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How to get more women on corporate boards

May 2, 2017
Diversity & Inclusion

Companies are under increasing pressure to include more women on their governing boards. But even so, women held just 20% of corporate board seats in the U.S., according to a 2015 survey of the S&P 500.

Why are these governing bodies not making up for this widely acknowledged gender gap? Research by Stanford Graduate School of Business professor Charles O’Reilly shows that, by default, they tend to replace women with women and men with men.

“There’s a tendency for people making decisions to continue to do what they did before,” O’Reilly says.

In a recent paper titled “Gender Diversity on U.S. Corporate Boards: Are We Running in Place?” O’Reilly and coauthors Catherine Tinsley from Georgetown University, James Wade from George Washington University, and Brian Main from the University of Edinburgh analyzed archival board data from 3,000 American publicly traded companies over 10 years. After that analysis revealed that a woman is more likely to be appointed to another woman’s seat, while a man is more likely to be appointed to another man’s seat, the researchers replicated the effect in lab studies.

Their research did unveil one promising solution: Simply increasing the number of women candidates improves the chances that a woman will be selected to a board seat, regardless of who’s being replaced.

The Fallacy of Going with Your Gut
While the standard hiring practices require leaders to outline a job’s criteria, weigh their relative importance, judge how well each candidate meets them, then select the most appropriate person, O’Reilly points out that relatively few people actually choose candidates this way.

Instead, managers often make hiring decisions unaided by analytic tools, preferring instead to “go with their gut.” This causes them to match surface-level features between the candidate and the person being replaced, explains O’Reilly. One such short cut is gender matching, or filling a seat with someone of the same gender as the person who’s leaving.

Testing Gender Matching
Since gender matching allows organizations to address the issue of gender disparity in boardrooms without actually increasing parity, the researchers tested the matching effect in the lab. They measured the efficacy of two interventions designed to increase the number of women board members. In two studies, participants were told to assume the role of the chair of a corporate board committee selecting a replacement for a departing board member. Participants reviewed resumes and demographic information about each candidate, and then were asked to rate the importance of various criteria and explain why they’d chosen a specific candidate.

In the first intervention, researchers reminded participants that diverse perspectives can enhance a board’s decisions. It turned out that simply alerting people to the importance of increasing diversity had no effect on their tendency to replace women with women and men with men, results that mirrored the field data of those 3,000 companies. Participants tended to identify other criteria as more important than gender, and very few outwardly mentioned gender matching as part of their decision-making process.

Adding Women to the Pool
In the second intervention, the researchers increased the number of women in a candidate pool so there were more women than men. O’Reilly says this intervention confirmed the common-sense notion that, with a wider choice of female candidates, more women will be invited to join corporate boards.

“The only thing that seems to guarantee that more women will be selected as board members,” he says, “is to increase the number of females in the applicant pool.”

O’Reilly says the study’s findings are consistent with evidence from cognitive psychology that people tend to make decisions based on habit and heuristics rather than analytics: “The last thing we want to do is hire a replacement who upsets the equilibrium. So what we do instead is select people who look like the person who left.”

By Lily B. Clausen

Source: Stanford Business

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