What difference does female presence and leadership make to boards?

6 Nov 18

Women in senior leadership positions can positively affect organisational performance. Mechanisms are needed to help them get there, argues Sheila Ellwood of the University of Bristol.

There have been few research studies undertaken where women have a substantial presence on boards of directors and fewer still where women are in the most senior positions. Therefore we decided to examine the influence of both the presence and position of women on NHS foundation trust boards.

NHS foundation trusts provide a useful context as there is substantial female presence on boards and women frequently occupy one of the most senior positions. Unlike most corporate boards, where there is only one or a small minority of women, one third of voting members of NHS boards are women and one third are chaired by a woman.

Results revealed that variation in the number of women on a board does not significantly affect financial performance across foundation trusts. In terms of service quality performance (clinical negligence costs), our results showed that female presence on boards does matter, but it is the position held by a woman and not the quantity of women that matters.

While the proportion of female executive and non-executive directors does not significantly affect clinical negligence costs, our results found that female presence in the two most influential board posts (chair and chief executive) does indeed make a difference. We can therefore conclude that having a woman in any of these two pre-eminent positions results in lower clinical negligence costs, and the chief executive position, as expected, is the most influential.

Our research is particularly relevant to the scope of the women and equalities committee’s inquiry into executive management. This will consider not just the level of diversity, but also the effect of women in the most senior board positions (chief executive officer and chair). In October 2015, only five FTSE 100 companies had a female CEO.

Our study of women on the boards of NHS foundation trusts informs the debate that high female presence among executive and non-executive directorships does not result in significant differences either in financial goals or service quality. However, it has been noted by other studies in different sectors that having a more women in the organisation affects performance positively.

Although there is little doubt that women will influence public sector organisational outcomes, we need a better understanding of what women bring to the boardroom table and the specific outcomes gender diversity creates. The public sector has recognised how important it is to attract and retain the right talent. Retaining a full talent pool and allowing women to reach their potential within organisations will benefit the public sector as a whole. More research is needed to help all sectors learn about the constraints women face in terms of their career progression.

Our research indicates that government should aim to ensure women are able to reach the most prominent positions on boards and efforts must go beyond merely achieving appropriate female presence at the senior level. Ministers should consider introducing mechanisms that support more women to reach the most senior positions in both private and public sector organisations.

Sheila Ellwood will be speaking at CIPFA’s PMM Live 2018 event on 7 November, where a series of presentations by respected scholars and practitioner will highlight the lack of diversity in politics and public policy.

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