I was intrigued to see the new study that shows companies perform better when they have women on their boards. Check out this story and video at CNBC. Here is the upshot: "Credit Suisse analyzed more than 2,500 companies and found that companies with more than one woman on the board have outperformed those with no women on the board by 26 percent since 2005."
This result becomes even more compelling when you pair it with a rigorous study done a couple years ago. It showed that groups that have a higher percentage of women have higher "collective intelligence" -- they perform better across an array of difficult tasks "that ranged from visual puzzles to negotiations, brainstorming, games and complex rule-based design assignments," as this summary from Science News reports. In that research, the explanation was pretty interesting, as the authors set out to study collective intelligence, not gender. As Science News reported:
Only when analyzing the data did the co-authors suspect that the number of women in a group had significant predictive power. "We didn't design this study to focus on the gender effect," Malone says. "That was a surprise to us." However, further analysis revealed that the effect seemed to be explained by the higher social sensitivity exhibited by females, on average. "So having group members with higher social sensitivity is better regardless of whether they are male or female,"
Yet, despite all this, there is still massive sexism out there, especially in the upper reaches of many corporations. Note this report from the Women's Forum: "While women comprise 51% of the population, they make up only 15.7% of Fortune 500 boards of directors, less than 10% of California tech company boards, and 9.1% of Silicon Valley boards."
Pathetic huh? And it is pretty good evidence that all those sexist boys who love going to board meetings and retreats unfettered by those pesky women are just hurting themselves -- and their shareholders -- in the end. But perhaps there is justice in the world, as this just may be a case where "times wounds all heels."
Indeed, I wonder when we will see the first shareholders' suit where a company that has no women on the board, and suffers financial setbacks, is sued. Their failure to do so could be construed as a violation of their fiduciary responsibility. I know this sounds silly, it does to me. But lawyers and shareholders have sued -- and won -- over far more absurd things, as this would at least be an evidence-based claim (albeit one that stretches the evidence a bit too far for my tastes).
Bob, You might like reading Aida Wahid's working paper. She basically finds organic diversity (particularly with woman) is what really matters. Mandates or compulsion does not seem to improve Board effectiveness. This is an older copy of her working paper. "Director heterogeneity and its impact on board effectiveness". http://www.darden.virginia.edu/web/uploadedFiles/Paper%20ASW%20Job%20Market.pdf
Posted by: Kyle Welch | August 01, 2012 at 10:26 AM