This week we return to the issue of diversity in the boards of Finnish publicly-traded companies.
Last week in our blog we discussed the board composition of publicly-traded companies in Finland for the first time. That discussion was based on a recent study by Prönö and on a bit older study by the Women Leaders Program of the Finnish Chamber of Commerce.
As it happens, on the same day that I published the blog, the Finnish Business and Policy Forum (EVA) came out with their own study.
In it and in a blog by Director Emilia Kullas, they celebrate how close the Finnish business world is to reaching the minimum level of the 40-60 division of gender equality in company board members. According to EVA, women held 35.2 % of seats on the boards of the largest Finnish companies in 2021. This indeed is quite close to the 40 % threshold.
This celebration mode, however, puzzled me. I had just written and published a blog where I had announced that overall this percentage is 27-29 %. Surely that’s low and not celebration-worthy.
And even if we focus only on the large companies, Prönö and the Chamber of Commerce had informed us that for Large-cap companies, the percentage was 32-34 %. The EVA figure was higher than either of these.
I had to find out what was going on and whether we really should be popping the champagne as the EVA report seems to suggest.
So, here’s what I did and what I found out.
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Some background to my study
First of all, I had to figure out what is the difference between the large companies in Prönö’s and the Chamber of Commerce’s studies compared to the EVA publication. What is the reason behind the differing percentages?
I concluded that the EVA dataset is a subset of the companies Prönö and the Chamber of Commerce examined.
EVA has taken the figure 35.2 % from the European Institute for Gender Equality (EIGE).
EIGE explains that their figure refers to companies in the OMX Helsinki 25 list in the Helsinki Stock Exchange. This list includes the 25 most-traded companies in the Helsinki Stock Exchange. The list is updated twice a year.
The list includes such companies as Kone, Cargotec, Nokia, Nordea Bank, Valmet, Wärtsilä, etc. So mostly large multinational companies based in Finland. This list is 5-6 companies smaller than the Large-cap list used by Prönö and the Chamber of Commerce.
Just to be on the safe side, I redid the calculation based on the OMX Helsinki 25 list currently in use in the Helsinki Stock Exchange. I excluded two companies whose headquarters are not in Finland. Thus I was left with 23 companies with altogether 187 board seats.
I went through the boards of these companies, counted the number of seats in total and how many seats men hold in comparison to women. I came up with a figure that was even higher than in the EVA report.
Currently, women hold 36.4 % of board seats in these 23 most-traded companies in the Helsinki Stock Exchange.
So, there. Let’s pop the champagne. The situation is even better than what EVA let us believe.
I was, however, curious to
- learn more about diversity in these 23 companies, and
- compare their diversity figures to those of the smallest companies in the Helsinki Stock Exchange.
After all, we know from the two previous studies that the Small-cap companies are lagging behind the big ones in this one metric. I wanted to see what other differences might arise.
I did this by detailing the ages, the highest education levels, and nationalities of the board members.
For the most part, the age of board members was easy to find out. Only among the Small-cap companies, a few do not reveal the birth years of their board members.
Education was more difficult. I intended to record the highest degree each board member had obtained. However, degree titles are not comparable between countries and between different generations. Some board members also have more than one degree of the same level. In those instances, I recorded only one of them. In case the other was an MBA, I marked that down. Thus, in my dataset MBAs are somewhat overrepresented in comparison to other degrees.
For the most part, companies also spell out the nationality of their board members. Especially the larger companies. If the nationality was not given I googled the person further. If that didn’t help, I made an educated guess, especially with Finnish-language names.
This is what I found out.
Diversity in the boards of the largest Finnish companies
Above, I mentioned that women hold 36.4 % of board seats of the companies in the OMH Helsinki 25 list.
Furthermore, in 82.6 % of the companies, men form the majority of the board members. There is an equal number of men and women in 8.7 % of the companies. And in 8.7 %, women outnumber men as board members.
In terms of age, this group of board members is very similar to all board members of publicly-traded companies (see Figure 1).
For both women and men, those born in the 1960s form the majority. Women board members, however, tend to be slightly younger on average than men.
The Prönö study pointed out that only a very small percentage of board members are born in the 1980s and 1990s. In this group, the few that were are members of the family owning a significant part of the company.
Education of the board members
As I said above, my recording of education levels and fields has some notable problems in it. Nevertheless, I think this gives an idea of the education levels and fields that are valued on company boards.
Women more often tend to have a degree in business than men. They also more often have a law degree. Men, on the other hand, tend to have a technical education (see Figure 2.).
In this group, there wasn’t a difference in the level of education between men and women (Figure 3.).
Nationality of the board members
As I mentioned in my previous blog, the Prönö study looked at the nationality of the board members as well. They concluded that 76 % of the board members of all companies in the Helsinki Stock Exchange are Finnish nationals.
In this group (OMX Helsinki 25 list), however, boards are more diverse in terms of nationality. Now, 60.4 % of the board members are Finnish nationals (Figure 4.).
Among women, there is even more diversity in terms of nationality than among men. Of the women, 57.3 % are Finnish nationals. 62.2 % of men are (Figure 5).
Overall, then, this group consisting largely of big multinationals is doing pretty well in terms of diversity. Let’s look at the Small-cap companies next.
Diversity in the boards of the Finnish Small-cap companies
In this group, there are currently 51 companies. For some reason, I couldn’t access the public web pages of one of them. For the 50 I did, there were 276 board seats.
The boards of companies in this group are smaller than those in the OMX group. In this group, the boards have on average 5.5 seats. In the OMX group, the average board size is 8.1.
A few didn’t have any other information on their board members up on their web pages than names and pictures. Thus I was unable to record the birth years, degrees, and nationalities of all of them. But for the overwhelming majority, I was.
In this group, the share of women board members is significantly lower than in the OMX group (24.6 %). This we already knew from the other studies.
This group also had companies that didn’t have any women on their boards (6 %). The share of companies that had an equal number of women and men (6 %) was also smaller than for the OMX group.
In this group as well, those men and women who were born in the 1960s dominate (Figure 6). Here, however, both men and women tend to be younger than in the OMX group. There were even some board members who were born in the 1990s. To what extent they were family members of major shareholder families I don’t know.
In this group, the education level of women board members is slightly higher than that of men (Fig 7).
The fields of their education, however, look very similar to the board members of the OMX group (Fig 8). Women’s education is in business, law, and the humanities and social sciences. Men favor technical fields and business.
These boards are, however, strikingly different from the OMX group in nationality. 93 % of board members in this group are Finnish nationals (Fig 9).
What to make of this
It is clear from this and other studies that the boards of Finnish multinationals are more diverse in terms of gender and nationality than those of smaller companies.
They are, however, very similar in terms of the educational background of the board members. Women members have studied business, law, and humanities and social sciences. Men instead have studied business and technical subjects.
As I mentioned, if a person had two degrees of the same level and one of them was in business, I recorded the business degree. My impression is that men often combine a technical degree with a business degree. Women, on the other hand, combine a business degree with a degree in law, or humanities and social sciences.
Although the boards of the Small-cap companies are slightly younger than those of the OMX group, boards in both groups are dominated by those born in the 1960s. Women also tend to be slightly younger than men.
The boards of Finnish Small-cap companies are thus significantly less diverse in terms of gender and nationality. After all, 75.4 % are male and 93 % are Finnish nationals.
There are even boards that don’t have a single woman in them (6 %). 56 % had only one woman. The contrast to the OMX group is clear. In that group, all but one (4.4 %) had more than one woman on the board.
So, in terms of gender and nationality diversity, the concern thus isn’t the large Finnish multinationals. They get their cues from beyond the borders of this country and thus form their policies and practices accordingly. It’s those smaller companies. Are they actually following an unspoken law of the land when it comes to diversity (or lack thereof)?
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