1. Critical Mass
The first of these is the concept of critical mass. This is the argument that due to their otherwise token status, women can most likely make a meaningful contribution to boards when they represent a critical mass. The thinking being that once women represent 3 out of a 10-person board, later operationalised as 30%, they can shape the board process, bring different perspectives and raise issues relevant to multiple stakeholders. For example, the 30% Club works globally to encourage firms to reach the 30% mass target without waiting for legislation to enforce this.
Despite the obvious appeal of a simple numerical target, there are still problems with this approach. The interchangeable use of ‘30% and three women’ has resulted in some boards claiming that they have reached critical mass when in fact they have only two women. For example, a board comprising seven directors can argue that they have reached critical mass with the appointment of two women, since 30% would mean 2.1 women, a target that is impossible to achieve. In this example, two women are likely to suffer from an out-group bias and have fewer opportunities to shape board processes.
It means that firms can separate the policy of critical mass but remain compliant in practice, but certainly not in spirit. Some countries have sought to address this problem. Norway for example specifies exactly how many of each gender must be represented on different board sizes.
A deeper issue has emerged as the debate on board diversity has broadened to include other forms in particular ethnic diversity (the only other demographic characteristic to be associated with a target in the UK). In the UK, the Parker Review stipulated that by 2021, there should be at least one ethnic minority represented across all UK FTSE boards, a target that was largely met. However, implied in this target is not only an acceptance of a tokenistic approach to ethnic diversity but an institutional framework for legitimising it. According to the most recent estimate from the Office of National Statistics, 15.2% of the UK population identifies as non- white. Across a board of seven, one ethnic minority director represents just over 14% of the board, approximately the same proportion found in the population of the UK. This then begs the question, should corporate board practice be informed by representation or integration? From a representation perspective, one ethnic minority across UK boards would fulfil the criteria, but 30% for women would not, since women represent approximately 50% of the population and 48% of the working population.
One idea is that a board needs 30% of ‘difference’ to interrupt the negative dynamics of a more homogenous team. As the board diversity debate expands to encompass aspects beyond demographic characteristics, these issues will be the ones that boards are expected to address. For example, board cognitive diversity is increasingly important. This brings us onto the second challenge.