We conducted qualitative interviews with both men and women board members in Europe, including Denmark, and the US, to better understand how women affect the dynamics and contribute to boards. In total the interviewees had combined experience from over 200 listed firms.
Our findings reveal that female board members are highly prepared for board meetings. They are also concerned that the board acts responsibly. One of the female board members we interviewed described women as "the worker bees - the ones who are super well prepared and ready to do the work". A male board member also explained that women are the ones who are highly prepared and have the most knowledge of the issues. Their thorough preparation means they are able to ask in-depth questions, which in turn changes the dialogue in the boardroom and leads to more nuances in the decision-making.
More open about their knowledge
Boards are often described as an exclusive club where it's best not to challenge the status quo. However, our research shows that women don't feel bound by traditional norms. They are open about when they lack knowledge and are also willing to ask probing questions and actively seek clarification.
Women also elevate the quality of the discussion in other ways. One board member told us that "the executive board (...) must now be prepared to be more engaged". The discussion also becomes less political. A female board member commented that "there is a different atmosphere when there are women in the room (...), the men compete less and the women create a more open atmosphere. It allows for discussion of topics that might not otherwise be discussed."
Another board member said that "chairmen have told me that they feel the risk has been reduced when making decisions because they have been carefully vetted. In the past, when they were all men, they only looked at the financials."
Too little disagreement can be a problem
Our study also shows that women board members help reduce what's known as pluralistic ignorance - that is, when individuals in a group underestimate how much others in the group share their concerns. When this happens, noone speaks up. A decision is quickly agreed upon, but potentially fatal consequences can be overlooked. When there are women board members, they help contribute to discussions that are deeper and more nuanced.
A qualitative study like ours cannot measure the impact on firm performance. However, the results of our study suggest that the presence of women board members contributes positively to good corporate governance and ultimately leads to better decisions.
