Norwegian research reveals that private, manipulative decision-making is rife on company boards and that some directors are more equal than others. An academic study from the Scandinavian country that mandates that company boards must comprise at least 40 per cent women confirms what many female directors already know: Men are chronically underprepared for board meetings.
Although the study by prominent Norwegian corporate governance researcher Morten Huse focuses on the experience of women in the boardroom, its underlying finding of how boards make decisions is of critical concern.
The conclusions are damning because they show that decisions at board level are more likely to be made outside the boardroom by directors who have deliberately created an inner circle of influence.
This form of behaviour often excludes the female director and is therefore a problem in itself. Of even greater concern, however, is the apparent lack of transparency in board decision-making. This undermines the attributes most cherished by board members - those of integrity, trust and credibility.
The study, Gender-related boardroom dyna-mics: How Scandinavian women make and can make contributions on corporate boards, which was co-written with Anne Grethe Solberg, found that board members do not have equal admission to all decision-making arenas.
Decision-making takes place inside the boardroom as well as before and after meetings. "I haven't made phone calls in advance and manipulated decisions," one survey participant says. "However, this happens often in the board. I believe men do so more often than women. They talk before the meetings. They clarify things ahead of meetings. I have attended many board meetings where I have not been able to understand why something suddenly has been decided without having been discussed."
One reason for this is the apparent lack of preparation for board meetings by male directors compared with the depth of preparation by their female colleagues. The study finds that "most men do not prepare well [for board meetings] and women directors do their homework".
Survey participants say men "read the board papers one page ahead" during the meeting. Others "talk into the air" to "buy time" to catch up with the discussion and to try to hide the fact that they haven't read the papers prior to the meeting.
One female director says male board members are often so underprepared that they only open the envelope holding the papers in the lift on the way to the meeting.
This director jokes that one way to improve the quality of discussion and decision-making at the table is to locate the boardroom as far away as possible from where directors park their cars.
"Decisions are often prepared at other arenas than the boardroom," the survey finds. "These arenas may be formal and informal. They may be hidden or unconscious, and that may not be equally open to all board members. We still have a society where women and men do not have access to the same arenas."
In 2006, Norway passed legislation requiring that 40 per cent of corporate board seats must be given to women within two years. Women hold seats on between 80 and 90 per cent of the boards in Norway, which is the highest proportion of female corporate directors of any country.
Since the introduction of the Norwegian legislation, Sweden, Finland, Iceland, Switzerland and Spain have passed different versions of this model, with varying legislated quotas.
"Various authors have argued that women directors on corporate boards offer many contributions," the study concludes.
"Indeed, by being more receptive to the contributions of women at the top, corporations can gain competitive advantage. Women directors may also serve other corporate women as role models."
Men may argue legitimately that if the situation were reversed, then women would exclude the token male in any decision-making conducted outside the boardroom. This may be true but is not likely to happen any time soon.
At a corporate lunch of prominent women business leaders, much-lauded chairman David Gonski began his keynote speech with the observation that he was one of three men in a room full of women. "Now I know how a woman must feel in the boardroom," he told the Women in Finance lunch.
Five ways to beat the system
The study by the Norwegian School of Management identifies five ways women can make contributions to board decision-making. These are by:
- Creating alliances.
- Preparation and involvement.
- Attending important decision-making alliance meetings.
- Taking on leadership roles.
- Being visible.
- These conclusions were reflected in the results of a survey by Corporate Women Directors International, which asked participants to nominate reasons for the continued low representation of women on corporate boards. The top three reasons were:
- Board recruitment culture remains basically within a closed club.
- Continuing resistance to board diversity from a male-dominated corporate culture.
- Female achievers are not visible to male CEOs and board members.
Ann-Maree Moodie is the author of The Twenty-first Century board: Selection, Performance and Succession, Australian Institute of Company Directors, 2001.
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