – come just days before Viviane Reding, European Union justice commissioner, is set to give her assessment of corporate progress in bringing more women on to boards. Ms Reding had threatened legislation if by this month she judged progress was insufficient and will make a statement on Monday.”

Thirty-one companies have so far agreed to sign up to one or both ERT initiatives. They include Siemens, Total, Telefónica, BASF and Philips. Twenty-three of them on Thursday published their targets and timetable for increasing the percentage of executive or non-executive women.

STMicroelectronics’ president and chief executive Carlo Bozotti, who heads the ERT working group handling the initiatives, said that the organisation would have pressed ahead with its plans irrespective of the European commissioner’s imminent progress assessment.”

 This is an extract from Financial Times, to read more: http://on.ft.com/xZEKFA