The Gender Bonus Beyond “The Land That Time Forgot”

The Gender Bonus Beyond “The Land That Time Forgot”

Author: INSEAD IDN President Helen Pitcher, OBE

As we enter a new decade it is an opportune time to reflect on the progress of diversity on Boards and the challenges that lie ahead.

This past decade has been one where female participation in the business world has exploded into the headlines and onto our Boardrooms.

In the UK we started the decade with the Davis Report in 2011 which sort to drive a voluntary target of 25% of women on Boards’ of FTSE 100 companies by 2015. The target was successfully achieved and then superseded by a 33% target by 2020, which is also likely to be achieved.  This model of targeted voluntary compliance has proved successful but there is still much to do in creating further diversity in the executive pipeline.  Targeted compliance has provided a catalyst for increasing gender participation on the executive committee and subsequently feeding onto Boards.  While less explosive and headline grabbing, this approach has largely avoided the accusation of under qualification and under experienced women on Boards, often thrown at the quota approach.

I was reminded recently of this former pre-2011 world by an article which articulated a ‘gender penalty’ for US Boards, based on the perception of investors, that Boards which focused on diversity would be distracted from focusing on short term profits.

How much the world has changed since the data used in the article was collected.  This has been a decade where both Regulatory and Governmental pressure has focused on the sustainability of our companies, in the face of numerous scandals largely driven by a short-termism approach.  This has culminated in a revised UK Governance Code, under pressure from the Government, promoting and ensuring that the Board engages, understand and consider a wider range of stakeholder in their deliberations and decisions.  This broadening of the stakeholder framework for a Board, is a growing global phenomenon where we see the concept of companies having to ‘earn’ a ‘licence to operate’, gaining increasing traction.  The recent pronouncement from the US Business Roundtable, an association of over 180 CEO’s of America’s leading companies, recommended a move away from a myopic focus on short term profit, to a broader focus covering employees, suppliers, communities and the environment.

This reflects a shifting spotlight onto sustainable long-term value for shareholders.  The business world and CEOs are being driven by their consumers and constituencies which provide them with the demand and ‘raw’ material to create long term value.  CEOs are increasingly ‘woke’ to the driving forces of climate change, ethical operation and sustainable value, which are at the forefront of the minds of their employees, consumers and increasingly concerned ‘woke’ pensions investment consumers.

My own experience is that climate change is becoming a key discussion point in Boardrooms, this is especially true where there is a direct business impact or indirect consumer impact.  This includes businesses across the energy, food and transport sectors to mention but a few.

This changing perspective to a broader stakeholder consideration, in turn directly shifts the nature of the Board’s debate to a much more diverse and emotional engagement.  It is fascinating to see a group of predominantly unemotional, reductionist, analytical males trying to make any sense of the outpourings of a sixteen-year-old female generational climate change totem.  Let alone struggling with how to translate this into a coherent vision and stakeholder strategy with an effective stakeholder communication plan for the future.

The ‘gender penalty’ article takes us back to a misogynist world, where the focus on short-term profits was heavily dominant, and where a largely male investor cohort, thought that focusing on diversity endangered this myopic goal of short-term profit.  In 2011, the final year of data collected for this study; the world started to change.  The Davis Report in the UK set voluntary target for females on our top corporate boards and started a change process from 12.5% of females on FTSE 100 Boards in 2010, to 32% in 2019.  This voluntary standard has been the driving force of the debate on how we accelerate the experience, qualification and accessibility of women to senior leadership positions, both in the executive pipeline and on to the Board.  Any of the pre 2011, predominantly male investors, looking at the FTSE 100 today would see nothing but a commitment to diversity on our Boards, and anyone using their outdated short term profit value ‘model’, would be ruled out from investing in the FTSE 100, which represent 80% of the capital valuation of the whole FTSE.

These forces for change are being replicated across the globe.  Emergence of the ‘woke’ Board with its eyes firmly fixed on the strategic horizon and balancing long term and short-term shareholder value, is the abiding image for the future.  Our Boards are increasingly recognising their responsibilities to the wider stakeholder communities and the threat to shareholder value that ignoring these trends presents.

This changing perspective of Boards is also driving an evolution in the role played by the Chairman of the Board, the last bastion of an un-diverse landscape that pervades our corporate life.  These changes are well articulated in a recent report on the future role of the Chairman by Deloitte, which recognised a significant shift in the professionalisation of the Chairman’s role and the demands being placed upon it.  Chairman are increasingly seen as the driving force of sustainable value and survival of the business.  Their role is developing strongly as; the ‘Company Ambassador’, driving a much stronger and wider engagement across all stakeholders; the ‘Strategy Provocateur’, provoking the CEO and Executive Team to develop a longer-term strategy; the ‘Culture and Talent Cultivator’, ensuring the cultural integrity and development and succession beyond the CEO; the ‘Guardian’ of the company’s reputation, ensuring ethical and good governance as a framework for performance and shareholder value; and finally as the ‘Board Conductor’ ensuring the Board is fit for the future with collective and individual contributions from the whole Board.

As has been widely described the characteristics of these ‘woke’ Chairman are very much focused on the behavioural spectrum, with flexible behavioural and personal styles, strong emotional intelligence and curiosity, with a level of engagement and humility which can facilitate the Board, “Good chairs recognize that they are not first among equals. They are just the people responsible for making everyone on their boards a good director” (Stanislav Shekshnia, INSEAD Leading from the Chair).

We need to ensure and support the development of these more aware Boards and Chairman.  The diversity dividend of enhanced performance is being increasingly realised and reported in the real world of modern-day Boards, which are targeted on a strategic horizon beyond the short term thinking of the past – “over the past decade McKinsey research has supported the economic, business and societal case for gender parity.  In 2019 our data set continues to show a significant link between diversity and financial performance” (Vivian Hunt DBE, Managing Partner, UK McKinsey & Company).

The missing link is the progress on diversity in the Chairman of our companies.  The modern Chairman requires a behavioural fluency and emotional empathy, which raises the whole Board to meet the challenges of a broader engagement across a range of stakeholders.  There are many able and aware existing and prospective male Chairman, who will bring this greater diversity of thinking and engagement to the Board.  However, we cannot afford to ignore our growing female Board population as viable candidates for this role.  As we increase the pool of women on Boards, we now need to ensure the acceleration of these women into Chairmanship roles, with a specific targeting and pledge to achieve this goal.  The current level of female Chairman across our companies is frankly embarrassing, in the UK 5% for the FTSE 100 and 2.5% for the FTSE 250.  At this rate the latest research from INSEAD suggests that it will take until 2027 to get 20% of women as Chairman of our Boards.  Fortunately, the advances we have made since 2011 means we can avoid any further perception of a ‘gender penalty’ for appointing women to Chairman roles.  As the authors of the ‘gender penalty’ article acknowledge “Over time, just as greater exposure to female leaders has been shown to reduce stereotype bias, the increase in female Board appointments should likewise decrease the perception that firms select directors for any reason other than their qualifications”.

Across our Board landscape we need to live up to this final gender diversity challenge and ensure the unblocking of the current logjam to the appointment of female Chairman.  We should be at least as ambitious as the original Davis targets, and pledge ourselves to 25% of women Chairman by 2025 and drive onto a 33% achievement by 2030.  ‘For this reason we have joined with INSEAD, Cranfield, The Pipeline and several prominent men and women in spearheading an initiative designed to Accelerate Women into the Chairman role. We have been delighted by the positive response, which will culminate in a short charter detailing how existing Chairman and Head-hunters can make this happen.’

The ‘gender bonus’ clearly outweighs the ‘gender penalty’ in our modern companies.  Fortunately, the “Land that Time Forgot”, illuminated in the ‘gender penalty’ article, is now remote, with only a few ‘throwback islands’.  We have largely moved onto a more modern enlightened thinking on the benefits of diversity and how it will help Boards to respond to the challenges ahead.


  • How to Be a Good Board Chair, Stanislav Shekshnia, HBR March–April 2018

  • Chair of the Future, Deloitte, 2018

  • Women Don’t Mean Business? Gender Penalty in Board Composition, Isabelle Solal, Kaisa Snellman, Organizational Science 2019.

  • Delivering Through Diversity, McKinsey 2018

Article originally published at Advanced Boardroom Excellence