An easy way to improve performance – put more women on your Board.

Governance of Cooperative Research Centres is one of the critical factors in their success.  It doesn’t matter what industry or sector a CRC comes from, but inevitably when I talk to them about their success the word “culture” comes up repeatedly. Whenever I advise a potential CRC consortia, I say the most critical success factor to me is the leadership of the CEO, the Chairman and the way those two can work as a team. Talented researchers can come up with an almost infinite stream of new ideas. It’s the translation of those ideas into benefits that is the hard part – again Edison’s “99% perspiration”.

CRC’s are full of smart people. But sometimes they look and think the same. There were about 60 Cooperative Research Centres went I went to my first CEO meeting in 2001 and only one of them had a female CEO. Maybe more importantly, the blokes in the room didn’t vary that much – probably the biggest differences being between those with a commercial background and those with an academic background. There’s no doubt a group of blokes of a like mind can run a successful Cooperative Research Centre. They run successful companies all the time.

But if that same group of smart blokes looking at turning research into outcomes were presented with a known and well researched way to reduce risk and improve performance at zero cost, they’d take it up wouldn’t they? You’d be knocked over in the rush, wouldn’t you?

Well, no.

Putting a few women on a governing Board is a well researched, well documented way to improve company performance. As far as I know, women Directors don’t cost any more than male Directors, so there is no cost involved. But we don’t do it.

Getting more women onto Boards is not a matter of matter of doing the right thing; it’s a matter of doing the smart thing.  Many studies have shown that increasing the diversity of a Board is associated with improved company performance. For example, Joy, Carter, Wagner and Narayanan showed back in 2007  that return on equity, return on sales and return on capital were all improved with more women on a company Board.

Italy has been forced to mandate a lift in the number of women in State and listed companies (see HBR blog Why boards need more women). It shouldn’t be necessary for Australia to go down that route, although most governments have set targets of some sort. For research organisations like Cooperative Research Centres, it should be a matter of recognising the value and getting on with it. But it is painfully slow, CRCs do better than the top ASX-listed companies but not by much – and the ASX companies are improving on a much steeper trajectory. The table below is from the Women on Boards 2012 Board Diversity Index, which shows CRCs lag behind almost every grouping and have only about half the percentage of female Directors as Australian Government companies. Less than one in five Directors of CRCs are women and we should do better than that – the Women on Boards report gives us the fairly generous “out” that most CRC Directors are appointed by participants.

This is important. If the biggest influence a CRC has in an area is changing cultures – drawing together the commercial and academic spheres – then how can they do that well if they are governed by a Board that looks, walks and talks the same? Diversity is an easy way to guard against groupthink and it’s free.

Sector

2010

2011

2012

ASX01-200 8.7 10.9 13.9
ASX201-300  NA NA 7.6
Superannuation Trustees 19.4 20.4 21.8
Corporate 21.2 19.4 24.9
Industry 18.9 21.9 20.4
Public Sector 22.0 23.6 21.5
Retail 17.1 18.0 21.5
Credit Unions & Building Societies
21.0 18.4 21.2
Private Health Insurance Funds NA NA 24.1
Research & Development Corporations 22.4 22.5 21.1
National Sporting Organisations 26.5 22.7 23.4
Cooperative Research Centres 17.3 18.3 18.2
Australian Government (top 84 by remuneration) 30.4 31.0 35.9
NSW: Government Owned Corporations 24.4 23.7 20.7
Qld: Government Owned Corporations 32.0 36.0 38.4
Vic: Government Owned Corporations NA 40.0 33.0
SA: Government Owned Corporations 45.3 47.4 49.1
WA: Government Owned Corporations NA 27.8 23.1
Tas: Government Owned Corporations NA 28.1 25.0

 

Women on Boards hosted a Leadership breakfast in Canberra this morning. Professor Valerie Linton, CEO of the Energy Pipelines CRC was one of the speakers. The CRC Association commenced a diversity project last year.