A non-diverse board may find it harder to ‘think out of the
box’ and be more likely to succumb to ‘group think’ and
staying within its ‘comfort zone’.
Boards should consider the likely benefits of diversity
but avoid creating a more diverse board if this would
compromise board effectiveness. It is the business case
rather than the politically correct, social policy case that
should be the driver of increased board diversity – as it
should be with respect to the composition of the board
generally. The experience of Norway, which has achieved
their statutory proportion of 40% female directors
on their large company boards, does not suggest that
mandatory quotas are an unmitigated good: it has resulted
in relatively few women holding an excessive number of
board positions.
Without quotas, the UK has achieved only about 17%
female participation on large quoted company boards,
with a greater proportion of women holding non-executive
compared to executive directorships. Bearing in mind the
higher proportion of executive directors on UK boards
than on Gulf boards, to be comparable with the UK’s very
modest level of achievement, female board participation
in the Gulf would now be between 25% and 30% of total
board membership. Many Gulf companies, including banks,
have one woman on the board, few have more. With typical
board size of twelve or so, the percentage of women on Gulf
boards cannot be more than 10% currently.
There is a need to move beyond the ‘token woman’
member of the board. It is difficult for one woman to make
the distinctive contribution that women can make when
she is a lone voice on the board. It becomes likely she will
tend to emulate the macho culture so often found in allmale boards.
A degree of international diversity on Gulf boards is
often achieved through the frequent overseas status of
the CEO who is generally a member of the board, and
international diversity is high at executive levels below
the CEO. Nominee directors, especially those who are
CEOs of the nominating parties, sometimes also enhance
the international element to Gulf boards.
Age diversity appears to be at least as great as with
Western companies – probably more so as there are many
young, nominated directors, often with family links to the
nominating party.
An issue of importance for financial institutions across
the world is the depth of financial experience of board
members. In particular it is generally considered
important for the chairman of a bank’s board to have
significant executive banking experience, in addition
to leadership experience.7 Even despite the general
40
7The
restriction of chairman appointments to nationals, Gulf
7
banks usually succeed in appointing board chairmen with
significant financial and leadership experience.
Sustainability
Gulf companies, even those such as banks that are not
in more obvious exploitive sectors, are now taking
sustainability seriously. Not so long ago, they tended to
interpret their corporate social responsibility obligations
only as a matter of making charitable donations and
reporting that they had done so. Now they have a much
broader understanding of their obligations especially
to their local community, extending to issues relating
to exploitation, pollution, global warning, staffing and
social obligations. Though without any data as evidence,
it appears that published sustainability reports, usually
separate from the main annual reports, are now as
widespread and as detailed as in the West.
Sustainability should entail concern right across the
supply chain. For instance, a bank, using a scorecard
approach to assist in making lending decisions, might
consider assessing a potential borrower’s sustainability
credentials as one of a number of factors which contribute
to the credit decision. The concern that this might
disadvantage the bank in a competitive environment,
may be counterbalanced if it is the case that sustainably
responsible companies are better run. This approach
would allow both the bank and the client to publicise their ??\?Z[?X?[] H??[Z]Y[?[?X?Y]?[Y[? ???]?[ X][????\? ????\?]?[ X][?\??Z[??[? ?? X?Y[? H ?Y?[??] ?X] \?] H ?\?Y\???Y][Y\?]\? [?\?Z?[???X?[]]Y?H[??^ \??[ \? H[?X???[??H ?]?\? ?X?X?K???[??[??K?[? HR? H \???X[??H? H??\? ??[?H\??\??Y?]X\?[??X[ N?[?]X\???H[?]?\?H ?YH YX\?? \?\??\??Y[? ??[?H^ \??[ H?X?[]]Y ???YH??\[?Y\???]??[ [?? YH[?\??\??Y[?? H \???X[??H? B???\??Z\?X[?[? H?Z\?Y[?? H??\???[Z] Y\?????B??B???B??VB???B???VB?????\?[ H???\?]?[ X][??[? H ?Y?[?^ [? ?\??\??[?? H \???X[??H?[?]?Y X[\?X????[ ?]?\?H ?\?H \?\??K]\? \?X[ H?\??Y[??B?H?Z\?X[?? H??\??] ?[? ?? X?[?\??Y[???[??]]?H?]\??Y[? ?X??\]Y[? H ?[??YY?H ??B?][\X? ?\? ??[?H ?Y?\?Y\?[?[\?[?\?XB???HY ?\??Y[? H ?Y?[??\?X????[?][ ?[ ?X\??X??] Z\? ? ?[?? ?[? ?XZ?\??\?[??? ^B?\?H \??Z]?Y?H Z\? Y\?????\??K \? ???\???Y?\\?X\? ?\?H[\ ??[Y[?\??YYY ?\?X[ H?? ?X?Y]?H H?YYY[\ ??[Y[? ?[?H ?[?Y]?Y[? [???[?Z???Y?H\?[?[\?[?[?Y??X?]?H ?\?\]Z\?]B???X?Y]?[??[?[??Y \???X[??K????Y?X?[????[????]H??\??[??B??\?X?H?H ??\???[? ?]??[X?\???R??[?\??\?
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