The US clearly has a problem with boardroom diversity. The latest research from the Financial Times spells it out. Just 15% of boardroom positions are held by women, while in Europe the figure stands at 25% (not the best, but better than the US).
US board directors, the FT tells us, are almost twice as likely to be over 65 years of age.
What to make of this? Well, the FT’s news does not exist in a vacuum. Last week a group of the largest fund managers in the US, including Warren Buffett, issued their own governance code in which they said: “Diverse boards make better decisions.”
In June, Mary Jo White, head of the Securities and Exchange Commission, the US financial watchdog, said emphatically that corporates listed on Wall Street need to improve their diversity disclosures. She added: “As a former member of a public company board and its audit committee, I have seen first-hand what the research is telling us—boards with diverse members function better and are correlated with better company performance.”
From the FT’s research we can only surmise that disclosure was poor because what companies had to report was poor too; old grey men, reluctant to move on, dominate the boardrooms of America.
When compared with Europe, the situation begins to make US boardrooms look reactionary: bastions of male stubbornness arrogantly wedded to the idea that only men can make the right decisions.
Of course, not all boardrooms are like this and in any case, successive women have proved this idea wrong. Women make great business decisions. What men really don’t like, I suspect, is that women change the boardroom environment. They’re not part of the club: they don’t socialise in the same way; they don’t laugh at the same hoary old jokes; they don’t have the same attitudes to work-life balance and family.
Lastly, they do business differently. Academics Kris Byron and Corinne Post recently wrote for Board Agenda that boards with women are more profitable. But they also do different things. They value “interdependence, benevolence and tolerance”, which may help them work more collaboratively. Boards with women also tend to make greater efforts to monitor the chief executive and the firm in general.
Research like Byron’s and Post’s is part of the process of defining the difference that women make. It also enables a contrast with what we may speculate to be male business characteristics: a narrow, aggressive view of what it means to compete; individual performance leading only to lip service for collaboration; profit trumps all other values; business comes before family and the home; a vaguely Darwinian notion of success meaning win or die.
Of course, this article deals only with diversity as an issue of gender, and that’s not what it is. Diversity is more complex, taking in race and ethnicity, as well as social background. In the UK business is also coming to terms with the idea of diversity needing to embrace individuals from disadvantaged backgrounds generally, whatever their race or gender.
In the US though, the values that support the dominance of ageing, male board directors look increasingly like artefacts from the past. Soon they’ll seem as antiquated as steam engines and paper-based memos. Technologies become obsolete, so do ideas and values. They are rooted in time and context.
And for ageing, male boardrooms, time is marching on as the business environment moves on.