Top 10 Ways to Lead a Board with a Solo Female Director

Being the only woman in a well-established group of male directors can be tough, especially when the woman is also the first woman to join the board.

Here are some ideas for Chairman, CEOs and non-executive directors (male and female) to remember when the board is transitioning to a broader composition, appointing directors who represent various dimensions of diversity, and not just gender.

1. Be sure that a woman's comments are heard; if the conversation goes on as though the woman has not spoken, reinforce what she has said, and give her credit for it.

2. If you notice a women being ignored or slighted, let her know you see what is happening and then make it clear to others that this unacceptable behaviour.

3. Be aware of informal occasions (sporting events are a typical example) when women directors are not present and board business is discussed.

4. Find time and ways to get to know the women informally to the same extent that you get to know the other men.

5. Don't expect women to raise gender and diversity issues by themselves; be alert to those issues and take the initiative to raise them also.

6. Don't get suspicious that women are conspiring when women are seen talking together or sitting in groups.

7. Put women directors on the nominating committee.

8. Ask women, (and not only those on the nominating committee), to suggest women board candidates.

9. Remind the board that having one, or two women, isn't enough. Nor is having no-one else who represents of other dimensions of diversity, (age, cultural background, nationality, religion, sexuality).

10. Insist that executive search firms and nominating committees provide a shortlist of board candidates who represent multiple dimensions of diversity, and not only gender.

(Adapted from "Critical Mass: The Impact of Three or More Women on Corporate Boards", Alison Konrad, Vicki Kramer and Sumru Erkut, in Organisational Dynamics, Vol 37, No 2, pp145-164, 2008).

"A woman with Asian-experience" and other stereotypes of board diversity

As the debate continues about increasing the diversity of composition on boards, the Norwegian experience of introducing quotas to redress the gender balance of its boards is widely cited as a key example.

Norway was the first country to introduce a quota for increasing the number of women on company boards. The legislation, introduced in 2003, required that at least 40% of both genders be represented. Non-compliant companies were faced with sanctions including forced dissolution.

It is critical to note that Norway didn’t legislate for “the boards of all listed companies to be at least 40 percent female” as is widely quoted in global media.

Instead, it introduced laws to ensure that corporate boards be composed of 40% of the under-represented gender.

The distinction is critical for the debate on gender balance in the boardroom as it removes the focus on feminism and “women’s issues” and instead forces the argument to be about equality in leadership in business and in the boardroom.

The legislation, which was introduced 10 years after the first motion for its introduction was made, was passed in 2003 by a majority of the Norwegian Parliament. It amended ss6-11a of the Norwegian Companies Act to state that both genders should be represented on boards of public limited companies, state and municipality owned companies and co-operative companies (a business organisation owned and operated by a group of individuals for their mutual benefit).

In the boards of publicly-listed companies, both genders should be represented as follows: 

1.       Where there are two or three board members, both genders should be represented;

2.       Where there are four or five board members, both genders should be represented with at least two members each;

3.       Where there are six to eight board members, both genders should be represented with at least members each;

4.       Where there are nine or more members of the board, each gender should be represented with at least 40 per cent each.[i]

The balancing of gender composition on Norwegian boards was initially slow but by 2005 momentum was evident. The proportion of women in 2002 was six per cent, rising to nine per cent in 2004 and 12 per cent in 2005. Then real progress was made with 18 per cent of board seats occupied by women in 2006, 25 per cent in 2007, 36 per cent in 2008 and 40 per cent in 2009[ii].

The Norwegian experience has caused other European countries, such as Holland, Spain and Iceland, to also introduce legislation to achieve gender balance on boards.

---

[i] Storkvik, A., and Teigen, M., (2010) “Women on Board: The Norwegian Experience”, Friedrich Ebert Stiftung, International Policy Analysis.

[ii] Teigen, M., (2008) Norwegian quota policies, paper presented at the Nineteeth Meeting of the Helsinki group on Women and Science, 4-5 November, ISF paper, 2008:12

Tokenism: The Hidden Enemy of Board Diversity

Ever since Derek Higgs[i] proposed that non-executive directors be sought from a broader range of potential candidates, including those which would capture likely female appointees, diversifying board composition has become a world-wide trend.

At one end of the spectrum, voluntary codes of governance have been revised to include “diversity” guidelines for increasing the number of women on boards, and in senior executive ranks.[ii] At the other extreme, in 2003 Norway legislated for corporate boards to increase the number of directors in the “under-represented gender”[iii] on the board or else face de-listing by the Norwegian Stock Exchange.[iv]

While statistics show that the number of women represented on Australian corporate boards has increased significantly between 2009 and 2013, the figures come off a very low base. For example, in Australia, the number of female directors on the ASX100 boards increased from 8.7 per cent in 2010[v] to 15.7 per cent in June 2013.[vi] But as of June 2013, 48 boards on the ASX200 do not have any female directors.

A greater number of women are represented on boards in other sectors namely mutual and community banks[vii], governing councils of universities[viii], and government entities[ix]. Medibank Private, which is one of the largest and most influential of government boards in which a federal Minister has final approval of the directors, has reversed the trend: five of the seven members of the board are female, including the chairman, Elizabeth Alexander. (The two men on the board are non-executive director, Paul Vamos, and the Managing Director, George Savvides).[x]

As governments, professional associations and boards continue to redress the gender imbalance on (mainly corporate) boards, two themes recur: 1) that “gender” and “women” are used as a synonyms for “diversity” (as opposed being only one example of the many dimensions of diversity), and; 2) the consequences of diversity of board composition is little understood.[xi]

One of the hurdles to overcome is the habit of “diversity” continuing to be defined as the number of men, versus the number of women, who compose a board of directors. While this misconception continues to be perpetuated, the opportunity to broaden the interest, and subsequently the discussion and academic research, on the impact of diversity on boardroom decision-making remains stymied.

Diversity means having many different characteristics represented (on a board) such as gender, age, cultural background, professional expertise, sexuality and religious affiliations. Diversity does not mean having one or two female directors on a board composed otherwise of men who all share the same characteristics – typically age, gender and professional background.

By limiting the definition of “diversity” as it relates to board composition to women, the opportunity for further discussion and research is likewise restricted. One area of research in which I am engaged currently is considering what it means to “lead for diversity”, meaning what additional skills does a chairman, experienced only in leading a board composed of men similar to him, need in order to accommodate a greater range of people on the board?[xii]

When there is only one person who represents the minority in a group, the spotlight of attention shines brightly. The other group members, shrouded in comfortable familiarity, are suspicious of this person, who looks different, speaks differently, and most confronting of all, thinks differently. Group dynamics theory attests to the practice of groups striving to conform in order to survive; a member who is different to the majority usually has limited choices: conform, or act independently and authentically and risk being rejected by the group.

Minorities in groups, even if this means one woman in a group of male directors, is often called a “token”, and the practice of admitting a person different from the group norm is called “tokenism”. Senior female executives and directors want to avoid being the “token woman” at all costs. Yet in this period of reforming the way boards recruit new directors and plan for succession, “tokenism” is a pertinent issue.

Women directors on ASX200 boards are most likely to find themselves as the lone woman, and occasionally as one of only two female directors. One woman finds the spotlight of attention very bright; but this is shared more easily with two women. Once three women are appointed a “critical mass” occurs and the group sees the women as “members” rather than “our female director”.[xiii]

The problem of tokenism on boards is greater when other dimensions of diversity, such as cultural representation, are sought on a board. In Australia, the Federal Government’s Asian Century White Paper has called for all ASX200 boards to have 33% of directors with “deep Asian experience” by 2025.[xiv]

The definition of “Asian experience” is fraught with misinterpretation,[xv]  and so far, only three per cent of directors of the ASX100 boards were born in an Asian country, namely China, Hong Kong and Singapore.[xvi] There is also a spattering of directors with experience of working in Asia, such as a former ambassador to China. If number of boards surveyed is increased to the ASX200, the number of boards with directors with “deep Asian experience” increases to six per cent.

With this push to increase the number of women and the number of people with “Asian experience”, on corporate boards, it is timely to consider what it means to place a person who represents a minority group into a well-established group.

Whether that person is a woman, a younger person, an indigenous director or a director born in an Asian country – further examination is needed of the impact of introducing a person of “difference” into a group whose membership that has a long tradition of “refreshing” its membership from a similar group of people. Questions to consider include adapting leadership styles for the chairman, training the whole board to better understand different perspectives, and revising induction programs for new directors.

These are areas of deep interest and relevance to my doctoral research and to my work as a board advisor. For further information, please contact me: ann-mareeATboardroomcg.com

---

[i] Higgs, D, (2003) Review of the role and effectiveness of non-executive directors

[ii] One example is the Corporate Governance Principles and Recommendations with 2010 Amendments produced by the ASX Corporate Governance Council.

http://www.asxgroup.com.au/media/PDFs/cg_principles_recommendations_with_2010_amendments.pdf

[iii] It is critical to note that Norway didn’t legislate for “the boards of all listed companies to be at least 40 percent female” as is widely quoted in global media. Instead, it introduced laws to ensure that corporate boards be composed of 40% of the under-represented gender. The distinction is critical for the debate on gender balance in the boardroom as it takes away the focus on feminism and “women’s issues” and instead forces the argument to be about equality in leadership in business and in the boardroom.

[iv] Storvick, Aagoth and Teigen, Mari, “Women on Board: The Norwegian Experience”, Friedrich Ebert Stiftung, http://library.fes.de/pdf-files/id/ipa/07309.pdf

[v] http://www.womenonboards.org.au/pubs/bdi/2012/index.htm

[vi] http://www.companydirectors.com.au/Director-Resource-Centre/Governance-and-Director-Issues/Board-Diversity/Statistics

[vii] http://www.womenonboards.org.au/pubs/bdi/2012/creditunions.htm

[viii] Of the governing councils of the Group of Eight (Go8) universities in Australia, 33% of members are female. http://www.go8.edu.au/

[ix] As at 30 June 2012, women held 38.4% of Government board appointments (up from 35.3% in 2011). Over the 2011-2012 financial year, 41% of the 1633 new board appointments were awarded to women. http://www.fahcsia.gov.au/our-responsibilities/women/publications-articles/gender-balance-on-australian-government-boards-report-2011-2012

[x] http://www.medibank.com.au/About-Us/Corporate-Information/Our-Board-and-Governance/Board-member-profiles.aspx

[xi] Adams, R, “Women in the boardroom and their impact on governance and performance,” forthcoming, Journal of Financial Economics.

[xii] Moodie, A., (2011) “The Chairman of the Future: Leading for Diversity in the Boardroom”, Keeping Good Companies, August.

[xiii] Torchia, M., Calabro, A., & Huse, M., (2011) “Women Directors on Corporate Boards: From Tokenism to Critical Mass”, Journal of Business Ethics, Vol 102 No 2, pp299-317

[xiv] The Asian Century White Paper, Prime Minister and Cabinet, Federal Government of Australia, 2013. http://asiancentury.dpmc.gov.au/white-paper

[xv] Interview with Ann-Maree Moodie, ABC News Radio, on the Federal Government's Asian Century White Paper which recommends the composition of ASX 200 boards include a third of directors with deep Asian experience" by 2025. October 29, 2012. www.abc.net.au/newsradio/listen/daily.htm

[xvi] Durkin, P., “Top boards fail Asia test”, The Australian Financial Review, 14 June 2013.

What happens to the director who "rocks the boat" in the boardroom?

Boards rarely take a vote, preferring to arrive at a decision by consensus.  The most commonly cited reason for this is the perception that a board that votes must be dysfunctional or adversarial.

But what happens when a director is the sole dissenting voice in the boardroom?

There are several ways directors try not to rock the boat. It can be a policy of the board, for example, that directors give the chairman a “heads up” about issues of individual concern before the meeting.

Other chairmen encourage the chief executive to “take the temperature” of directors before the board meeting to ensure a proposal is well explained.

A director who is still dissatisfied, but is disinclined to “hold up the meeting” by digging in on an issue, may speak with the chairman or the chief executive privately afterwards.

If a board discussion has reached a stalemate, a chairman may force the issue and offer a director who has argued against a motion to have his or her name – and the nature of their opposition – formerly recorded in the minutes of the meeting.

This can be a tricky course of action though. As one director once told me : “If you are in the minority and six months later you’re proved to be right, it’s cold comfort to say ‘I told you so’ because at the end of the day, you were simply not compelling enough in your arguments to sway the board at the time.”

There is a subset category in the academic research on group dynamics that is concerned with “group think”. This is a term used to describe a mode of thinking that group members engage in when they become intent on maintaining the status quo.

When this happens, the members of the group lose the ability to think critically. If a board has succumbed to group think, it is more likely to be falsely confident in its collective abilities and knowledge and therefore become more reckless when making decisions.

Tolerance to risk is higher in groups than it is with individuals, because responsibility is diffused in group. If no one person is responsible for the decision, then all will share the consequences of the outcome. The majority model, which is used by many boards, is also a factor in the group being more likely to take the less conservative path.

If the board operates by consensus, the group decision equals or approaches majority opinion; if consensus can’t be reached, majority rule applies.

When faced with a decision that is perceived to be highly risky, board members tend to choose one of three courses of action - they seek the counsel of any board member who is deemed to be the "subject matter expert"; they call for independent advice, or; they defer the decision for as long as required in order to ensure that all the information is available.

When all other factors are stripped away, the role of the board is about one thing: making the right decision for the organisation. If we accept this premise then it follows that how a board makes decisions is a key issue of leadership for the chairman, and a key issue of process for the board.

A board can check itself against this simple but important purpose by evaluating its tolerence for dissent, articulating how it deals with a director who "digs in" on a issue, and determining whether it has a culture of too easily conforming to the majority view.

.

Interview with David Gonski (2): The Curse of "Unconscious Bias"

The term “unconscious bias” has a rich academic pedigree steeped in psychological thinking. In layman’s terms, it describes the practice of judging others by stereotype: we hire people we like; people with whom we feel an affiliation. The lack of diversity on Australian boards and in senior executive ranks is often blamed on unconscious bias. In the second part of my interview with David Gonski, AC we talk about why familiarity is considered important in choosing our colleagues and how unconscious bias can stymie good decision-making.

 “We tend to choose from the circles we know and trust,” says Gonski, who is the chairman of Investec, Coca Cola Amatil and the Future Fund. “It’s regarded as less risky to take people who are already in those positions or to take people who’ve had to break in to those roles.

“But the circles you draw from won’t include diversity unless you consciously decide to make them diverse. And my theory is that it is worthwhile doing that. In fact, the actual exercise of exercising your mind to think outside of your circle is a good thing. You can create the benefits of diversity by breaking out and not just having people who are similar to yourself.”

Gonski cites the example of a board colleague with whom he rarely agreed. The director had completed his term on the board and Gonski spoke at his farewell party. “This person was from a very different world with very different thinking,” he says.

“At his farewell I stated publicly that he had created better decisions. He had done this because of his ‘needling’ and his constant questioning; I knew he would give us a hard time on any issue. But as a result, the decisions were more carefully framed and much more talked through. So he actually did a great service for the organisation. He made people think harder – and he made me think harder. I carefully checked everything he said.”

My research on “leading for diversity” at the board table concluded that chairmen who are experienced in leading boards of directors who are representative of their own type will need a set of additional skills to help them lead a diversely-composed board. The skills I identified include patience, understanding, the capacity to accept other viewpoints, the ability to listen and a tolerance for dissent - in addition to the traditional skills that a good chairman will bring to board leadership.

Gonski has the experience of serving on boards composed of men who are similar to him, as well as boards composed of a much broader range of people. He believes his style of chairmanship is congenial to homogeneously-composed boards as much as those boards which are heterogeneous.

“I would hope that my leadership style has not changed as a result of (having more diversity of views around the board tables I sit at),” he says. “I hope that I have always been inclusive and I hope that I have always led, whatever I’ve led, with a concept of diversity in it.

“However, within diversely-composed boards I think some of the decisions that have been made, the rigour with which they’ve been made and the vantage points from which they have been made may have changed. But my actual leadership style? No, I don’t think so.”

Diversity means much more than gender. Other dimensions of diversity include age, ethnicity and geographic location. There are already boards of listed companies in Australia which are diversely composed in the true sense of the term.

In my “leading for diversity in the boardroom” research I highlight the boards of Orica and BHP Billiton, for example. (See my article, International Governance: leading a truly diversely-composed board published in the peer-reviewed journal of Chartered Secretaries Australia, Keeping Good Companies, in February 2012).

The average age of company directors in Australia is already decreasing as many of the newly-appointed female directors are younger than their male counterparts. Gonski believes Australian listed entities are on the cusp of accepting “diversity” as meaning much more than gender.

“As the gender issue is addressed and moves forward, as the concept of diversity is understood more fully, and as the benefits of having both genders is recognised, it’s natural that we will want to see what benefits could be made in having diversity in other ways,” says Gonski.

The next step will be geographic diversity. “We already have some recognition of diversity of technical background,” says Gonski. “When I joined boards, most of the people on boards were lawyers. Now we’re seeing in the larger companies examples of geographic diversification – for instance, having someone who understands Asia is on the board. Someone who has lived there in an Asian country, who has worked there and who has done business there.”

But Gonski warns that exploring other dimensions of diversity may threaten the progress that’s being made on appointing women, especially at a time when 60 of the boards on the ASX 200 don’t have any female directors.

“I would hope that there’s a total positive to all of the aspects of diversity and it doesn’t have the effect of lessening focus on the gender issue in favour of the others,” says Gonski. “It shouldn’t happen, but we need to be aware of it.”

To ensure against a return to closed thinking about board composition, Gonski advocates a careful approach to using personal networks to gain a board seat.

“A personal network can be the very antithesis of breaking down the barriers to diversity,” he says. “You’re going right back to the old days when there was a club, and those in the club got the directorships and those outside the club, didn’t.  You need open windows and open doors to create good decision-making on boards.”

How to Win a Board Seat

Every year, approximately one-third of the 1,750 seats available on ASX200 company boards are made vacant. Most vacancies occur because the directors have completed their terms; three terms of three years is the usual benchmark.

Other vacancies arise when board members retire because they've accepted a new board appointment which is in conflict with some of the boards in their current portfolio. For example, a director would not be able to maintain a seat at a regional bank board if they then accept a directorship at a bigger bank.

Or the vacancy may occur because a director simply has too many boards to manage efficiently and properly.

Past practice has meant that the candidates who fill these vacancies will be similar to their predecessors - male, Anglo-Celtic origin, and similar professional, educational and personal backgrounds. However, more of these seats are going to women as a result of new best practice guidelines which encourage listed boards to reflect a better gender balance in their composition.

That said, there are still only about 550 positions on ASX 200 boards that are made available every year. And each one is hotly contested.

Winning a seat on an ASX200 company board reminds me of the school leaver or newly-minted university graduate who misses out on a job because they don't have any work experience. How can they get work experience when no-one will give them a job, they lament.

It's the same in board circles. The way to get a seat on a listed company board is to have a listed company board in your portfolio already.

In my previous post, "Waiting for the Phone to Ring....", I advise senior executives making the transition from a full-time career to building a new role as a professional company director to be patient, tenacious and diligent.

The traditional routes are to register with organisations that advertise board vacancies. One example is Women on Boards, a not-for-profit organisation which campaigns for gender diversity on boards across all sectors.

It's also useful to meet the key consultants in the board search industry. Most large consulting firms provide such a service; there are also a range of boutique agencies which specialise in board placement. But be careful to choose consultants who are truly experienced in board search to ensure your résumé is handled professionally.

The best way, however, is to use your personal network. If it's appropriate, let it be known that you will be pursuing a board career once you leave your current executive role. Your first board is the most critical when you're starting out as a company director because it signals to the market what type of director you will be and the type of industry you're interested in - financial services, health, mining?

The people in your personal network who will provide the best advice are non-executive directors, CEOs, chairmen, company secretaries and board search consultants. Telling your network that you're available for a board seat once you leave your current job is critical to finding your first board role. These are the people who already familiar with your experience and capabilities and are more likely to champion your next career move.

It's tempting to defer searching for board roles until after you leave your current executive role because your job is too demanding and leaves you too little time to network. But many executives in transition forget the caché that their job title and company often carries - and how quickly this is forgotten once they've left.

It's often more palatable for a chairman to appoint a new director who is the CEO or CFO of a major organisation rather than to hire someone who's been "retired" for six or 12 months as they "build their board portfolio". 

Making yourself out to be a good catch is part of the game in board circles, just as it is with applying for any new role.

The next steps to consider are:

1. writing a director's résumé;
2. preparing for an interview, and;
3. conducting due diligence on your prospective board's company.

I will cover these in subsequent posts.

Waiting for the phone to ring........

CEOs and other c-suite executives who announce their departure from their companies “to pursue a board portfolio” often believe that they will be overwhelmed with invitations to join boards. For most, it comes as quite a shock that offers aren’t made with the volume and speed that they expected or from the type organisations they believe to be an appropriate match to their skills and experience.

A senior company executive’s life is busy and demanding. In order for the executive to be efficient and productive, an executive assistant (EA) manages the diary, books flights, makes restaurant reservations and ensures a car and driver is ready. The phone never stops ringing; people are always waiting to be seen.

The EA is a lifeline, a diary at the end of the phone. I've seen CEOs and other well known executives walking down Collins Street in Melbourne or George Street in Sydney on the phone to their EA asking: "Where do I have to be next?"

Outside this environment, the former CEOs often find they are fending for themselves. Some lease an office and employ a part-time assistant; others share office space and secretarial support with like-minded people. “Of course, I look after myself these days,” is the clarion call of a former executive in transition to life as a company director.

For the most part, the executive must adjust to a new life of being self-sufficient: booking their own flights, catching taxis, typing their own emails, making follow up calls. Some former executives even confide to me that they’re worried they’ll have to return their membership card to the Qantas Chairman’s Lounge.

As Helen Coonan, a former senator and now non-executive director of casino operator Crown Limited, told The Weekend Australian newspaper: "Things like (having to drive) yourself everywhere. It's a big shock."

But the least understood challenge for most former executives - or former politicians - who are “building a board portfolio” is the wait: the wait for the invitations; the wait for calls to be returned; the wait between appointments. “You have to be patient and resilient because it never happens as quickly as you expected or wanted,” one ASX 200 director told me.

The yardstick is a minimum of two years – of networking and endless coffee meetings in hotel cafes, of waiting for invitations, of being interviewed by board nominations committees, of learning to cope with not being chosen and of dealing with the disappointment and frustration that can follow.

No longer the centre of attention the former executive can find himself outside of the sphere of influence, increasingly isolated and seemingly marginalised.

Making the transition from an executive career to a company director is a tough adjustment to make. My next post on this topic will offer suggestions and ideas for how a serving CEO can start planning for post-executive board career, and how those “directors-in-waiting” can make the transition easier.