The boardroom mystique
On the 50th anniversary of the publication of Betty Friedan’s The Feminine Mystique I’ve started to wonder how far we’ve come in the boardroom. As I finished a conversation with a search firm that specializes in oil, gas and mining this week I questioned the level of progress.
The search firm noted that for the most part the companies it speaks with are simply not interested in having women on their boards. They don’t see the point of diversity. They say there aren’t enough women with direct experience in oil, gas and mining, and they don’t have an interest in looking outside the industry.
Some companies in these sectors are bowing to international pressure to add women, and several, such as energy industry giants Exxon Mobil, BP and Shell, have two women nonexecutives on boards with 12 to 15 people. Mining is the worst sector for gender diversity, with just 5 percent of board seats in the top 500 mining companies held by women, according to a recent report published by Women in Mining and PriceWaterhouse Coopers.
Diversity of thought, experience, knowledge, understanding, perspective and age means that a board is more capable of seeing and understanding risks and coming up with robust solutions to address them. It’s not about sticking a bunch of women on the board for the sake of optics. It is about extending the fundamental principles of good governance to the oil, gas and mining sectors. Healthy businesses need comprehensive diversity.
It is not as if the status quo were working so well. The industry is rife with governance issues, and putting the same people on the board over and over again is not going to fix that. According to the report by Women in Mining and PriceWaterhouse Coopers, profit margins are higher for mining companies with women on the board. Of the top 500 mining companies surveyed, the 18 mining companies with 25 percent or more of their board consisting of women had an average net profit margin for the 2011 financial year that was 49 percent higher than the average net profit margin for all top 500 mining companies. Their research also showed that those mining companies with female board members have a higher average profit margin overall (23 percent) than the average net profit margin for the top 100 mining companies (20 percent).
Mining giant Glencore’s board is made up of men alone. Glencore is soon to become even bigger after its merger with Xstrata, another company with no women on the board. Glencore let it be known that it will (cue the trumpets) add a woman after it has completed its merger with Xstrata (confetti drop here). I had already heard of their intention to do this as long ago as last August, so I wonder what the delay has been. It seems that even contemplating a woman is momentous for Glencore, as a spokesman is reported to have said, “The appointment of a female board director is a significant consideration.” They have announced that they will sometime announce, and for this they are getting ink in the mainstream press, including the Telegraph.
Glencore is the same outfit whose chairman, Simon Murray, in April 2011 was not so keen on having women in his boardroom, telling the Telegraph in an interview:
Women in the boardroom? Terrific. Why not? Always welcome. But why make a special case out of it? Why tell everybody you’ve got to have X number of women in the boardroom? Women are quite as intelligent as men. They have a tendency not to be so involved quite often and they’re not so ambitious in business as men because they’ve better things to do. Quite often they like bringing up their children and all sorts of other things.
All these things have unintended consequences. Pregnant ladies have nine months off. Do you think that means that when I rush out, what I’m absolutely desperate to have is young women who are about to get married in my company, and that I really need them on board because I know they’re going to get pregnant and they’re going to go off for nine months?
That makes me think that adding one or two women to Glencore’s board isn’t going to solve the larger underlying governance issue. When an influential board chairman can make a statement like that and still remain in his very lucrative and highly public role, it says something about the company and the industry.
The mining and oil and gas sectors are rife with volatility. Examples include Bumi, a London-listed Indonesian coal company that, when it was created in 2010, was worth $3 billion. This week there was an unsuccessful attempt by Nathaniel Rothschild to clear out the current board and wrestle back control of the company. ENRC, the Kazakh mining company, has ousted independent directors and had multiple boardroom upheavals, public disputes and ongoing questions about its corporate governance. Both have no women on their boards.
When I talked with Trevor Philips, former chairman of the UK’s Equality and Human Rights Commission (EHRC) for “In the Boardroom with Lucy Marcus,” we looked at things that can be done to bring diversity of all kinds to boards.
Philips advocates greater transparency and reporting, but we know the numbers, and we’ve known them for a long time. He also suggests instituting a version of the NFL’s Rooney rule created to address the extreme imbalance of minority candidates for head coaching and senior football operation jobs in the United States. Having women on short lists is fine unless the women are consistently not chosen, and then become tainted by the perception that they are “ever the bridesmaid, never the bride.”
I recently cleaned out an old filing cabinet, and in a file labeled “Boards/Women” I found 10- and 15-year-old reports from organizations like Catalyst, an organization that focuses on research and reports on expanding opportunities for women in business, as well as plenty of women’s groups and action committees that no longer exist. The reports focused on the benefits of adding women to boards, the way women can persuade boards to add them, calls to action by chairmen who signed up to these principles … essentially the same exact reports we see now. I also found the details of the launch of a women’s initiative I attended at the World Economic Forum meeting in 2001 – 12 years ago – with Hillary Clinton, Madeleine Albright and a room full of other accomplished women. We all pledged to get more women in attendance, so that kind of effort is not so new either.
What would Friedan, the founder of NOW, the largest organization of feminist activists in the United States, think of us? After all, that is a lot of years of talk in those files and not a lot of movement.