The power of one woman


Having just one woman on the board can improve governance and make a difference, a study in Canada has found.

Judith Zaichkowsky, professor of marketing at the Beedie School of Business, Simon Fraser University in Vancouver, Canada, found that while companies with the most women scored the highest on corporate governance, there is significant improvement with one woman over none on boards, especially in male-dominated industries, such as energy and mining.

In a paper entitled “Women in the board room: one can make a difference”, recently published in the International Journal of Business Governance and Ethics, Zaichkowsky says her findings suggest that strategically, it is better to get a foot in the door of male-dominated boards with one woman who understands the business, rather than barging in with, say, three women.

She notes that lone women board members in her study exhibited a certain pride in being a highly qualified company director. “They were accustomed to their outsider status and needed no additional support from the presence of members of their own gender group.”

Zaichkowsky adds: “The theory that women are well-suited to be board members is indeed strong (Arfken et al., 2004). Women are well-educated, contributing members of organisations, and effective managers. They are also consumers who buy and have much decision-making power in the marketplace. However, not all women are alike, just as not all men are alike. Boards should be comprised of people who have the best understanding of the business and the best concerns for a viable, profitable organisation which treats its employees and customers to the highest standards.”

Noting a push for representation quotas in many countries, including Canada, the US and UK, Zaichkowsky says an issue that became evident while doing her research was that the same women were board members for multiple companies.

“In 2006, Norway led the way by legislating that 40 per cent of board directors had to be women. It achieved that goal by 2008. The results of the quotas show that a few women are holding many directorships, with one woman on eight different boards by 2009 and 61.4 per cent of the women on the boards holding at least three different directorships. So, there is a dramatic increase in multiple board appointments for the same person.

“Norway has more boards with women, but not necessarily more total women in the mix. A similar situation appears in Canada without a quota ruling. There is one woman with seven directorships; three with six board seats; five with five board seats; and 23 with four board seats.

However, this is not a trend which appears to exist in Australia. A recent report by Company Directors on female non-executive director appointments to ASX 200 boards (2010-2014) show that more than half (53.8 per cent) of female appointments had no previous or current ASX 200 non-executive directorships, highlighting that in Australia the pool of female directors has significantly expanded in the last four years.

Zaichkowsky continues: “Korn/Ferry suggests that the maximum numbers of boards a person can adequately handle are three to four, with one or two additional appointments for persons holding CEO positions. So, why are the same women appointed to more than three boards?

“A common recruitment assertion is that ‘when you interview for a job, it is all about your qualifications, but when you interview for a board it is about how compatible you can be’. The key is said to be in signalling that you can ask the right questions. Or maybe it is not asking the wrong questions. Future research that documents the reasons for appointing women to multiple boards could be very insightful.”

For purposes of this study, Zaichkowsky analysed data from 2004, 2006, 2009, 2011, and 2012 from two unique databases: “board games” by the Globe and Mail (G&M) newspaper, the source for corporate governance scores, and CSR ratings by Corporate Knights (CK) magazine.