Shireen Muhiudeen began her presentation by providing a completely fresh perspective on the value of having women in the Board Room. She ran a newsclip from a CNN Business feature which revealed the findings of a recent US study of Fortune 500 companies. According to the report, companies with at least 20 percent female representation on their boards, performed significantly better than others, in spite of the global financial downturn.
Shireen, who is the managing director of Corston-Smith Asset Management, is a strident supporter of Corporate Governance and writes a column on the topic for a major Malaysian newspaper. She was called upon to comment on this report and shared similar findings from her own survey of companies that have women in top management. These companies seem to do better because women bring to the table a different style of management.
Shireen posed a pertinent question, “If Lehman Brothers was Lehman Sisters, would Lehman have collapsed?” She went on to describe the composition of typical boards of directors. Even today, the old boys’ network dominates and this ensures that men, who invariably went to the same schools or universities, eat in the same restaurants and play golf at the same club, get appointed to boards of directors of financial institutions or public listed companies. They bring to the board the same values, beliefs, cultural backgrounds, loyalties and core competencies. These were the men who sat on the board at Lehman Brothers.
Shireen provide some interesting comparisons on how far women have progressed in the corporate world internationally.
• In the UK, only 6.6 percent of non-executive directors are women.
• In the rest of Europe, women only filled 12 percent of top management.
• Norway has now made it a mandatory to have 40 percent female directors for main listed companies since 2008.
• Spain instituted a gender equality law in 2007 which requires 40 percent women on boards by 2015. Compliance is required if a company tenders for Government jobs.
• In Asia, Malaysia sit in the No. 6 position with 5.2 percent female directors after Philippines with 10.3 percent at No.1; Hong Kong with 7.8 percent; Thailand with 6.7 percent at No. 3; Singapore with 6.2 percent and Indonesia with 5.5 percent occupying the spot ahead of Malaysia.
Some have criticised mandatory rulings which require a certain percentage of female directors:
• Men claim that they will have to vacate positions in favour of incompetent and inexperienced women. They also claim that there are not enough women to fill these posts.
• Others have said that female quotas should be applied to fishing and whaling, and not for women directors.
• Another contention has been that women in boards ape men and soon replicate their own old girls’ network to help women get top positions.
While men want to retain the status quo, Shireen said that having women on boards makes good financial sense. After all, many companies cater to female customers and having no women on their boards limits their perspective and puts them at an obvious disadvantage.
Shireen went on to outline available evidence of how having women on boards has been particularly rewarding:
• According to McKinsey’s research presented at the Women’s Forum for Economy & Society in Deauville, France, there is a clear correlation between companies that have better-than-average financial performance within their sectors in European companies with the proportion of women on their boards. This better financial result is measured in terms of return on equity, operating results and share price growth.
• Companies with a third or more women on senior team have a higher return on equity. These companies have higher “organisational excellence” which include accountability, innovation and positive work environment.
• Catalyst’s US boardroom research showed Fortune 500 companies with highest number of female directors are more profitable and efficient.
• The Catalyst’s survey showed companies with three or more women on their respective boards of directors, on average gave an 83 percent higher return on equity, a 73 percent higher return on sales and 112 percent higher return on invested capital.
Clearly, despite the naysayers have to say, the numbers really do the talking!
Shireen went on to explain why women make a different and why we need them on Boards.
• Women are always asking questions. They are not shy to admit that they do not know something.
• Women on boards are working instead of sitting on the board. They read minutes and raise the level of discussions on boards.
• The old boys’ network on many boards ensures many issues do not get discussed or questions to not get raised as the members of the board share similar values and opinions.
• Gender diversification and internationalisation of boards of directors force companies to bring in different pools of talents. This diversity dilutes “groupthink” and widens the scope of discussions based on many different perspectives.
From her experience as a successful fund manager with ING, and now running her own asset management company, Shireen said women’s weaknesses lie in their failure to network or link up effectively. To get more women on boards, more effort must be put into doing the following:
• The government must work with national bourses to make it a listing requirement.
• It needs to be made known that women can make very effective non-executive directors even though they might have non-traditional CVs, or may never have been a CEO or previously served on a board.
• Women who have leadership potential must push themselves, move out of their comfort zones and accept that they have no reason to be shy about their talents and accomplishments.
• Women need encouragement to step forward – to this end it is necessary to find coaches, colleagues or partners who can be mentors.
• Director training programmes for women is an important necessity to prepare women for decision making roles in the corporate sector – there are many qualified women in other sectors who are doctors, lawyers or academics for example.
• Training programmes should involve simulated board meetings to give female candidates a chance to acclimatise themselves to board settings, demonstrate their strategic thinking, financial savvy and handling of governance matters.
• Develop mentoring programmes with existing corporate leaders. In the UK, there is a FTSE 100 Cross-Company Monitoring programme where Chairpersons mentor senior women in other companies to help redress the gender imbalance in boardrooms.
Shireen concluded by saying that the surveys have shown that women are needed on board; now women just need to do it – “get a mentor, do due diligence and get into the boardrooms!” she exhorted.
Click on pic to view Gallery of 2009 Speakers and Panelists
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