How to disrupt board decision-making to deliver meaningful inclusion for women

Cranfield’s twenty-third Female FTSE Women on Boards Report launched last week with some promising highlights on women’s board representation. With that however comes the reality that age old attitudes continue to slow more meaningful progress. For example, women now hold more board positions in Britain’s leading companies than ever before. But despite the fact that the FTSE 100 and FTSE 250 have all but met the 40% target set by the FTSE Women Leaders Review in February this year (the FTSE 250 is at 39%), women are still more likely to be offered non-executive roles, either exclusively or at a minimum prior to their appointment into executive roles. These positions are lower influence relative to the Chair and CEO positions persistently occupied by men. This requirement to ‘prove themselves’ first, even at board level, shows that gender inequality has not disappeared but has taken the form of shifting standards.

In this article, Dr Mona Bitar, Vice Chair EY UKI, Shaun Scantlebury, Partner for People Advisory Services EY UKI, and I share our thoughts on board decision-making and how this exercise presents a critical hurdle for women’s equality in the boardroom. Drawing on 40 years of experience in the corporate world collectively, Mona and Shaun share their reflections on some of the pertinent themes that halt progress.

Double standards for women

The double standards for women in leadership is not a new concept. Back in 2011, a McKinsey report stated that men are promoted on their potential while women are promoted on their past accomplishments, which has since been supported by research. For women in the corporate world this is a lived reality.

Mona: For example, in conversation with a very successful CHRO recently, who made the move into a commercial role as CEO of a business division, I asked what made the difference? ‘I had to go and demand the job, I had to tell them that I was ready and put forward a very compelling case for now and not later’.

Research shows that humans prefer potential in many areas of life, including sport and art. But this preference doesn’t extend to women in leadership in the same way that is does for men. This is because we shift our focus to past performance when we associate potential with risk or feel uncomfortable with the uncertainty. These shifting standards for women demonstrate that pervasive inequalities still exist. The boardroom, where the women represented have repeatedly ‘proved themselves’ throughout their careers, is no exception. The perceived risk in women’s potential also explains why women must be exceptional to secure the same level of trust and sponsorship as men who are not. We see this double standard in the language used to describe the types of men and women who are championed to succeed.

Mona: Over the last 25 years I have observed a number of dynamics at play when it comes to promoting women. Anecdotally, there seems to be a much more distributed bell curve of senior male executives. Yet, women feel a pressure to be exceptional all the time. I have witnessed this time and again, and the answer has too often has been ‘let’s give them another development year.’

Companies need to disrupt this way of thinking if they are to leverage the economic benefits of diverse boards and create meaningful inclusion. Rather than seeing women executives as a risk, boards should focus their attention on the real risks that threaten their opportunities for growth, including poor executive succession planning, suboptimal decision-making, and diversity without inclusion.

Current risks with boards’ diversity strategy

1.??????Poor executive succession planning

This year’s Female FTSE report included a special project on executive succession planning and the findings are quite concerning. One interviewed board consultant reported that they only see the top 10% of companies do executive succession planning well, the rest being “haphazard.” The report concluded that poor executive succession planning is a weak link in boards’ diversity strategies. This vital process requires ownership, accountability, commitment, and ongoing action if it is to sustain a company’s performance and deliver the inclusion that is required to utilise the board’s diversity. Intentional succession planning mitigates the risks associated with time-critical succession decisions, often characterised by irrational and suboptimal processes that maintain rather than disrupt the status quo.

Shaun: Intentional succession planning with a specific focus on diversity is a win/win for organisations as it can strengthen the talent pipeline and shift the dial on representation if done well.?The challenge for organisations is often a success archetype that does not encourage diversity and the lack of robust development pathways for diverse talent.

2.??????Decision-making

Groups often reinforce the shifting standards for women in leadership. We bring our individual biases into group discussion and rather than counteract inequalities, they amplify them. Shared information bias is one example of how this happens – groups spend more time discussing and put more weight on information already known by most members. Men have stronger networks than women, are more likely to be sponsored, and are represented in greater numbers so it is no wonder boards would value and spend more time discussing information about such men over women on the same long or shortlists. Compounded by the gender bias in potential versus performance, group discussion risks overlooking female talent.

Mona: Personally, I’ve noticed how ‘non-professional’ activities are weighted as indicators of leadership capability. For example, stereotypically ‘masculine’ activities such as sports are often valued as demonstrating leadership qualities. However, stereotypically ‘feminine’ activities, that are often overlapping, such as managing a career, maternity breaks, caregiving, and domestic responsibilities are not valued in the same way. From my perspective this is because too few can really empathise with what it requires to do this, and the challenges involved. Thankfully we are seeing a shift to more balance in this space, but it does compound the issue.

3.??????Diversity without inclusion

Boards are taking a risk by increasing their diversity without the required inclusion. Research from Financial Reporting Council found that FTSE 350 boards where female directors are less integrated are less collaborative in their decision-making, more competitive in communication styles, and pre-emptive in their voting. The outcome is underlying disagreements, overlooked perspectives, and overconfidence in decisions. Companies where women on the boards are more integrated show better performance and shareholder relations, including 10% higher stock returns. Without the full inclusion of women on boards, companies risk performative and tokenistic actions that bring potential conflict over collaboration. This year’s Female FTSE Board report shows that this is already a huge risk – boards are more diverse than ever, but key positions of influence remain reserved for men.

Shaun: The research supports that diversity without inclusion can be counterproductive.?However, Boards should not leave this to chance. Being intentional about what behaviours, rituals and traditions might need to shift to get the best out of diverse voices around the table.

How to mitigate the risks: What boards can do differently

Having highlighted the pitfalls in boards’ decision-making, we provide recommendations for enhancing this process with a view to overcome pervasive gender bias and disrupt the status quo:

1.??????The Chair should set the tone

Women on boards need to be heard to leverage the full benefits of diversity for effective decision-making. The Chair has the capability to contract with the board and agree ways of working. Through this, board members need to be given permission to challenge, and this should be valued. Role modelling a culture of inclusion to create a psychologically safe environment is the foundation of effective collaboration.

2.??????Introduce healthy debate

Although group decision-making often leads to suboptimal outcomes, there are ways that boards can mitigate this. For example, assigning one or two people the role of ‘devil’s advocate’ means that someone is given the responsibility of challenging points raised and decisions made. Even if the devil’s advocate doesn’t agree with the challenge, surfacing it is important for healthy decision-making to riddle out bias. Other examples include creating ‘for’ and ‘against’ teams. Despite individuals’ preferences, being assigned a position can broaden the debate and challenge groupthink. Finally, opinions, subjective evaluations, or falling victim to shared information bias should be called out.

3.??????Plan for risk

All appointments come with some level of risk, we just choose to overlook it for some and not for others. When a business decision leads to failure, groups will come together to conduct the decision-making equivalent of a ‘post-mortem.’ However, collectively engaging in a ‘pre-mortem’ exercise can help to identify any potential risks and failures and mitigate those before they materialise. Dedicating time to discuss all risks creates a more equitable playing field because those associated with male candidates are also surfaced. It also enables boards to put the plans in place that will mitigate legitimate risks in the interest of optimising outcomes. Planning for risk can disrupt the performance/potential gender bias that prevents suitable women’s appointment into high stakes roles.

Concluding remarks

This year’s report findings demonstrate that gender inequality on boards persists and that overcoming this is not as straightforward as setting targets. To meaningfully address the inequality, boards need to recognise the critical role of decision-making and take disruptive steps to optimise outcomes.