Women on Corporate Boards: Do They Make Men THAT Uncomfortable?

There must be a reason why companies seem unable to diversify their leadership, despite the growing evidence of the benefits of doing so.

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New research released last week by the University of British Columbia shows that having women board members has a substantial and positive effect on a firm’s value by reducing the cost and volume of acquisitions. This follows years of research by Catalyst showing that companies with three or more women on their boards outperform those without, to the tune of 53% uplift in returns on equity, and 66% on capital. Another report by the Credit Suisse Research Institute shows that businesses with women on their boards outperformed comparably sized companies with all-male boards by 26 percent.

One must wonder with all this data how smart is everyone not listening to it. You’d think that investors would demand to see more women on boards. But in fact, nothing is changing. Women hold less than 17% of Fortune 500 board seats. And that percentage has stayed flat for seven years now. Fifty companies on the Fortune 500 list have no women on their boards at all.

(MORE: Twitter’s All-Male Board Spells Failure)

What is it that keeps that glass ceiling in place—and stops the gender equity issue from moving forward? If financial metrics won’t sway progress, what will?

To answer that question, one has to understand difference, at work.

Over the course of 20 years of working with big global companies as well as Silicon Valley startups, I’ve shipped or shaped about 100 products –totaling about $18B in revenues globally.  My strategy creation process was far more inclusive – inviting the disgruntled employee who was missing sales targets or the often-dismissed admins who had first hand experience with a problem. Unlike others who focused on getting the “best idea” from the ivory tower of an organization that rarely had a full and complete view of the situation, this approach was far more successful because it drew on diversity.  (James Surowiecki, Howard Reingold and Scott Page have separately researched and concluded inclusive engagement is key to innovation; my work largely focused on how to do it, not the need itself.) Two lessons from those experiences apply here:

• In problem solving a tough strategic issue, the key is to understand the problem fully and to then interpret different ideas for solving it. No one knows how everything works, but together, teams can piece together knowledge, insights and formulate new choices. Just one good idea amongst the team means success for everyone. This is where difference – cognitive difference – really comes to bear. Each of us brings something distinct to any situation – it’s a function of your history, experiences, visions, and hopes that only you have. I call this cognitive difference Onlyness. It is central to how value creation happens in our time. People are not cogs to be used and dispensed as they were in the industrial era, but the very source of value creation in modern information-driven economies. Boards of course face tough and complex challenges with elusive answers but often the key is in framing the problem and interpreting options, and this is where cognitive diversity is vital. In Scott Page’s words, the value of diversity is a proven mathematical truth, not a feel good mantra.

• When confronted with someone who looks or acts different from “us,” many have a tendency to recoil. Difference is uncomfortable. It can be triggered by many identity markers — race, gender, ethnicity, sexual orientation, socio-economic status (or, really anything) – but difference nearly always activates the ‘this requires new effort” muscle. Engaging with difference requires you to step outside your comfort zone, to see some perspective different from your own as equally valid. Put practically, it causes you to slow down to explain yourself, or to understand anew. This truth was evident even with leaders seeking to grow, to include, and to listen for ideas.

If boards are not embracing diversity despite research proving its value, they must be sacrificing performance for comfort. More statistics won’t change that. To shift is to be willing to live with the discomfort of sometimes being wrong, allowing your ideas to get better even if that means you are no longer the smartest guy in the room. Only then will the largely homogeneous hierarchy give way to a diverse approach and enable something new to flower.

The “Think different” notion introduced to us by Apple might provide some guidance. These ads have been heralded as advertising genius. The leader of Apple, Steve Jobs, embodied the ideas of ‘think different’ and revolutionized an entire industry. It’s time to take the think different notion to a new level and allow it to revolutionize governance, economies and actually allow new people to contribute that which they can.

1 comments
lindabolliger
lindabolliger

Nilofer offers some important insights regarding men and difference. I recommend taking it one step further in that similar to what Jeremy Loveday's gone viral video on "What Women Have Been Asking About Men for Centuries" can be reduced to how most men simply fail "the-take-responsibility" road to "manning-up" in facing "difference" and/or cases of violence or need to violate or restrain women or to make it difficult for them to compete. 

In the case of women, why must college age women NOT WALK ALONE at night on campus or or service women put up with sexual assault and rape wear chadors in Muslim nations? Patriarchy is the most common answer. I agree IF patriarchy is rooted in fear of the feminine since it would explain routine male behavior of women outside and inside the boardroom. It's truly a sad commentary on the dominant board director species when corporate policy is in the hands of an American white male elite, known now more colloquially as pale, male and stale, that is so subliminally wired to fear their opposite (women) that their fear interferes with their ability to appropriately do their job for shareholders, investors or labor as well as the environment and  corporate social responsibilities.  I contend it is this cohort's historic disrespect of and failure to factor in the cost of BEST corporate citizenship practices in the bottom line. For it is in the not doing so that breaks the business thread in the fabric of what makes up the tapestry of the national economy. As a direct result we've already seen the role bad corporate citizenship played in: 

A.  The 2008 Wall Street Meltdown that nearly sacked the entire global economy;

B. Dereliction in the Duty of Care in board governance in failing to implement non-fear-driven business practices that call for the best person for the job as well as putting as much energy behind planning to ensure an improved corporate citizenship culture/future by learning how to plan for passing the torch to diverse business leaders of the future.

As a direct, albeit partial result, a disproportionate amount of money was routinely routed away from business sustainability into the pockets of the American Middle Class by:

A.  The political apparatus (Citizens United) where companies are now the largest donors of candidates and once elected have corporate lobbyists write the legislation voted up or down in Congress that undergird this male/fear driven business practice of exclusion;

B.  The Military Industrial Complex whose leaders intensely lobby for war material (whether needed or not) as well as historically and continue routinely dealing effectively with military service women and men victims of sexual assault/rape; 

C.  Service Generals who retire from active duty and successfully move into the corporate boardroom because most may have a bias as well as, some might suggest, a conflict of interest in their governance Duty of Care responsibility, when voting on corporate support for political candidates for office on Capitol Hill.  

The solution today is to continue calling out men at every station in life, in law, in leadership, rich or poor to examine the costs of their fear of difference if we are to achieve the kind of business leadership that operate in keeping with extending America's grand experiment in Democracy for an additional 236 years.