Gender diversity on corporate boards can improve organizational performance
Gender inequality on corporate boards of directors is still an issue in Canada, despite diversity disclosure rules. Since 2014, business regulators in Canada have required companies to disclose the number of women on their boards in an effort to increase gender diversity.
Despite this, women continue to be underrepresented on Canadian boards. Recent data from Statistics Canada shows that female representation on boards is only at about 19 per cent. The share of women on boards of directors has increased by about 2.5 per cent every year since 2016.
This low representation is surprising, given the research that shows that gender diversity on boards helps organizations perform better. For example, gender diverse boards have a greater understanding of consumer behaviour and are better at meeting consumer needs.
In an effort to better understand the influence of gender diversity on the functioning of the board, and how these differences can be leveraged, our research team interviewed 29 female and male directors on Canadian boards.
Both women and men perceived the role of the board in a similar way. This was an important finding — it meant that the board members did not perceive their job as a gendered role. In other words, they did not believe that being a board member was more suitable for men than women.
We did, however, find differences in how the women and men performed their role.
Women were more prepared for board meetings and follow-up more with management. Women also asked more questions and were more likely to ask difficult questions. One of the female board member told us:
“Women are less shy about asking questions… Women are much more ready than male colleagues [for a meeting]… They read the material, they are serious and prepared and they have the capacity to have the courage of their opinions.”
Women also sought out consensus more often and thought more about other stakeholders, including employees and clients, than men did. One female board member said:
“There is a sensitivity at the level of women, they will be [more sensitive] to subjects more than men, like the concerns of employees, users of services, single-parent families.”
The boys’ club
Both genders believed that the “boys’ club” explained why men and women performed their roles on the board differently. The term boys’ club refers to an informal network of men with common interests and friendships — in this case, business-related interests.
Women are often excluded from these groups, as highlighted by one of the male board members we interviewed: “With women on the board there is no friendship, no affinity with other men around the table.”
Because women were not part of the boys’ club and were unable to rely on support from the men on the board, they needed more courage to express their opinions and be more prepared for meetings.
One woman said, “women are more direct in their expression… They are generally ready to challenge because they are a little bit outside the boys’ club, protecting each other.”
While being excluded from the boys’ club does add an additional challenge for the women, they were still capable of performing their jobs well, with the added bonus of being able to offer a new perspective.
Being excluded from the boys’ club meant that the women had an outsider perspective. They were more likely to challenge ideas and opinions in a way the men were not.
Genetics and social roles
Each gender had different explanations as to why they believed women and men performed their board role differently.
The men claimed that women were genetically and socially different than them. More precisely, they believed women had a genetic predisposition and were socialized to be more caring and more collaborative. They believed these differences followed women to the board. One man said:
“It is much more at the level of the social skills as we quickly learn as boys and girls… Social roles are determined by the fact that we are men or women and it means that men and women will perform differently and will perceive things differently… When we are on the board of directors, we reproduce the same patterns.”
Interestingly, women did not explain their differences in behaviour with genetics or socialization. Instead, they believed their intuition, communication style and unique perspective explained the differences.
One woman said: “Women have a different way of looking at things… an approach with more conciliation and less confrontation, which improves the quality of the debates.”
The responses of both groups of participants in our study were consistent with social role theory that explains the different types of social roles women and men are expected to perform. While women might not be genetically pre-dispositioned to be more caring, they are expected to be unselfish and nurturing while men are expected to behave more competitively.
Benefiting from differences
The differences between how men and women perform their board role could explain why gender diversity improves corporate performance. By asking more difficult questions and challenging management and the other board members, for example, women looked out for the best interests of various stakeholders and improved organizational performance.
One man took note of this, saying:
“I would tell you that those who question more, who challenge more are women… They are the ones who are going to be the most outraged by, I would tell you, failures of functioning [of the organization].”
The differences that men and women bring to the table should be embraced and promoted by organizations, not judged or condemned. By welcoming difference, companies could help promote an inclusive environment that encourages women to continue to perform their jobs in their own unique way.
It’s clear that both men and women offer unique and valuable contributions to company boards. To reap these benefits, organizations should continue to increase gender diversity — while diversity has been improving over the years, it still has some way to go. Going forward, organizations have the opportunity to show leadership in gender diversity and improve in the process.