05 Feb Some surprising bad news about women on boards
Not that long ago the FT held a business conference in a swish hotel in London where a man on the stage asked the mostly female audience to do something I was not expecting.
Raise your hand if you support quotas for women on boards, he said, and in a flash most did. Ten or even two years ago I doubt so many hands would have shot up so quickly in a room like that, full of women from the City of London.
Laws forcing companies to put women on the board were something you saw in places such as Norway or California. The idea of being a quota appointment made a lot of women uneasy, including me. But change at the top has been sluggish.
The share of women on the UK’s top 350 company boards might have hit 30 per cent this year, but as of last month just 4 per cent of chief executives and 7 per cent of chairs were female. The numbers are similar in many other countries. No wonder women are growing impatient, especially when so many diversity advocates argue there is a sound business case for more female leaders.
As Christine Lagarde, the head of the European Central Bank, said in the wake of the 2008 global financial crisis, “if it had been Lehman Sisters rather than Lehman Brothers, the world might well look a lot different today”.
Yet a new study from two academics at the Insead business school suggests things are not so simple. When Isabelle Solal and Kaisa Snellman looked at 14 years’ worth of data from more than 1,600 US public companies, they made a disturbing discovery: businesses that put a woman on the board then suffered a two-year decline in their market value.
Worse, the penalty was greater for companies that had splashed out on measures to boost diversity, such as better work-life balance policies. Their market value fell by nearly 6 per cent after a woman joined the board.