In the quest to improve the number of women on boards, we often focus on the individual. We police women’s CVs and tell them their personal characteristics (or personality) are the reason they haven’t reached leadership roles. Tertiary and postgraduate qualifications, experience in management and executive roles, nationality and international corporate experience, social connections and a range of intersectional factors have been seen as important for women breaking through the glass ceiling. While an understanding of individual characteristics is important, this focus can also serve to obscure the broader social and structural factors constraining and facilitating women’s corporate success. In widening the lens, others have focussed on country-specific factors, including the country’s gender pay gap, level of political representation, and the role of gender quotas or targets that have proven to be important drivers for women’s place in corporate leadership.

In between the macro (structural) and the micro (individual) frames are the firm-level drivers of women in corporate leadership. This meso space where the macro and micro interact, have been covered sparsely, but with some evidence that family ownership, firm size, performance and industry influence the number of women in leadership roles. The work on this globally is thin, but in Australia our knowledge of firm-level drivers is limited to one study of board members of ASX500 companies over four consecutive, contemporary years. Assessing the presence of women on boards against a range of firm characteristics, the authors found a positive relationship with firm size, women chairs, corporate governance scores, and the use of Big 4 auditors. Unsurprisingly, they found a negative relationship between women on boards and factors indicating conservatism or inflexibility, including board age, CEO tenure and shareholder concentration.

The excel update: as part of my work on women in ‘formal’ corporate leadership positions, the team and I have compiled the names and genders of all executives and board members for Australia’s top 25 financial firms, and top 100 non-financial firms, at benchmarks since women started being appointed to corporate leadership in the 1980s (1986, 1997, 2007, and 2018). It’s been a big job. Board members are often used in studies such as these (I’ve done so myself!), as directors are more public facing and thus easier to determine from the source material. However, understanding executives is crucial, as these roles often have more direct power over the business, and executive experience is often a necessary precursor to board roles. In capturing executives, my second issue has been that the source material has been inconsistent, resulting in a very long process of comparing different sources. The third issue was the determination of gender. Sometimes only surnames and initials were provided, necessitating a bit of digging to determine first name and gender. You cannot assume Chris is a man, or Lindsey is a woman (ask me how I know). Despite the laboriousness, this is very important work to do, as I now have the data infrastructure to be able to compare the presence of women (and their place in the corporate hierarchy) with various firm characteristics such as industry, assets, market capitalisation, board size, the presence of diversity and inclusion statements, and so on.

So why might there be firm effects for the appointment of women to boards? After all, women are ostensibly appointed on their merits (lol). Or, you may argue, all top companies are subject to the same legislation and corporate governance recommendations, with no single company excused from the long march of women’s equality. While this is certainly true to some degree, companies also have agency in deciding who to promote to executive and board roles. There are countless women who have met minimum standards of education and experience to be appointed, and yet they continue to be marginalised in leadership roles. Gender quotas are not required in the Australian context, with ‘soft’ regulation in the form of ‘comply or explain’ procedures encouraging companies to appoint women, but with no concrete consequences if they do not. These two factors give companies a role in deciding who, how many, and when to appoint women to their leadership suite.

New leadership appointments are largely the discretion of the existing board of directors (specifically the nomination committee). Both executives and board members have a symbolic role as the public face of the corporation, and are required to appear knowledgeable, ethical and community-minded in order to maintain the company’s social license to operate. Executives, or the top management team, are salaried employees responsible for ensuring the business fulfills its purpose, remains financially viable and delivers shareholder returns. Knowledge, skills and experience are key criteria for the appointment of a corporate executive, as they are responsible for monitoring operations, managing crises, and implementing new initiatives. Executives generally have a lengthy career trajectory through operational roles within the company or in similar firms, combined with experience in managing and leading employees. The combination of technical and leadership skills are seen as necessary to manage their portfolio, collaborate with other executives, and communicate with the board.

The board of directors are, in part, responsible for ensuring managers act in the best interest of dispersed shareholders. Board independence is key, with one or two executive directors (usually the CEO) on the board, but the remainder comprised of independent non-executive directors who can provide insight and oversight over company decisions. Board appointments are also guided by the ‘skills matrix’, with directors using their knowledge and skills to provide advice and guide company operations. Board members often have a background as a company executive, using their knowledge of the business to transition to their second career as a company director. Board members may also have a general professional background, with accounting, law, and investment banking seen as useful for director’s audit, monitoring, and knowledge-based roles.

This focus on leaders’ knowledge, skills and experience invokes what is referred to as the resource dependence model. It argues that organisations are not independent, but exist as a coalition of resources that respond to a complex and dynamic set of external environmental demands. Companies create connections or links with the external environment to obtain resources, with executive or director appointments one such link that reflects specific organisational dependencies. Early work on boards and resource dependency theory found that board size and composition related to the firm’s environmental needs, with companies with greater interdependence (complexity of operations, internationalisation and so on) requiring a higher ratio of outside directors. Subsequently, researchers have emphasised the need to ‘match’ resources provided by directors with the needs of the firm, with the focus shifting to appointing directors with a range of different knowledge, skills and experience resources.

Gender diversity, or the appointment of women to executive and board roles, can be motivated by resource dependency. Appointing a diverse range of executives and board members can enhance overall leadership expertise. Diverse groups can be more creative, and can produce better solutions to complex problems. The appointment of women to leadership roles can also help companies respond to increased pressure around gender equality, and enhance the legitimacy necessary to secure investment capital and human capital in the labour market. Women leaders can also enhance communication with, and commitment from, the external environment, particularly regarding female suppliers, customers and employees.

Although these factors will likely influence all firms in some measure, there are several organisational variables that can influence the representation of women in leadership. Larger firms (firm size) have more complicated external resource needs, are more well known, and face greater pressure to conform to societal norms. Larger companies also tend to dedicate more resources to diversity training, which may allow opportunities for women to be promoted. Larger leadership groups are more likely to include a more diverse range of leaders, including more women, as their size allows the company to access multiple experiences and backgrounds. Firm age may also influence the number of women, with informational and problem-solving needs much higher in early stages of the company life cycle. Crises, bankruptcy and organisational decline may also encourage the appointment of women, as it often prompts director turnover and efforts to re-establish links with the external environment. Women are also subject to the ‘glass cliff’ (see here for an explainer), achieving leadership roles when the risk of failure is highest. The firm’s industry may also matter, with symbolic and material connections to stakeholders in ‘feminised’ industries (more women employees, more women customers) dictating the appointment of women executives and board members.

Bringing some data to bear on these firm-drivers essentially resolves one of the black boxes for encouraging women in corporate leadership. We know women are highly qualified and experienced, and we know society is getting increasingly frustrated with the lack of women in leadership. What is needed now is to understand diversity in leadership from the perspective of the firm, the people who are actually making the appointment decisions (though, of course, subject to various external dependencies). Hopefully, by understanding the relationship between top companies and gender diversity over the last four decades, my work can help lift the veil on the companies that tend to encourage women, and why.