’Who you know’ culture leads to lack of diversity on boards

Men are almost three times more likely than women to be approached directly about joining company boards, according to a new survey that finds that over a quarter of panels have less than 10 per cent female membership.

The Institute of Directors in Ireland (IoD) study finds women are losing out to men due to the “who you know” culture which dominates the appointment process to private sectors boards locally.

Half of all male directors surveyed said they were recruited through direct approach by a member of the board; compared to just 19 per cent of women.

The study of more than 300 IoD members finds that 42 per cent of directors were appointed to their position after being directly approached. Some 67 per cent saying they knew three or more people on the board of the company they joined.

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The report starkly concludes that company boards in Ireland lack diversity in terms of gender, skills, race and ethnicity.

"The homogenous nature of some boards in Ireland limits the potential for diversity of thought and heightens the possibility of group-think. Without formal diversity policies in place or a transparent and open appointment process, it will be difficult to move beyond the status quo," said Maura Quinn, chief executive, IoD.

While 89 per cent of directors say gender diversity is important when recruiting new board members. However, some 65 per cent of directors reported less than 30 per cent female representation on boards with 28 per cent saying they had less than 10 per cent female membership.

Two-thirds of women surveyed said they believed it was more difficult for them to be appointed to boards than for men. Some 63 per cent said they thought unconscious bias was a barrier to inclusion with 52 per cent indicating a lack of access to networks as a primary reason why it was tougher for women to make it onto boards.

Conversely, 44 per cent of male directors said the pool of suitably qualified women is not large enough with 20 per cent stating there are no barriers to women being appointed to boards.

“Considering that we now have an open and transparent process of appointment to State boards which takes diversity into account, private sector boards in Ireland would appear to be lagging behind,” said Ms Quinn.

“Board members tend to appoint directors in their own likeness and so the ‘who you know’, informal approach, through personal contacts and networks, means that there is little opportunity to achieve meaningful diversity in the boardroom,” she added.

In addition to low levels of gender diversity, the research found a clear absence of racial and ethnic diversity in boardrooms in Ireland with limited appetite for change. There is also a similarity in skills and educational background across the directors surveyed.