April 22, 2018

Boardroom women enhance results. But men don’t believe it!

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Nearly 10 years ago, McKinsey & Company published a research paper showing that corporations with the strongest representation of women on their boards ‘are also the companies that perform best’ (http://www.raeng.org.uk/publications/other/women-matter-oct-2007 ). The research was extensive, examining 231 organisations with feedback from 115,000 employees against nine of McKinsey’s proprietary measures such as accountability, innovation, leadership and work environment.

It is important to note that positive results were only found when at least three out of 10 board members were women. Below that ratio, no significant results were found.

The evidence for boardroom diversity is so strong that some investment firms plan to begin launching products investing in female-led companies.

Such findings would appear to be compelling. But not so fast. Charles Street, one of our MBA students from Australia, noted that recently (October 2016) PricewaterhouseCoopers released a boardroom survey which showed that ‘just 24 per cent of the male respondents believed board diversity improves corporate performance’. Perhaps not surprisingly, the survey showed that 89 per cent of female directors do believe it (http://www.smh.com.au/business/workplace-relations/few-male-board-members-believe-diversity-improves-company-performance-pwc-study-20161011-gs07j5.html).

So in spite of compelling empirical data, which we might well think would impact boardroom attitudes about company performance, substantial work evidently still needs to be done in the struggle for boardroom diversity. And boards would appear to ignore these findings at their own peril.

Dr Richard Bunning, Teacher, EBS MBA Programme About Dr Richard Bunning, Teacher, EBS MBA Programme

Co-author of Leadership with Tony Berry and co-examiner for the Leadership elective.