Do we need women in the Board?

This was the interesting question posed during the WomenBiz Talks organized by the Women’s Business Council Philippines at the Dusit Thani Hotel today, and which sparked a healthy debate.  Aside from being inducted as a member of WomenBiz, I was glad I attended the talk, though I missed attending the Amcham General Membership Meeting next door.

After a hearty lunch of ginisang munggo, laing and adobong manok, and the inevitable photo taking, the intimate group of powerful women tackled the day’s theme.   Chit Juan, president of Echostore Sustainable Lifestyle, opened the discussion with a premise that we need a law to ensure seats in corporate boards, as the addition of women corporate directors results in better decisions and more diversity in outlook.

Atty. Lorna Kapunan, senior partner at Kapunan Garcia & Castillo Law Office, roundly disagreed citing the case of Norway that had passed legislation mandating a 40% woman-man ratio on public limited companies to disappointing results. Because there were not enough competent (aka trained) women corporate directors available, companies forced to take on women to comply with the mandated ratio, quickly saw their stock prices plunge.  To protect themselves from this legislation, about 70% of public limited companies delisted since 2003; while new companies incorporated outside of Norway to avoid this requirement.

Because men and women are wired differently, it was observed that women in boards tend to push for property acquisition rather than leveraged organic growth.  And then there’s the issue of women having other interests, such as having children and taking care of their families. This is not to say that we cannot have women corporate directors, especially in the Philippines.

In the case of companies of Fast Moving Consumer Goods (FMCGs), it would be disastrous not to have women on the board as they would represent the interests of the consumers, being the ones with the buying power.  There are also industries where women dominate.  One such example is the Tourism Industry, to which I belong.

In the country’s Tourism Promotions Board, for instance, three of the five private sector directors are women: Margarita F. Munsayac, VP of Maribago Blue Water Beach Resort (Representing Accommodation Sector); Margarita F. Villarica, president and general manager of Destination Specialists, Inc. (Representing Travel & Tour Services), and me (Representing Meeting, Incentives Travel, Conventions, Exhibitions & Events Services & Facilities M.I.C.E.Sector).  And on the public sector side, we have Usec. Laura del Rosario of Department of Foreign Affairs, Usec. Fe Reyes of the Department of Trade and Industry, and Usec. Catherine Gonzales of Department of Transportation and Communication.  Clearly, TPB is a woman-dominated board.

According to the International Business Report (IBR) released by local audit company Punongbayan & Araullo and global firm Grand Thornton, on average women comprise about 34% of company boards in the Philippines, which is way above the global average of 19%.  One advantage Filipinas have is the availability of househelp to assist in taking care of the house and children, freeing women to pursue careers in the corporate world.   And I’d like to add the social support system of families.  I don’t think I could have gone very far in business without my beloved mom being there to supervise my yayas in looking after my children and my home.

What advantages do women bring to the board room?  According to a study by Professor of Strategic Management Bart of the DeGroote School of Business at McMaster University which polled 624 board directors in Canada, women were more likely to use “co-operation, collaboration and consensus building” when dealing with complex decisions.   Also, women were more likely to take into account interests of multiple stakeholders as they viewed fairness as an important factor in their decision-making.

A Credit Suisse report on gender diversity and corporate performance indicates that companies with women on the board exhibited higher return on equity (ROE) and better average growth.  Catalyst Inc. (2007) showed that Fortune 500 companies with more women on their boards were found to outperform their rivals with return on sales and return on equity.  What could possibly be the reason for the better financial performance?

Credit Suisse proposes that gender diversity signals a better company, with greater effort across the board, a better mix of leadership skills, access to a wider pool of talent, a better reflection of the consumer decision-maker, improved corporate governance, and risk aversion.

Lorna was emphatic that there should be no legislation to mandate appointment of women on corporate boards.  Rather, competence was the only reason women should be on corporate boards.  I totally agree on this point.  And that’s why I am seriously considering Chit’s recommendation to take the Institute of Corporate Directors Course, and help in raising awareness of women to aspire for board seats for greater diversity.