How important is it to have women on the corporate board of directors? Well, if improved financial performance is priority, the answer is: very. While gender diversity may be seen as a lofty social goal, there is mounting evidence that having more women on boards of directors isn’t just the right thing to do—it’s good business.
In 2015, a study by McKinsey & Company found that “companies where women are most strongly represented at the board or top management levels are also the companies that perform best, on both organizational and financial performance.” For instance, companies with a higher proportion for women on the board averaged 10 per cent higher return on investment and 1.7 times greater stock price growth.
The same study found that women represent only 17 per cent of the eligible talent in the corporate leadership pipeline. While fixing this inequity will take time, there is plenty of incentive for smart companies to begin to address this situation right now. In Canada, securities regulators such as the Ontario Securities Commission (OSC) have mandated that companies increase the representation of women on boards and executive officer positions and as a result the number of board seats held by women at TSX 60 companies increased from 20.1 per cent in 2014 to 23.1 per cent in 2015. However, despite these gains, Canadian companies still lag behind their European counterparts. The introduction of the Copé-Zimmerman law in France, for example, has led to a massive jump to 33 per cent female representation.
While traditional board structures may have relied more on paper documents and a strong handshake to get deals done, providing an environment that makes it easier for underrepresented groups to be effective is essential. Many companies still don’t have the systems and processes in place to make it easier for women to adapt to governance structures that have traditionally relied heavily on male-dominated conventions. These include an easy-to-use document management system, support for remote meetings and flexible board scheduling.
Board management software, such as the Leading Boards’ service, can make it easier for those new to the board environment to manage documents, juggle multiple roles, and maintain a healthy work-life balance, all of which can go a long way to support women in leadership roles.
Board management software is a sound investment for any board that wishes to increase efficiency, security and diversity of participation. While getting more women on boards is clearly the right thing to do, it helps to know that the process and results of the drive for diversity have strong business benefits as well.