Women chairs to drive diversity across the business

This International Women’s Day 2022, Helen Pitcher OBE, IDN President shares her thoughts on the role that women chairs play as a driving force for diversity across businesses.

It is widely recognised that the two critical dimensions driving equality in the organisational and business workplace are the roles of Chairman and CEO.  Currently however, they are acting as barriers to progression, with the woeful lack of diversity in our Chairs, CEO’s and Executive Leadership populations.  The recent FTSE Women Leaders Review Feb 2022 again highlighted this issue especially in the CEO and Executive Leadership landscape.

“The number of women in the very top job, that is the CEO remains flat and stubbornly low, and there is much more to do on Executive Committees.”

The annual Female FTSE Board Report by Cranfield University shows a positive gender progression at the NED Board level, but throws into stark relief the lack of progress on gender equality in the C-Suite, with the female Chairman leadership of our Boards at 11% in the FTSE 100 and 14% in the FTSE 250 and with only 8% female CEOs across the FTSE 350.  Additionally, female participation in executive leadership has flatlined at 13.7% in the FTSE 100 and 11.2% in the FTSE 250.

We are relying on traditional and slow solutions to solve an unsustainable situation; we need to employ spiralling creativity and innovation to drive change.  This should be a revolution of action, thought and imagination to break the mold and learn new ways of thinking and acting.

The classic rationalisation to the lack of progression for women in CEO, Executive Committees and Senior Leadership roles is the ‘supply deficiency.’  The research done by Assistant Professor Shirley Lu (Harvard Business School) indicates that we could be waiting a long time for the ‘supply side’ environment to change voluntarily.  At the same time, we have the insight from the Cranfield Report of the many capable female leaders who are around, ready and able to fulfil these most senior roles.

While the average tenure of CEO’s at 5 years, provides an insight into their short-term focus, there is little excuse for Chairman to ignore this inequality with their generational stewardship of the business.

In a recent article I suggested that Quotas was the only way to break this log jam, starting with the role of the Chairman at 40%, in order to drive diversity throughout our companies.  The female Chairs are available, ready and waiting for these appointments as demonstrated by the Cranfield Report.

It is time to act, and let’s not kid ourselves that ‘voluntary’ action alone will solve this issue.  The original 2011 Davis Review ‘Women on Boards’ was commissioned and driven by the Government who were concerned about the slow rate of progress of women onto Boards.  It did not spontaneously emerge for companies, the FRC or Companies industry bodies seeking to drive change.

The FTSE Women Leaders Review which is supported by Government and builds on the work, and success, of the Davies and Hampton-Alexander Reviews, has recognised this dilemma.  The Review has set a new recommendation for the Senior Leadership of the FTSE 350 business.  Namely, that a women should be in at least one of the most senior roles in a FTSE 350 business by 2025.  Those roles are the Chair, Senior Independent Director, CEO or CFO.  While this is a good first move, it fails to recognise the dominance of the Chair and CEO roles as the primary driving force for diversity across our businesses.

The Chairman and CEOs have had their chance to progress voluntarily, and they have failed.  It is now time for Governments, Regulators, Female Chairs, NEDs and the Diversity Lobbying Bodies, to say enough is enough, the time for substantive action to break the behavioural anchors has arrived.  Only an immediate progress on the levels of Women Chairman will drive out this inequality of female CEO’s and Leadership Executives across our business landscape.  I would be delighted to see the FTSE Women Leaders Review Recommendation drive a significant upward movement to a 40% target of women Chairs, I remain vigilant however, as to what will be achieved by the end of 2025.

IDN celebrates International Women’s Day 2022

Over 50% of IDN’s board members and ambassadors are women

This March 2022, INSEAD Directors Network (IDN) celebrates International Women’s Day.

In line with INSEAD’s commitment to cultivating a community that pursues equity, exemplifies inclusion, and cherishes diversity, IDN’s board embraces gender diversity.

As of 8 March 2022, four out of the eight IDN board members (including our President, Helen Pitcher, Helen Wiseman, Pamela Ravasio and Karen Loon) are female.

Further, following the recent appointment of Mary Antenen as our IDN Swiss Ambassador, 12 of our 20 IDN ambassadors (60%) are women.

Why is greater board diversity important for organisations?

  • It makes business sense. To date, academic and business research has focused on the business case for greater board diversity and have sought to demonstrate a correlation between board diversity (principally gender) and greater financial performance. This includes a broad range of areas, including financial position/performance, public disclosure, socially responsible behaviours, firm decisions, philanthropy, reputation, and innovation.[1]In 2020, a study in Australia by Curtin University took this a step further and found a causal link between greater numbers of women on boards and in leadership and better financial performance.
  • Stakeholders expect it – In line with the global focus on stakeholder capitalisation and sustainability, investors increasingly expect organisations to have greater board diversity. For example, in the past 12 months, several asset managers have updated their proxy voting requirements on gender diversity to now cover listed companies in some markets in Asia. Further, increasingly more governments, regulators, professional organisations and advocacy groups have released regulations and guidelines which encourage improvements in the pipeline of available diverse candidates for boards. These include a greater focus on disclosure of board diversity policies and reporting measurable progress in improving board diversity.

Yet, whilst women are estimated to hold 19.7% of board seats globally, a 2.8% increase from 2019, progress has been slow and inconsistent. Further, according to Deloitte, only 6.7% of board chairs are women, and only 5% hold the CEO role.

While many argue that it is important to have at least 30% women on board, having greater diversity without a focus on board dynamics will not necessarily lead to greater performance.

Board chairs and other directors also need to create inclusive cultures that allow healthy discussion and dialogue in a safe space.

How can IDN members support greater diversity in the boardroom and #breakthebias?

Create the right culture and board dynamics

  • Invest time in group dynamics and board development. For boards to be effective, it is vital to create the right environment and dynamics in the boardroom. In our IDN webinar on Positive Board Dynamics and Coaching: Key to Superior Performance held on 8 July 2021, Professor Vincent Dominé of INSEAD highlighted that “collective behaviour at the board level has an 800% greater impact on a firm’s performance than the characteristics of individual directors”, according to the benefits of boards working effectively as a team. Emphasising the importance of having psychological safety in the boardroom, Professor Domine highlighted that investing time in group dynamics and board development is essential.
  • Adopt Fair Process Leadership. Another framework that supports better board dynamics is Fair Process Leadership. Many IDP attendees would be familiar with the importance of having Fair Process Leadership in the boardroom. As Professor Ludo van der Heyden of INSEAD argues: “the sustained practice of fair process leads to greater value creation for a corporation’s stakeholders and increases the trust that society awards the business. Fairness is not an option: it is fairness for the board and ultimately business performance.” Using the FPL framework in the boardroom will support greater board effectiveness.

Grow the pipeline of female directors

  • Mentor aspiring and new female directors. The journey to becoming a director is often opaque. IDN’s experience is that board mentors play a key role in supporting the successful transition of senior executives and new directors into their roles. As one of our IDN mentees said in 2020: “Normally it takes years to come up the NED learning curve…and a few mistakes along the way. My mentor saved me a year or two easily.”
  • Encourage greater diversity in your organisations – Understand from the management of the organisations where you are a board member how they manage diversity. Ask them questions such as: how does greater diversity align with your organisational purpose, lived values, and behaviours? What are some of the inhibitors, both conscious and unconscious, inhibiting change? How is greater diversity embedded into all areas of your organisation, including beyond talent management? And are your organisation’s senior management (especially women) encouraged to take on external board roles as part of their leadership development programmes?


Karen Loon IDP-C is an IDN Board Member

[1] For example, refer to the overviews of recent research by Kagzi and Guha (2018) at https://www.emerald.com/insight/content/doi/10.1108/JSMA-01-2017-0002/full/html, and Salma and Qian (2021) at https://www.journalofbusiness.us/index.php/site/article/view/182.