March 19, 2008

Corporate Boards Benefit from Women's Experience and Perspectives

Siri3.jpgResearch by Dr. Siri Terjesen

Men still outnumber women in corporate boardrooms based on the outdated assumption that women don’t possess the high-level experience necessary to join those hallowed ranks.

While women now represent a substantial proportion of potential candidates for board directorships, few are chosen. The result is that companies across the globe are missing out on corporate women’s advanced educations, knowledge, capabilities and perspectives.

This is one finding of a recent study, “Newly Appointed Directors in the Boardroom: How Do Men and Women Differ?”  The researchers were Dr. Siri Terjesen of the Neeley School of Business at Texas Christian University, and Dr. Val Singh and Dr. Susan Vinnicombe, both of Cranfield University in the United Kingdom. The study will be published in an upcoming issue of European Management Journal

The notion that women don’t have the right stuff to serve on boards no longer holds true, the evidence shows.

“It has long been assumed that women possess less business experience than men, and that’s the number-one myth we debunked,” says Dr. Terjesen, an authority on entrepreneurship, strategy, and international business, and herself a corporate board member.

“Women have plenty of experience, although they often have different types of experience than men,” she says.

The study is one of the first investigations of the differences between recently appointed male and female corporate directors.  It examined new appointees to the boards of the Financial Times Stock Exchange’s 100 most highly capitalized blue-chip firms in the United Kingdom, representing 81 percent of that market.

Previous studies had scrutinized the overall makeup of boards and the characteristics of directors in general, but did not specifically look at the qualities boards desire in director candidates, nor at gender differences.

The research included all 72 women appointed to FTSE 100 boards during 2001-04 and 72 men randomly selected from the 470 appointed during that time frame.

For all 144 directors studied, the researchers noted demographics, educational background, business reputation, international experience, and previous board experience.  They examined career sectors the directors had worked in, such as international, financial, management consulting, public sector, and voluntary/charity.

Several striking differences were revealed between newly appointed male and female corporate directors in terms of their career paths and skill sets.

  •   While educational levels were similar, 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 had much more experience on FTSE 100 boards, but female directors had
      somewhat more experience on FTSE 101-350 boards and international boards.  Women
      directors had much more experience than men—-by 62.5 percent to 38.9 percent--on other
      types of boards.
  •   The women had a higher likelihood of having a portfolio of career experiences than did the
      men by 41.7 percent to 27.8 percent.  Women had held senior positions both in the private
      and public sectors, such as in major businesses, government, nonprofit organizations, and
      educational institutions.  The men typically had been more singularly focused.

“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,” Dr. Terjesen explains. “They say yes more often to different things.  This provides a diverse set of career skills they can bring to their boards.”

Such diversity is becoming increasingly valued, in part due to new regulatory and competitive pressures that are driving corporations to seek directors from outside their own usually homogeneous talent pools. Some countries are even mandating gender quotas, says Dr. Terjesen. 

The incidence of female executive directors, however, increased only marginally to 3.8 percent in 2006 from 2.0 percent in 2001.

This means women are still not making it into the highest echelons of FTSE 100 directorship in positions such as CEO, CFO or COO, regardless of the depth and breadth of their previous senior-level experience at smaller firms and other organizations.

The percentages should continue to improve, however, as increasing numbers of highly qualified women keep knocking on boardroom doors and more major corporations realize the value of inviting them inside.

“Earlier research shows that companies with more women on their boards tend to perform better,” Dr. Terjesen says.

The nationally ranked Neeley School of Business at TCU focuses on personal development, vital connections and real experiences. High functioning classrooms and calculated career development give students the platform to succeed. Renowned faculty, major corporations and leading executives connect to share winning business practices. Students work for real clients to solve critical challenges. Neeley is consistently recognized among the best business schools in the country by The Wall Street Journal, BusinessWeek, Forbes, Fortune, US News & World Report and The Princeton Review. From skills and strategies to team dynamics and global expeditions, we make sure Neeley graduates are trailblazing business leaders – each in their own individual way.

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MEDIA CONTACT
Elaine Cole
Public Relations Manager
Neeley School of Business at TCU
817-257-5724
e.cole@tcu.edu