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).

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

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[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.

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Are new director appointees a burden to the board?

When I was reseaching my fourth book, The Twenty First Century Board, it was put to me by a prominent and experienced chairman that a new non-executive director can take a year to settle into the new role, learning how the company operates, the nuances of the corporate strategy, the dynamics of the board and the personalities of the key players in management. As well as many other things.

I thought it was as odd thing to say - surely a board needs a new director to be more actively engaged a lot earlier? And I started to think about how this could be done.

As part of my research into "Leading for Diversity in the Boardroom" I considered the three main parties who are responsible for ensuring that a new director can start making a contribution at the board table from their very first meeting. They are: the chairman, the board as a whole, and the new director.

Often a new non-executive director feels that the most appropriate way to behave in
the first few board meetings is to remain quiet, to listen and to participate in the
discussion only if they have something valuable to say.

The underlying motivation for this behaviour is the new director wanting to ‘fit in’ and not dominate proceedings or exhibit other behaviours that the group cannot tolerate.
Ironically, this behaviour can send the wrong message. If the other board members have heightened expectations about how the new member will add to the collective
value of the board’s composition they will be disappointed with the silence. They
would prefer the new director participates in board discussions immediately.

Obviously the new director takes a risk with whichever approach they adopt.

I'd welcome comments on the experiences of other directors who are new to boardrooms or from those who remember what their first board meeting was like.

More about this topic can be found in my article, "Cultural Governance: ensuring 'fit' in the boardroom" which was published in the refereed governance journal, Keeping Good Companies, in August 2011.

In subsequent posts about "leading for diversity in the boardroom" I'll discuss how a chairman can avoid the burdens associated with inducting a new director.

Do you lead your board like Margaret Thatcher?

It is January, 1984. The place is No 10. The forum is the British Cabinet’s Overseas and Defence Committee. The subject is the possibility of an attempt to normalise relations with Argentina…Sir Geoffrey Howe is four minutes into the Foreign Office paper on the need to open exploratory talks with the Alfonsin Government. Mrs Thatcher cuts in: “Geoffrey, I know what you’re going to recommend. And the answer is ‘no’.” End of item: nobody argues with the boss.
                                                    - Peter Hennessy, Cabinet, 1986.

The chairman plays a crucial role in determining the quality of decisions made by board members.

If the chairman is a person to whom deference is afforded by the group, the decisions made by the board will be influenced by how the board members predict the chair’s preference for, and expectations of, the final determination.

A chairman must appreciate that in order to ensure a high standard of decision-making by the board he or she should adopt a neutral position while simultaneously eliciting a range of views, and especially perspectives which are the antithesis of the group norm.

Unlike the former British Prime Minister Margaret Thatcher, whose domination of her Cabinet remains the stuff of legend, a chairman should avoid stating personal preferences too explicitly during the boardroom debate.

Group decisions are usually determined by a majority - rather than the minority – rule as I wrote in a 2003 corporate governance opinion column for the now closed CFO magazine.

The minority rule, however, should not be unappreciated, as it can be exactly the position needed to make a better decision, to reverse a “bad” decision, or to add a new perspective to an outcome which is ultimately determined by the majority rule.

If a chairman was so bold as to encourage the minority rule, it must also be understood this will cause dissent in the group. Board members are predisposed to endorsing the most socially-desirable viewpoints of the group and a “deviate” will upset this balance.

The chairman, therefore, must be able to celebrate and support the views of the “devil’s advocate” while simultaneously managing the ensuing furore of the group caused by the dissenting voice.

The “devil’s advocate” must likewise be responsible for the fallout caused by airing a viewpoint counter to the group norm.

There have been several notable examples of chairmen in Australian board history who were Thatcheresque in the execution of their duties because they believed their particular leadership style was the only way to express authority and power.

The more elegant, courageous and influential approach is if a chairman lets the minority have its say, celebrates the “deviate” viewpoint and learns that being the centre of attention can also mean standing outside the spotlight.

Do you have the skills to lead a diversely-composed board?

If you are the chairman of a listed company board which is composed of people who are representative of many dimensions of diversity - age, gender, nationality, educational background and geographic location - you are in the minority.

Many of your peers will be leading boards which are homogeneous; some will chair boards with one or two female directors. In governance jargon a board of men and one or two women translates as being "diverse".

But gender isn't a synonym for diversity.

Chairmen of truly diverse boards are rare. I have talked in depth to many of this select group of men and women. Their experiences of managing the views and contributions of people who are quite different to one another formed part of my research for "leading for diversity in the boardroom".

The skills that a chairman of a diversely-composed board requires fall into the catagory of "soft" skills.

In the report of my research, "The Chairman of the Future: Leading for Diversity in the Boardroom", (Keeping Good Companies, February 2011), I write:

"The ability to chair a diversely composed board will require a range of what are often called “soft” skills that have traditionally been considered the domain of women. The most significant of these is being able to listen closely. In all probability, someone who is different to you – because of gender, age, nationality, work and education background, religion – will not think the same way. But that doesn’t mean you both aren’t working towards the same solution.Therefore, the leadership skills required for a diverse group will also include patience, understanding, and the ability to put aside ego in order to accept that there may be another way of doing something. Finally, a tolerance for dissent is critical."

The leadership skills of patience, understanding, the ability to accept other viewpoints, the ability to listen and a tolerance for dissent are in addition to the traditional skills that a good chairman will bring to board leadership.
As more companies in Australia and globally continue to pursue diversity as a critical strategic goal, the people who are chosen to lead boards may well be selected based on their demonstrated ability to "lead for diversity".

WHAT IS CORPORATE GOVERNANCE?

At its very essence, corporate governance is simple: it's about a group of people making the right decision for the organisation.
Most board work occurs in complex environments. Corporate law, regulatory compliance, industry competition, the vagaries of international economics and shareholder expectations are only a few of the factors which board members must consider.
But in the end, governance is simply about decisions made by a board which aim to lead to a successful and sustainable organisation.
Accepting this as our premise, these are some of the questions that follow:
1. Who are the people making the decisions?
2. What are their qualifications and collective experience?
3. How are they led?
4. What is the quality of information on which they base their decisions?
5. How open and transparent is their relationship with the chief executive and the management team?
6. What is the standard of debate and discussion at the board table?
7. Is the board a well-functioning team or could it benefit from stronger leadership and a refreshed composition?
The Boards and Governance blog promotes good governance practice, discussing a broad range of contemporary issues concerning what it means to be a member of a board in today's complex global business world. Common themes will emerge: board leadership, group decision-making, the art of argument and debate, diversity of board composition and group dynamics.
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