..



.

Business News

'Network contagion' is key to getting healthier numbers of women on company boards

  • Written by Michael Gilding, Pro Vice Chancellor, Faculty of Business and Law, Swinburne University of Technology

Female representation of 30% on a company board is the tipping point[1] at which it stops being tokenistic and begins to make a difference on things like innovation.

Norway, France and Sweden have already achieved this target[2] for companies overall. In Australia, the ambition was to do so in 2018. At this stage, that looks unlikely[3]. This suggests it is time to consider more surgical policies to increase female board membership.

Read more: Company boards are stacked with friends of friends so how can we expect change?[4]

Our ongoing research aims to understand the main drivers of women’s participation on boards. We imagined that the drivers might be complex and multidimensional. In fact, we found that they were pretty simple.

So far we have found the only significant predictor that boards will reach the 30% target is that they have a director who sits on another board that has already done so.

We have looked at the company boards of the 200 largest companies on the Australian Stock Exchange (the ASX200) and how they are interconnected through their board members. These connections help with the sharing of expertise and experience across firms.

The directors of the ASX200 form a classic network. Of the largest 200 companies in Australia, 172 companies form one giant “component”, linked together through shared directors.

This is what the network looks like (click to zoom):

'Network contagion' is key to getting healthier numbers of women on company boards Gender and companies. Author provided (No reuse)

The blue figures represent men and the pink figures represent women. You can see that some boards have no women, some have one or two, and some have three or more.

Which factors are significant?

We tested any variables that might make a difference in the recruitment of women to boards. These included the industry sector, market capitalisation, affiliation of a board member with the Australian Institute of Company Directors[5] (AICD), and the presence of a “male champion of change[6]” on the board.

We thought some industries (say health) might be more likely to cross the 30% threshold than others (say mining). Smaller companies might be less likely to appoint women to their boards, because this is indeed the case for boards outside the ASX200[7].

Boards with an AICD graduate or fellow might also be more likely to cross the threshold, given the institute’s robust advocacy of women on boards[8].

The same logic applies to the presence of a male champion of change on a board[9].

We found five variables that make a statistically significant difference to the appointment of female directors. However, only one of these variables makes it more likely that the board hits the 30% target, which is having an AICD fellow on the board. This makes it significantly more likely that the board has three women.

The other four variables make it less likely that a board will hit the 30% target. Specifically, firms in four sectors – consumer discretionary (retail), health, industrials and materials – are significantly less likely than the rest to reach the 30% threshold.

Read more: Experienced shareholders better than independent directors for business[10]

The network contagion effect

We then tested for different kinds of “network effects[11]”. Network effects can take many forms. For example, the reciprocity effect occurs where you “like” me and I “like” you.

The popularity effect is where we both “follow” the same celebrity on social media but not each other.

In the case of the ASX boards, we found that just one network effect is statistically significant – network contagion.

Contagion literally describes the biological transmission of a disease from one person to another. In the board context, it refers to a process of social influence, where shared directors transmit ideas and practices from one board to another.

We found that boards are significantly more likely to have reached the 30% target when they have a director who sits on another board that has reached the 30% target. Let’s call it the “director network contagion” effect.

Once we include the director network contagion effect, all other variables discussed earlier became irrelevant – sector, market capitalisation, AICD affiliation and male champions of change make no difference to the appointment of women on boards.

Only director network contagion is important.

Read more: Daniel Andrews, board quotas and the myth of 'insufficient women'[12]

Time for a more focused strategy

Our findings suggest that current strategies to advance women on boards lack focus. We need a more surgical approach to the issue, directed towards the frontier where boards with three women or more interact with boards under the 30% threshold.

Think of it as the inversion of a public health campaign to prevent the spread of a disease. The first step in such a campaign is identify the diseased and anyone who has had contact with them, then to isolate them.

The first step in our proposed campaign is to identify the boards that meet the 30% threshold and any boards with which they share directors, then intensify their exposure.

Having said this, our findings are based upon a sliver of data: the biggest companies in the country at a single point in time.

What would we learn if we studied patterns of recruitment for the past decade? And what would we learn if we extended our analysis beyond the ASX200, to other listed companies, private companies, government boards and not-for-profits? We would love to answer these questions.

Authors: Michael Gilding, Pro Vice Chancellor, Faculty of Business and Law, Swinburne University of Technology

Read more http://theconversation.com/network-contagion-is-key-to-getting-healthier-numbers-of-women-on-company-boards-99600

Business Daily Media Business Development

Bahrain Property Show 2018: How does it reflect the real estate market development in Bahrain

It is no secret that the Arabian Peninsula and the Gulf Cooperation Council (GCC) countries are currently going through a lot of pivotal changes. Such changes do not include economic or po...

News Company - avatar News Company

Di Jones real estate recognises high achievers

Di Jones celebrated its outstanding performers on Saturday (24 February 2018) evening at the Di Jones Real Estate Annual Awards.                               The black-tie Gala Dinner s...

Helen Hull - avatar Helen Hull

Five Reasons Melbourne Rules

If you are traveling in Australia and have left Melbourne off your destination list, then you are going to want to reconsider. Many people consider Melbourne to the best city in the world...

News Feature Team - avatar News Feature Team

Making Friends During Your Campsite Stay

Part of the excitement of vacation is meeting people who you would never otherwise encounter. Staying at a campsite isn’t just about taking in nature. It’s also about sharing the beauty of n...

News Feature Team - avatar News Feature Team

Have More Fun On Your Business Trips

Whether you are a traveling salesman or someone who finds themselves on the road more than in their office you probably are grateful for any tips you can get especially if they involve havin...

News Feature Team - avatar News Feature Team

Traditions of Rural Bali at Villa Sabana

A Privileged Insight into the Traditions of Rural Bali at Villa Sabana  Situated in the traditional village of Pererenan near Canggu, Villa Sabana is peacefully secluded in a semi-rural...

Linda Lim - avatar Linda Lim

Business Daily Media Business Reports

Di Jones real estate recognises high achievers

Di Jones celebrated its outstanding performers on Saturday (24 February 2018) evening at the Di Jones Real Estate Annual Awards.                               The bla...

Helen Hull - avatar Helen Hull

Eclipse Travel Expands Operations to New Zealand

Eclipse Travel, specialists in key adventure destinations such as Antarctica, the Arctic, Africa and Latin America, have announced today their expansion of operations to ...

Yvonne Kong - avatar Yvonne Kong

How medical professionals can benefit from an overall wealth management solution

As a health care professional, you have made it your life's work to focus on the care and health of the general public. While this kind of work can be extremely rewarding...

News Feature Team - avatar News Feature Team

Why Pinterest Should Be Part of Your Marketing Strategy

Pinterest is a growing social media platform that can deliver significant traffic to your website and new followers to your brand. With it’s steady growth and outrageous ...

Greg Nunan - avatar Greg Nunan

The top reasons why gyms fail

Steve Grant is a Business Coach and Founder of GymHub.com.au   Every month thousands of new trainers walk out of their 6-month course with the qualifications needed ...

Steve Grant - avatar Steve Grant

WHITE LABEL NOBA’s Winter 2016 season: Earth + Country

Taking cues from the warm winter colours of tobacco and caramel, and combining them with the strength of navy and the embracing lightness of whites and creams; and then...

Kath Rose - avatar Kath Rose

Former Etihad boss brings substantial event insight to PMY Group Board

Paul Sergeant PMY Group, the architects of the digital insurgency occurring at major venues across Australia and New Zealand, are delighted to welcome 35 year even...

Annie Konieczny - avatar Annie Konieczny

More training for coffee making than property sales: REINSW

Sydney 9 May 2016. An overhaul of education and training standards for the real estate profession must take place to help prevent illegal activities, according to the Rea...

Helen Hull - avatar Helen Hull