Golden Skirts? Why Women Directors get Overboarded

Gender diversity in senior management is an issue that is receiving overdue attention from all quarters – regulators, executives and academia. Priyanka Dwivedi is a co-author on the paper “Differential Effects of Functional Experience on Board and CEO Appointments for Female Executives”. She explains why companies must do more to expand the pool of candidates when they select women directors.

ISBInsight: What were the questions that guided your research?

Priyanka Dwivedi: There is an increasing pressure on firms to enhance gender diversity across the organisation, especially at the top. Some of the largest institutional investors in the United States (US), such as Black Rock, State Street and Vanguard as well as governments around the world have recently demanded that companies increase gender diversity on boards.

This push for recruiting more women on boards has resulted in a few experienced women directors getting multiple board seats. In the US, these experienced women directors typically possess higher educational qualifications than men and often come from non-executive, non-business backgrounds. But we don’t really know what factors impact the likelihood of female executives’ getting their very first board appointments nor do we truly understand how this increasing gender representation in senior ranks affects women in lower positions. My research broadly addresses these issues.

Why is it important to address these questions?

There is mounting government and institutional pressure on firms around the world to increase the number of women on their boards. For example, there is now a legal mandate for publicly listed companies in India to recruit at least one woman on the Board of Directors. Similarly, in Norway, 40% of Board members have to be women!  But, where are firms going to find so many women directors to comply with the law?

This push for recruiting more women on boards has resulted in a few experienced women directors getting multiple board seats. In the US, these experienced women directors typically possess higher educational qualifications than men and often come from non-executive, non-business backgrounds

The availability of competent directors, especially female directors, is a critical issue across countries, including India. Since hiring committees are often concerned about bringing underqualified female directors on board, they end up hiring the same few experienced women directors, or ‘golden skirts’, who may, at some point, become ‘overboarded’ or spread thinly across too many boards.

In contrast, in my interviews with women directors, they often recounted how difficult it was to get their very first board appointments. Therefore, in this study, my colleague Professor Michael Withers and I are examining the factors that are important for the selection of female executives to their very first board appointments. Our study will help firms gain better insight into the new selection criteria for women directors. It will also help female candidates, who may not have prior board experience but still have the relevant managerial skills, to better prepare and position themselves for board appointments by focusing on factors that increase their likelihood of attaining first-time board appointments.

In my interviews with women directors, they often recounted how difficult it was to get their very first board appointments

The research was based on a sample drawn from the population of all non-CEO female executives listed as one of the top five compensated executives in the S&P 1500 from 2001 to 2015.

One of the findings of your research is that more experienced women executives are not making it to the Board level. What could be contributing to this counterintuitive observation?

Female executives’ tenure is one of the variables we analysed in our study. As to our finding that tenure reduces female executives’ likelihood of getting their first board appointment, one possible explanation could be that female candidates who have been at senior executive levels for a long time and yet not been appointed to a Board previously, maybe discounted in terms of their executive ability. Perhaps, female executives’ long tenure, without a prior board appointment, may paradoxically become a signal of incompetence instead of being a sign of expertise. But more research is needed to truly understand and explain these effects.

In your research, you have specifically considered female candidates with experience in General Management and Finance for first-time board-level appointments. What was the reason for choosing these fields?

We know from past management research that the board of directors has two major roles—monitoring and resource provision. Therefore, experience in general management and finance are highly valued human capital skill sets in directors because they allow the board to fulfil both these functions. General management is typically seen as the operational track leading up to the Chief Executive Officer or Chief Operational Officer role. Executive experience in finance may lead to the role of a Chief Financial Officer. (In the US, the Securities and Exchange Commission now mandates that every publicly listed firm have a CFO). Due to these reasons, we examined how general management and finance experience influences women’s likelihood of gaining first-time board appointments.

Female candidates who have been at senior executive levels for a long time and yet not been appointed to a Board previously, maybe discounted in terms of their executive ability

Tell us about the ‘golden skirt’ phenomenon. How can it affect the candidature of women candidates for board-level appointments?

‘Golden skirts’ is the term that has been used in the media, and more recently in scholarly research, to label a small pool of seasoned female directors who have attained a large number of directorships and as such fill most of the available board seats for women. In essence, anecdotal and research evidence suggests that firms keep appointing the same female directors to their boards.

The board of directors are required to play two major roles. One is the monitoring and oversight role and the other is an advisory and resource provision role. Having too many board seats, as is the case for the so-called golden skirts, may impede female directors’ ability to fulfil these responsibilities because they are being stretched too thin in terms of time and attention.

Any board member, male or female, will have a reduced bandwidth to function effectively if he or she is holding too many board seats. This will impact the level of performance, at the individual and the firm level, sooner or later

Just to be clear, this is not gender-specific. Any board member, male or female, will have a reduced bandwidth to function effectively if he or she is holding too many board seats. This will impact the level of performance, at the individual and the firm level, sooner or later. The right thing to do is for firms to pay attention to and expand the pool of female candidates they consider for board positions.

Priyanka Dwivedi is an Assistant Professor of Management at the Mays Business School, Texas A&M University.  She has a particular research interest in examining gender and diversity issues in the upper echelons of organizations. Her dissertation was selected as a finalist for the INFORMS Best Dissertation Competition in 2016, and her research has been published in the Academy of Management Journal. She recently received the C K Prahalad Best Conference Paper Award at the Strategic Management Society’s Special Conference in Hyderabad, India.

Startup Opportunities in India Agriculture?

The agriculture sector is India’s largest employment sector, with nearly 650 million workers.  That probably makes it the largest employment sector in the world. However, it is dominated by marginal farmers and a lack of technology penetration. What entrepreneurial models are evolving to plug these gaps? With Usha Ganesh, Satyajit Majumdar is an author of the paper ‘Inclusive Entrepreneurship in Agriculture Value Chain in India’.

ISBInsight: What motivated your research?

Satyajit Majumdar: While the agricultural sector contributes about 17% of India’s GDP, it directly or indirectly employs about 50% of the population. Moreover, about three-fourths of these farmers are small and marginal. They contribute to about half of grain and horticulture production. This marginal nature of the farmer gets compounded with each generation since the land parcels keep getting divided between a larger number of offspring. Hence, we have a scenario where a large segment of the population depends on an activity which is not very remunerative. In the current farming model, unfortunately, benefits are greater for distribution than for production. Moreover, the criticality of this sector for the country is also reflected in the politicisation of many aspects of agriculture.

We also had first-hand exposure to farmer issues in the course of our work. Our ‘research activism’ put us in touch with the farmer community across Central, East and West India and with personalities like Anna Hazare. What we noticed was that there was a great disparity in success stories. This led us to think about the contributing factors for commercial success in farming. One of these turned out to be the presence of efficient services in the value chain and a more scientific approach towards crop selection, sowing, harvesting and selling. The structural inefficiencies in Indian agriculture also seem to create entrepreneurial opportunities.

Structural inefficiencies in Indian agriculture are also creating entrepreneurial opportunities

We thus set out to address questions like ‘Who is stepping up for these opportunities?’ ‘What are they doing differently?’ and ‘What are other opportunities for which business models can be created in the agricultural value chain?’

Were these agriculture-allied services models for-profit or not-for-profit?

It was a healthy mix of both. While there are entrepreneurs involved in helping the farmer community realise better yields while making money themselves sustainably, there are also non-governmental organisations, farmer producer organisations and philanthropists working in the same sphere. To our surprise, it was not the large corporates that were stepping up for these opportunities but startups and individual entrepreneurs.

What are some of the areas that are seeing greater involvement by entrepreneurs?

Developing market linkages is one of the key focus areas for service providers. Apart from this, other significant focus areas included pre-harvest and harvesting stage activities like crop selection, soil analysis and understanding the effects of climate patterns. Storage and crop protection are areas that have still not seen enough investment from the private sector. This remains a high potential area for entrepreneurs, more so since wastage rates run as high as 40%. Most of the solutions were data or technology-driven, be it the use of drones, data analytics or soil-sensing services.

It was not the large corporates that were stepping up for these opportunities but startups and individual entrepreneurs

These technological innovations are not only product-level but also business model innovations. One aspect that has facilitated this drive is the deep penetration of mobile and internet networks and the tech-savviness of the rural population, which has transformed rural India. One aspect that has facilitated this drive is the deep penetration of mobile and internet networks and the tech-savviness of the rural population.

Why is the development of such services important for Indian agriculture and the farming community?

Innovation is required to make farming sustainable. It is also needed for marginal farmers to move from subsistence farming to actually making profits, as distortions get removed or at least reduced.

Apart from the obvious higher profits from greater efficiencies, there is another tangible benefit for farmers. Our work also led us to conclude that the mindset of ‘subsidy chasing’ that leads to the demand for political patronage is not necessary. With the introduction of some activity-based efficiencies, farming can become a profitable and scalable activity.

Most of the solutions were data or technology-driven, be it the use of drones, data analytics or soil-sensing services.One aspect that has facilitated this drive is the deep penetration of mobile and internet networks and the tech-savviness of the rural population

Also, we need to realise that the challenges for farming are only increasing. Climate change is a reality and this requires that farmers become better informed with data so they can make better choices. This can lead to more short-cycle cropping, which can mitigate market risks and the risk of crop failure.

In some sense in general, the production planning techniques that are common in manufacturing, perhaps, need to be developed for agriculture too.

Besides, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has also increased labour cost for agriculture.

Fundamentally, we need to understand that farmer exploitation prevalent in the agriculture sector has to stop. If it does not, who will produce our food? We have seen farmers throwing away their products because the sales ‘realisation’ does not even cover the transportation cost! If these entrepreneurial interventions are helping mitigate this exploitation, they should be welcomed with open arms.

Farmer exploitation prevalent in the agriculture sector has to stop. If it does not, who will produce our food? We have seen farmers throwing away their products because the sales ‘realisation’ does not even cover the transportation cost!

What role does policymaking have in encouraging entrepreneurial solutions?

The models of entrepreneurship and the ancillary services that have emerged are largely driven by private enterprise so far. Some policy impediments do exist, which make farming less remunerative and keep it a marginal activity. For example, the Agricultural Produce Market Committee (APMC) legislation started out with the good intent of organising markets for farmers. However, the APMC model is now becoming increasingly restrictive for existing farmers because it consolidates buyers and also makes it difficult for new or marginal farmers to break in. Its removal can possibly be a positive policy move.

Such improvements may be long overdue considering where we are in agriculture versus the rest of the world.

We have to understand that it is about time for win-win solutions that help both producers and consumers. The degree of wastage in Indian agriculture produce is estimated to be as high as 40%. That means that any solution which improves efficiency will by definition be win-win. This way, farmers will also look at farming as a business and not as a vocation.

Training our students to see the potential in agriculture and the agri-business is something we do not do consciously in business education. This can be done better and certainly needs to be done better if we are going to bring innovation into agriculture and make it an equitable and value-driven activity.

Training our students to see the potential in agriculture and the agri-business needs to be done better

Prof Satyajit Majumdar is faculty at the Mumbai campus of Tata Institute of Social Sciences’ Centre for Social Entrepreneurship, School of Management and Labour Studies. With Samapti Guha and Nadiya Marakkath, he co-edited the volume Technology and Innovation for Social Change, which was published by Springer.