There are plenty of articles on the web about why gender parity is good for business. At the same time figures circle on how low of a percentage there are of female board members. The easy trick to close the gender gap that is still present? Put more women in charge and strengthen role models within the company. It should not be harder than that?
This is the type of article that can be read over and over; female corporate leaders add this value or that benefit. The numbers differ depending on publication, so do the said benefits that gender parity can bring. But the point in common is that an equal composition between genders generates better revenue & diversity of thought.
Board compositions are on every agenda this year, and has been named the trend of 2018 in numerous published corporate governance articles. Diversity of thought is important for a corporation to thrive. Boiling it down to gender parity though, it is more than just the thought difference that matters. More importantly, deciding for a gender equality is also the moral thing to do.
Yes, there is a gender difference – No, it doesn’t have to do with competence
With this “think manager, think male”-logic, potential and opportunity is lost. In most countries around the world, more women than men graduate from universities. That means that in most countries there are a larger number of competent women than there are men. At the same time, the presence of women on boards is strongly linked with a good corporate reputation, according to Harvard Business Review (HBR).
The tricky aspect seems to be in determining how to use this female competence, how to talk about what exactly parity should look like and what the most important elements are in senior management and executive composition.
Back in 2012, Harvard Business Review (HBR) published an article on why boards need more women. The key factors being that companies with women executives deal more effectively with risks and can address shareholders better. The same goes for today, so really nothing has changed in these six years…
What is the problem?
There are no “do this and all will be fine”-suggestions. This is a multi-faced and complex issue. But the minimum that should be done to boost gender parity is to empower and encourage female staff to become leaders. Put effort towards teaching not only men what it takes to become a business executive, and the problem should soon resolve itself.
It is time to be frank and admit that many are resistant to give women a fair share of seats at the boardroom table. However, with an upcoming proxy season, what should scare boards are the shareholders, where activism is now flourishing. Beginning next month, the investor consultants Segal Marco Advisors will vote against the nominating committees of boards of directors at U.S. firms if the boards have no female directors, according to a Business Wire press release.
The present mindset of society is probably what needs to change. Studies show that people have a biased mindset which is heavily influenced by whatever has happened before, i.e. a man was boss. That is why quotas are necessary, to redefine the biased mindset for future generations.
To create a lasting change, corporations must strive for better alignment and increase female leadership. It shouldn’t be harder than that. There must be a day-to-day commitment in order for anything to change, not only in saying so but also in actually putting plans in order and going through with them.
How quotas can help
There are of course the counter arguments that there are not enough experienced female leaders or that the females who have the experience boards are looking for will be spread thin sitting on plenty of different boards at the same time.
Though, as board workloads continue to rise, there will also be room for an increased number of board seats. Here, progress toward gender parity can make room and find a path towards a more diverse corporate boardroom.
And it from there it’s a good cycle coming the corporate way. According to World Economic Forum, women leaders hire more women employees. They also pay their high-earning women more than a male CEO would. Plus, they focus on female progress within the company. This leads to a work landscape where women can develop, and for future references, more competent women leaders that will take seats on boards.
Progress has been slow and steady, but since some countries enforced quotas in their law-making, things are looking better. In some European countries the share of women among directors of large companies has increased four- or fivefold since 2007, according to The Economist.
Other than quotas there are ways to help onboard more women. Set up a clear board recruitment plan, where women are considered first. If none of the female applicants fit the match, then and only then, the board can move on to review the male applicants.
There are no downsides to gender equality, but there is a significant upside – The moral case for equal rights and opportunities!
Still a long way to go
With this topic getting so much attention, it is strange for the boardrooms to be at a standstill, or to move at a glacial pace forward at best.
According to the board intelligence agency Equilar, gender parity within boards in Canada will be achieved by year 2048. That is 30 years down the road. More alarming, that is one of the lowest numbers in the world. Globally (figures varying) there’s still around 100 years until an equal workforce is reached. So, why aren’t a majority of companies yet equal if it is beneficial to have a gender diversity?
Research has also shown that the greatest benefits of diversity comes with female representation between 40-60 percent. But numbers are still disappointing. According to World Economic Forum, the only sectors where female corporate leadership exceeds 40 percent are healthcare, education and non-profits.
It seems strange that it is still needed to emphasise the benefits from having a balanced board (and workforce for that matter). But to answer some of the concerns, here goes…
A gender-balanced board will bring:
- Diversity of thought
- Balanced understanding of all employee groups
- Role models for the next generation
- Beneficial structure as for shareholder activist campaigns
- More effective/different approach risk management
If they don’t give you a seat at the table, bring a folding chair.
– Shirley Chisholm, first African-American woman elected to the US Congress
With our board portal DiliTrust Exec work can be done from anywhere around the world – at any time. Regardless if your board prioritises equality and gender parity, or keeps the matter further down the agenda, our software will help create effective board communication. It lets each member go through documents digitally, add notes and share with other members.
Connect with us to find out how DiliTrust can help enhance the management of your board and executive committees’ meetings.
If this interested you, you might also like our article “Two reasons to give your boardroom the facelift of age diversity”