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What Works? Three Strategies for Getting More Women on Boards

By Melissa J. Anderson

A new report by GMI Ratings has revealed that boards around the world are diversifying when it comes to gender, albeit at a crawling pace. The report authors, Kimberly Gladman, Ph.D., CFA, Director of Research and Risk Analytics and Michelle Lamb, Research Associate, studied the boards of over 4,300 companies in 45 countries globally. They found that this year, for the first time ever, at 10.5%, women hold more than one in ten board seats. Additionally, the number of companies with no women on their boards dropped to 39.8%.

According to the study, industrialized countries tend to have more women on boards than developing ones – although that’s not true in every case. For example, only 1.1% of Japanese board seats are held by women. At 4.5% and 7.0%, Italy and Singapore aren’t faring much better. On the other hand, 17.4% of board seats are held by women in South Africa, the highest scoring emerging market on GMI’s list.

In fact, there’s little homogeneity between countries on either list. The country with the highest level of female board participation is Norway at 36.3%, which GMI attributes to the country’s gender quotas. At 16.6% and 13.8%, France and Australia are the countries with the fastest rate of growth when it comes to female boardroom participation.

The researchers write, “This heterogeneity reflects the wide range of approaches countries are taking with respect to board diversity, involving legal requirements, corporate governance guidelines, listing exchange standards, mentoring programs, and other voluntary initiatives.”

Besides large scale initiatives, they explain, the way boards generally operate in each country will effect its gender make-up. “Countries where annual director elections are common, for example, might show change more quickly than those where the board stands for election only every fourth or fifth year.”

Here is a deeper look at three national strategies for getting more women on boards, and how they appear to be working.

1. France: Quotas

GMI attributes France’s recent success in boardroom gender diversity to its 2010 law designed to increase board gender diversity in two phases. Within three years, boards would have to be 20% female, and within six years, they would have to reach 40%.

That’s why, they say, the percentage of women on boards is “zooming up” in France. Now at 16.9% female, the percentage has increased a total of 7.5 percentage points since 2009. Additionally nine out of ten boards has at least one woman.

They add, “Perhaps most striking of all, nearly a third of French firms have at least three female directors—a number many believe constitutes a critical mass, and allows companies to benefit more from women’s leadership styles.”

2. Australia: Transparency

Since 2009, Australia has increased its percentage of women on boards by 5.4 percentage points and now stands at 13.8%. It has achieved this high rate of growth, not through legislation, but by corporate disclosure requirements set by the Australia Stock Exchange.  “ASX-listed companies are now required to report on their overall diversity policies, as well as on specific objectives for improving gender diversity.”

This industry-backed push for corporate diversity seems to be working without the involvement of state-mandated quotas.

3. US: Investor Pressure

In contrast to France and Australia, the speed at which women are entering the boardroom is significantly slower. Only 12.6% of directors are women, and only 10.4% of boards have three or more women. On the other hand, the researchers add, “Interestingly, however, women are slightly overrepresented on all three key committees [Audit, Nominating/Governance, and Compensation] compared to their numbers in the director population.”

But, they write, the rate at which boards hire more women is changing, due to pressure by investors for greater gender diversity. The researchers mention efforts like the 30% Coalition, and pressure by CalPERS and CalSTRS:

“For example, the 30% Coalition is a network of investors, corporate leaders, and other advocates seeking to raise the proportion of female directors to that number by 2015. To help companies find qualified women, as well as other candidates with a diverse range of backgrounds, skills and experience, the California Public Employees’ Retirement System and the California State Teachers’ Retirement System recently commissioned GMI Ratings to create the Diverse Director DataSource (3D).”

By pushing indirectly for better diversity, they say, investors can help make a difference in the gender make up of boards.

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