The study reveals significant impacts of major economic crises on gender diversity within corporate boards.
- Research by emlyon and Surrey Business School highlights board gender diversity decline post-2008 crisis.
- Junior female executives were particularly affected, even in specialized roles like CFO.
- The presence of female CEOs or gender quotas did not mitigate diversity reductions.
- Over 21 countries’ data reveal shifting corporate focus during crises.
The investigation into corporate boards spearheaded by Shibashish Mukherjee and Sorin M.S. Krammer uncovered a troubling decline in gender diversity post the 2008-2010 financial crisis. The researchers evaluated more than 10,000 boards across 21 countries, applying the method of a natural experiment to assess the change in gender diversity before and after the crisis. Their findings indicate that economic downturns push boards to prioritize functions seen as more directly related to financial survival, subsequently sidelining gender diversity efforts.
The study revealed that junior female executives, even those holding significant positions such as Chief Financial Officer (CFO), faced considerable demotions or removals from boards. This trend underscores an unsettling shift in priorities where gender diversity is perceived as a ‘softer’ issue, secondary to the urgent demands of managing a crisis. Professor Mukherjee notes that during economic hardships, businesses aim to enhance saliency and legitimacy, often at the expense of diversity and inclusion initiatives.
Notably, having female leadership, including female CEOs, did not prevent the reduction of gender diversity on corporate boards. Similarly, existing gender-specific affirmative policies, such as board gender quotas, showed no significant impact on curbing these diversity setbacks. According to Professor Mukherjee, the expectation that female leadership might champion gender equality initiatives does not always align with the realities faced during economic crises.
The comprehensive analysis of corporate boards across diverse geographical regions gave the study its breadth and depth, illustrating a global pattern in response to financial turbulence. The research illuminates the fragility of gender diversity gains, suggesting that the progress made can be easily reversed when companies are under economic strain. Published in The Leadership Quarterly, these insights make a significant contribution to understanding how corporate governance structures respond to crises.
Economic crises significantly threaten gender diversity in corporate governance structures, requiring proactive measures to sustain progress.
