Women on top: the benefits of a diverse boardroom

Mining companies lag behind the rest of the world in the number of women on their boards, and this exclusion could affect financial bottom lines as well as corporate culture. Women in Mining (UK) chair Amanda van Dyke discusses her organisation's new report on the value that women bring to the boardroom and the benefits that the industry could unlock if it starts paying attention.

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In corporate culture, it's often said that change comes from the top. As the logic goes, if there's any chance of a company affecting change throughout its structure, only the boardroom and the executive leadership has the authority to make it so. By the same token, the ongoing journey to foster true gender equality in business must be reflected just as strongly in the upper echelons of the corporate hierarchy as at the bottom or in middle management. Unfortunately, the mining industry is still lagging behind the rest of the world in this regard, with fewer women on boards than in any other industry.

When the 2014 Cranfield Female FTSE board report found that all but two companies in the FTSE 100 had female directors on their boards, it was no surprise that the only companies with all-male boards - Antofagasta and Glencore - were both miners. Antofagasta's appointment of Vivianne Blanlot as non-executive director in March 2014 and Glencore's pledge to have a woman on its board by the end of the year at least raises the cheering prospect of a FTSE 100 without a single all-male board by 2015.

Nevertheless, a few key appointments can't obscure the fact that just over 7% of directorships in the mining sector's top 500 listed companies are held by women. And, according to a recent report published by non-profit organisation Women in Mining (UK), this exclusion could have financial implications as well as cultural and social effects. The report's key findings revealed that there is a strong positive correlation between female participation on boards and financial performance in key metrics like return on assets (-2.86 on all-male boards; +6.40 on boards with two or more women) and enterprise value (106% higher for companies with two or more women on the board when compared to all-male boards).

We spoke to Women in Mining (UK) chair and lead author of the report Amanda van Dyke to discuss the value that women bring to the boardroom, avoiding tokenism and the statistical minefield of correlation and causation.

Chris Lo: The report includes an interview on corporate diversity with Lord Davies, in which he said "You've got to start with the board in any capacity and then work down." Is that something you agree with - is the boardroom the natural starting place to promote women in the mining industry?

Amanda van Dyke: There are fewer women in the mining industry than in any other, at all levels, all the way up to the board. It's a cultural issue. Corporate cultural changes start from the top. You lead by example. I'm not saying that a pipeline isn't very important in terms of getting women to the industry and preparing them to do well in the industry, but in order to change a corporate culture to realise the benefits of female participation, I do think that cultural change is led by the board.

CL: Do you think the majority of mining boards and executive teams are sensitive to the importance of diversity and the financial and corporate benefits that women can bring to the boardroom?

AvD: I don't know that sensitivity is the right word; I think they're not always aware of it. Mining is one of the oldest industries, and it's a very closed industry. Many don't understand why mining needs women - 'Why will women make a difference?' The function of organisations like [Women in Mining (UK)] is to make the argument, and we've been pretty strict about trying to make it a business case. So if you can get the industry's ear and encourage understanding of the benefits, we think that converting in that way is firstly much more effective, and secondly, it's less aggressive.

We believe there's an extremely strong business argument, but it's a business argument that most of the industry is ignorant of because there have been no women in it for such a long time. And it's such a closed industry that international best practice doesn't necessarily filter in very easily. The industry often tends to hold itself apart, and trying to explain that it is good business and some of the best practices in using women can help - it's a bit of a learning process.

CL: 30% is noted in the report as the 'critical mass' of female participation required to unlock the full benefit of gender diversity. Why 30%? Is this the point at which the culture of a company starts to change?

AvD: It's the point where significant changes that are associated with women on boards are noted. I think that has to do with the fact that one woman might be just a token. One woman is paving the way; I'm not suggesting that having one woman on the board isn't a good start. But to change the way the board thinks, to change the dynamic is what you're trying to do - and we stress that diversity generally on boards is good, and gender diversity is one well-noted form of diversity. What makes boards more effective is diversity on many levels - age, gender, culture - it's about getting the board to think outside the box and look at every aspect of something in order to find the most effective solutions for the big picture and how to carry something forward. One woman [on a board] can affect change, but the full benefits associated with women on boards tend to be correlated at that point [30%].

CL: One of the most important findings of the report is the strong positive correlation you found between female representation on boards and the financial performance of companies. Is this correlation an important tool to bring about change?

AvD: It's the tool that we're choosing to use. There are two things that it's correlated with. One, profitability. Two, market recognition of performance, and market recognition of performance is very important to miners as well. The ways in which women do that are less direct; I think that it hasn't been as effective as we would have necessarily hoped, but change takes time - it doesn't happen overnight. It's not just one or two financial ratios that they're associated with performing better on, it's more like 50. For example, the social licence to operate is huge, just as important as a mining permit. The fact that women play a large role in preserving and creating social licences to operate within the various jurisdictions where mines tend to operate these days is having an impact, but I would say it's a slow learning curve.

CL: The report acknowledges that correlation doesn't necessarily imply causation, but it does cite "a growing body of evidence" that more diverse boards are more effective. Is the key now to build on that evidence to firmly establish that position?

AvD: Yes, that's exactly the point. It has to be noted that correlation isn't causation, and causation in terms of business is very rarely found. The way we make business different is always through correlation. We notice a correlation and we try to find the causation, but ultimately it's very hard to find social causation. That's why economics is a social science. That being said, the body of evidence is fairly overwhelming at this stage. From outside the mining industry, we've made the first steps at doing mining-specific bodies of evidence, and we were very happy that even with the low number of women on boards and women participating in the industry, it was still massively correlated with better functioning. But in other industries where there are a great deal more women, where the tipping point has been achieved, the correlation is huge. It's cutting off your nose to spite your face if you can't take evidence from lots of other industries, as well as your own industry, and say 'Just because I don't know why, I'm not going to do it.'

I believe a lot of the resistance is cultural. It's not that they're sexist necessarily. It's interesting; most of the women that I work with in the industry, and we have over 1200 members, will tell you that they don't experience sexism. What we're fighting is not necessarily sexism, it's just a culture that doesn't realise the value of women for women's sake. However once you've been given the entrée, generally, it's our experience that the industry is very receptive, because they're practical people and when they realise that you do a good job you tend to be rewarded for it.

CL: Do you think the mining industry is increasing its uptake of women in senior positions fast enough on its own, or should legislation be an option that's on the table?

AvD: We're asked this regularly. We don't support legislation. The reason we don't support legislation and quotas is because the issue with getting women on to boards is a cultural one. The whole argument we have for women on boards is that they can affect change. If women become appointed on a token basis and people believe they're just there to fill a quota, their effectiveness, the extent to which they're listened to and their ability to affect change is severely limited. That tokenism makes it much more difficult to make the long-term industry change. The most effective way of enacting change is by a wholesale buy-in, and by the industry realising, acknowledging and working with us to try to make it happen. Working with industry is much better than regulating and enforcing the industry, in our opinion. And it will allow women to have the effect on boards and on company performance that they deserve.

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