Thought Leadership

Egon Zehnder International recently joined forces with the European Professional Women’s Network (EPWN) to conduct a third survey on the representation of women on European boards. The top 300 European companies now have 9.7% of women on their boards, versus 8.5% in 2006 and 8% in 2004. Out of a total of 5,146 directorships, women now occupy 501 board seats.

However, a closer look at the statistics tells a slightly different story. Excluding Norway, where the number of female directors jumped to 44.2% in 2008 due to new government quota legislation, female directors held only 9.1% of total board seats in 2008. In other words, the number of women directors on European boards has increased by an average of only 0.5% per two-year term since 2004. Moreover, despite statistical evidence that women directors now play a marginally stronger role, 25% of European companies still have an entirely male board.

What do these numbers tell us?

A number of groundbreaking analyses highlighting the links between diversity and board performance have recently hit the news. On an academic level, these studies show that the more women on a company’s board, the better its performance. However, although these findings may seem perfectly reasonable, behaviour in the business community has been slow to change when it comes to nominating female board members. Our survey reflects this reality by pointing to a growing, but unspectacular number of female board appointments in 2008. Ultimately the survey results shows that progress towards greater diversity is being made, but very slowly and that a major shift in attitudes towards recruiting female directors has not yet occurred.

Another hot topic in the current diversity debate is quotas. Many female executives, especially senior leaders, object to quotas because they imply that women cannot reach the top on their own merit. One advantage of quotas is that they force boards, nomination committees, and search firms to look and think outside the box. Ultimately, however, quotas are not a long-term strategy for promoting diversity.

Feedback from our clients suggests that companies are increasingly coming to see the need for a more diverse board and greater gender diversity. Unfortunately, the fact that most board members traditionally come from senior executive positions in similar companies, where senior women leaders are still scarce, is clearly slowing progress. Based on our experience at Egon Zehnder International, a highly creative approach to searches is required that re-defines the profile of a good non-executive director in a fresh way. More broad-minded thinking can result in far more diversity on boards, in terms of gender experience and thinking. When asked to find female board members, we have looked in new directions, including different fields like academia or law and consulting firms, as well as in departments beyond the CEO’s office, such as HR, Corporate Affairs and Marketing.

Increasing divide in Europe

The Scandinavian countries rank the highest in our survey. They are led for the third time in a row by Norway with a rate of 44.2% women on boards, followed by Sweden (26.9%), Finland (25.7%) and Denmark (18.1%). Norway’s jump of 15.4 percentage points from 28.8% in 2006 (and 22% in 2004) can be explained by its recently introduced quota legislation. Moreover, almost all the companies in this group have at least one woman on their board. In Norway, Sweden and Finland the average number of women on boards has exceeded the significant number of three, signalling that these countries have clearly moved away from tokenism and are convinced of the positive impact of gender diversity on their results.

The next four countries in the ranking - trailing the Scandinavian countries by a small gap - are led by the Netherlands with 12.3% of women on boards, followed by the UK with 11.5%, Ireland with 10.1% and Austria with 9.2%. The Netherlands deserve mention for its 5.8 percent increase in 2 years, making it the fifth-ranked European country this year, up from tenth place in 2006. This impressive rise is due to the commitment of several CEOs to improving the number of women directors in response to pressure from the press and various private initiatives. The United Kingdom seems to have reached a plateau at 11.5%, up only 0.1% from 11.4% in 2006, after an initial encouraging growth rate of 1.4 percent in 2004. Austria, on the other hand, slid back to 9.2% in 2008 from 9.5% in 2006.

The remaining countries in the ranking all fall below the 9.7% European average. In Germany 7.8% of board members are women, versus 7.6% in France. These 2 countries are followed closely by Luxemburg and Belgium, Switzerland, Spain, and Greece with results ranging from 6.0% to 6.6%. The number of female directors in Luxemburg soared from 0% in 2006 to 7.2% in 2008 versus 2.5 percentage points over the same period in Spain and just 0.3 percentage points in France.

Italy and Portugal, the two countries that placed last in the survey, lag significantly behind the rest of Europe: Italy has only 2.1% of female board directors, barely up from 1.9% in 2006; and there is only one woman director to be found in Portugal, who accounts for 0.8% of top board seats.

	% Companies with women on boards	% Women on boards	Average number of women on boards
Norway	100 (100)	44.2 (28.8)	7.0 (3.0)
Sweden	100 (100)	26.9 (22.8)	3.3 (3.7)
Finland	100 (100)	25.7 (20.0)	3.3 (2.2)
Denmark	83 (100)	18.1 (17.9)	2.5 (2.5)
Total	97% (100%)	28.6% (22.5%)	3.8 (3.1)
The Netherlands	79 (50)	12.3 (6.5)	1.5 (0.8)
UK	81 (86)	11.5 (11.4)	1.4 (1.4)
Rep of Ireland	83 (60)	10.1 (8.1)	1.3 (1.0)
Austria	50 (50)	9.2 (9.5)	1.5 (1.8)
Total	79% (75%)	11.4 (8.6%)	1.4 (1.3)
Germany	82 (72)	7.8 (7.2)	1.8 (1.7)
France	73 (75)	7.6 (7.3)	1.2 (1.1)
Luxembourg	50 (0)	7.2 (0.0)	0.8 (0.0)
Belgium	44 (43)	7.0 (5.8)	1.1 (1.0)
Switzerland	57 (58)	6.6 (5.9)	1.0 (0.9)
Spain	70 (48)	6.6 (4.1)	1.0 (0.6)
Greece	56 (57)	6.0 (4.4)	0.8 (0.6)
Total	70% (64%)	7.3% (6.4%)	1.2 (1.1)
Italy	30 (22)	2.1 (1.9)	0.3 (0.3)
Portugal	17 (0)	0.8 (0.0)	0.2 (0.0)
Total	28% (20%)	1.8% (1.7%)	0.3 (0.3)

Note: The numbers in brackets are the results of the BoardWomen Monitor 2006.

Significant demographic differences

The ages of the 5,164 board members range from 24 to 94. The average age of a board member in Europe is 58 years. This is also the average age for male board members, while female directors tend to be younger and aged around 53 years. The median age for board women is 51 compared to 61 for men, which reflects the growing supply and seniority of those women who entered the workforce in the 1980s and 1990s who are now starting to come through.

More international representation of women on boards

Rising international diversity reflects the desire of many companies to enrich their boards with people from different cultures to maximize their performance. 23.5% of board members in European countries are of a different nationality to that of the company’s headquarters (up from 22.6% in 2006). For women, the proportion of internationals is even higher, reaching 24.8% in 2008. The exception is Norway, with just 2.4% of female board members coming from a different country. The Norwegian authorities, the federation of employers, and private initiatives organized activities in preparation for the introduction of the quota legislation, which have expanded and developed the female talent pool in Norway.

Men still chair most board committees

In this year’s survey the representation of women as chairpersons of board committees was included for the first time. The sample contains 1110 committees with identified chair positions, of which 48 (just 4.3%) are held by women. The UK leads the pack with 21 female committee chairpersons, followed by Spain with 6 female committee chairs.

Technology committees have the highest number of women chairpersons (10%), followed by corporate social responsibility committees (5%), nomination and compensation committees (4.9%) and audit committees (4.8%). There are no women chairpersons on any committees of banking and safety issues at the present time.

Rankings EuropeanPWN BoardWomen Monitor 2008 – 2006 – 2004

2008	Country	2006	2004
1	Norway	1	1
2	Sweden	2	2
3	Finland	3	3
4	Denmark	4	10
5	Netherlands	10	7
6	United Kingdom	5	5
7	Rep. of Ireland	7	NA
8	Austria	6	8
9	Germany	9	4
10	France	8	9
11	Luxemburg	16/17	NA
12	Belgium	12	12
13	Switzerland	11	6
14	Spain	14	11
15	Greece	13	NA
16	Italy	15	13
17	Portugal	16/17	NA