6 myths about female board members
On International Women’s Day in 2019, shortly after she joined us at Saïd Business School, Renée gripped the room when she did a thorough analysis of some of the myths around women on boards in terms of representation, risk-taking, and returns.
Nearly six years after that event - Does the ‘business case’ for women on boards stand up? - Nurole, a global non-executive search specialist, caught up with Renée for their Enter the Boardroom podcast to get her perspective on what if anything has changed. In light of current political developments and an increasing diversity backlash, we wanted to share that episode here on Oxford Answers to remind our readers that science can help steer us through ideological minefields.
Myth 1: Popular boardroom surveys provide an accurate picture of women's relative underrepresentation
Every year in the UK the FTSE Women's Leaders publishes a report sharing insight and progress in delivering gender balance across the FTSE 350 (the top 350 listed companies) and 50 of the largest private companies. While the numbers from that review in 2024 may look like gender balance is in sight, Renée reminds us that in the UK there are about 1700 listed firms and once you look outside the largest firms, the headline representation figure decreases a lot.
What next: If all the focus is on large firms, then the large firms will respond by appointing women. But where do they get these women? So one hypothesis that Renée would like to study is the possibility that gender representation policies cause the reallocation of women from small to large firms rather than systematically increasing gender representation.
Myth 2: The 2008/2009 financial crisis would not have happened if Lehman Brothers had been Lehman sisters
This oft quoted statement made after the collapse of the Lehman Brothers bank assumes that women are more risk averse than men. But as Renée points out when people make these claims they forget about selection. As the barriers to entry for women in finance are much higher you don’t tend to see ‘typical women’ in finance. In fact, both women and men in finance are different from the general population, therefore it's not at all obvious we would see a gender difference in the attitude to risk.
What next: Renée has long argued that tackling gender inequality involves a rethink of finance itself. This is why she argues that the academic institutions that teach, influence, inspire, and mould the future bankers, fund managers, brokers, traders, economists, policy makers and finance and economics professors also need to change. (Read Renée's piece Balancing Finance: The diversity dividend about women's low representation in finance academia and what to do about it.)
Myth 3: Female directors are just like male directors
When looking at board composition it’s not biology that matters, it’s the skillset - the knowledge, experience and expertise – that any individual brings to the board in order help the firm achieve its objectives that matters. Since talent should not be a function of biology, if you never have a woman on your board then that's a sign that there's something else going on. That might be a cultural issue so putting a woman on the board will not necessarily solve that cultural problem.
What next: Every board and board member shouldn’t be a clone of the other. If Renée were recruiting for a board, she would look outside her field and her industry for those board members.
Myth 4: HR directors are to blame for the gender imbalance on boards
The fact that women are underrepresented on boards is structural – it’s societal. What Renée shows in her research is that in countries where you have more women working full-time you have more female directors. So we need to enable more women to work full time.
What next: It’s simple. Let’s get policymakers to focus on policies such as childcare and not on quotas.
Myth 5: Adding a woman to your board will improve shareholder value
Renée tells Oliver Cummings, podcast host and Nurole CEO, that she thinks it is actually impossible to prove or disprove this statement scientifically and thinks that you should be sceptical about claims made either way. The reason she cannot see any possible way to causally identify the effect of gender on firm performance is because people are bundles of characteristics. For both men and women you cannot disentangle gender from other characteristics.
What next: Again scientifically Renée think it's impossible to establish that just because you're a woman or a man you add value. But she refers us again to myth three – if you don’t have women on your board then you need to ask yourself whether you have a problem that you need to fix. Put another way: discrimination is unlikely to add value.
Myth 6: Quotas are necessary to improve female board representation
We need to move beyond superficial fixes and treat the disease not the symptom. She refers us back to the point she made in myth number four about where policy makers should be focusing.
What next: She is however becoming increasingly concerned about the very large backlash against women's rights we are currently witnessing. And worries that a lot of the narrative around diversity and quotas for example is not helping the issue. ‘I really think that we need to be much more careful and much more thoughtful about how we approach these issues.’
