Representation of women on boards in Finance and STEM occupations

Many studies have pointed to the underrepresentation of women in STEM (science, technology, engineering and maths) and Finance occupations.

Women on boards in Finance and STEM industries

Professor Renée Adams and Dr Tom Kirchmaier, December 2015

Many studies have pointed to the underrepresentation of women in STEM (science, technology, engineering and maths) and Finance occupations. Recent research by Professor Renée Adams and Dr Tom Kirchmaier examines whether this underrepresentation persists at higher levels of the corporate hierarchy.

Using data on boards of listed companies in 20 countries for the years 2001 to 2010, the researchers found that the percentage of women on boards is lower for firms in the STEM and Finance sectors than in the non-STEM sectors. STEM and Finance firms have an average of 1.8% fewer women on boards than non-STEM firms. This is an economically significant leadership gap, relative to the sample mean of 7.56% women on boards. Women are most underrepresented on boards in the “Natural Resources and Mining”, “Manufacturing”, and “Financial Activities” sectors.

A recognition that the percentage of women on boards varies by sector has implications for policy on board diversity. In particular, the researchers note that it will be more difficult for firms in the STEM and Finance sectors to achieve board diversity targets. Additionally, gender diversity may have a greater impact on firms in the STEM and Finance sectors than in other sectors.

Further, the researchers argue that given that the underrepresentation of women on boards in STEM and Finance firms is, in part, due to the persistent underrepresentation of women in STEM and Finance fields, it is unlikely that board diversity targets alone can solve the problem of women’s underrepresentation on boards in these sectors. To solve the underrepresentation problem, additional policy measures are needed to improve women’s participation and retention in STEM fields.

The Innovation Statement proposals announced by Malcolm Turnbull late last year will go some way towards achieving this. In particular, the Government is planning to invest $13 million over the next five years to encourage more women to embark on, and remain in, STEM related careers.

It is also worth noting that Adams and Kirchmaier’s report is predicated on the assumption that women on boards in STEM and Finance firms are generally recruited from those industries. Where this is the case, boards of STEM and Finance firms could consider broadening their pool of potential board candidates to other industries.