Companies with the highest percentage of female directors have been shown to outperform on return on equity, return on sales and return on invested capital. They pay less to gobble up other firms. They have lower stock price volatility. And those with more women at the top have even been shown to have fewer governance controversies, such as bribery and fraud. There's enough evidence -- even if some is mixed -- that some investment firms have launched products geared toward generating higher returns by investing in female-led companies.
Yet according to a new report, men in the boardroom don't yet seem to buy the idea. A survey released Tuesday by PwC of more than 800 corporate directors found that just 24 percent of the male respondents believed board diversity improves corporate performance, while an overwhelming 89 percent of female directors believe it does. Meanwhile, just 38 percent of the men said it improves board effectiveness, while 92 percent of women agreed that it does.
That sharp divide reflects a surprisingly high percentage of male directors apparently reticent to embrace diversity's benefits. "Those numbers are telling us that we still have work to do," said Paula Loop, who leads PwC’s Governance Insights Center. "Female directors in the boardroom still need to convince their male counterparts that they are improving [performance]. I think the verdict is still out for men."
One way to interpret the findings, says Loop, is that male board members are saying "we hear you and we hear investors and shareholders telling us we’re looking for a diverse board and we’re acting on that. But we're not entirely convinced about why we’re doing that."
The survey also asked respondents to name the ideal gender breakdown among board members. Currently, women make up just under 20 percent of all seats, a number that has barely budged over the years.
Some 43 percent suggested women should make up between 41 percent and half of the board, and the same percentage said women should make up only between 21 and 40 percent of the board. The latter figure, which is considerably below actual parity, may reflect the ongoing belief among some male directors that the number of qualified women is not sufficient to fill board seats, a belief still held by about a third of the survey's male respondents.
Even as investors clamor for more diversity and the issue gets far more scrutiny -- legislation was proposed earlier this year to get more women on boards, and the Securities and Exchange Commission is drafting rules to get boards to reveal more about diversity -- an unsettling number of respondents seemed to still want little presence of women around the table at all. Some 10 percent of respondents, 97 percent of them male, said women should only make up between zero and 20 percent of board seats, according to the report.
Until more men step down from boards, it will be harder for the number of women to grow substantially. As a result, many of the women who responded to PwC's survey appeared to have a possible idea for a solution. The percentage of female directors (69 percent) who strongly believed mandatory retirement ages were important far outstripped the percentage of men who thought they were (just 29 percent). In other words, the stereotype of the boardroom as an old boy's club continues to have some real truth to it.