Women on boards

glass ceiling edited

Yet again there is coverage in the media about boards falling short of hiring women and the debate about quotes and merit rumbles on. Merit is the best measure by which to recruit. In an ideal world, performance alone informs the decision. Quotas are disliked by almost everyone; no one values tokenism. No one should be excluded from boardroom positions or senior jobs, so long as they have the requisite qualifications, skills and experience.

All of which begs the question of whether the business world is governed by merit? Has the legacy of several centuries of female repression been firmly quashed? According to Lord Davies’ report, the answer is a firm ‘no’.

Quotas to get women on boards are not necessary. Positive discrimination – ditto. Quite simply, Women Are Good for Business! Despite the wealth of proof that this is so, as I will summarise shortly, there is still a woeful imbalance in the boardrooms of the UK and beyond. In 2010, only 12.5% of the UK’s FTSE 100 boards were female. Though this represents a significant increase on the 2004 figure (which was 9.4%)  at this rate of change it would take more than 70 years to achieve boardrooms with a male-female balance.  Is it not possible, I hear you ask, that women aren’t fully suited to these roles?  Men may have always led your organisation and you’re doing quite well as you are thank you very much.

This is a question worth an in-depth answer:

Women at the top level improve company excellence
This first point can be demonstrated by a large study done across 60,000 employees in 101 of the top European companies. The companies that had three or more women in senior management positions scored higher on scales of leadership, accountability, direction, coordination and control, innovation, work environment, motivation and external orientation.

Women at the top level improve financial performance
When 89 top European companies were closely analysed, those that had the most women at the top level significantly outperformed their sector and saw much higher stock price growth.

A further large study showed that companies with more women on their boards outperform their rivals with a 42% higher return in sales, 66% higher return on invested capital and 53% higher return on equity.

Of course, correlation is not cause. But the correlations found in the studies above are striking. They demonstrate that gender balance will help business move forward and grow. They back up the well-known premise that corporate boards function best when they contain a mixture of backgrounds, education and experience.

Let’s consider two further points that, whilst not related to profit or performance per se, highlight the benefit of increasing the number of women on company boards.

  1. To compete globally, the UK will need an additional five million highly qualified workers within the next ten years. If women occupied the same number of roles as men, this shortfall would reduce to three million, without reducing the number of men in employment.
  2. Women control the purse strings, making 70% of all household purchases. With this in mind, would you still want a board that far over-represented men?

Surely a board that well represents its customers will better provide for them.

One might well ask why, now that we are well into the 21st Century,  company boards are still so unbalanced?  Some of the reasons are pretty obvious, but the figures are still shocking.

  • On average, European women devote twice as much time as men to domestic tasks. And flexibility when it comes to work/life balance is not common practice
  • 49% of the highest paid women are childless compared to just 19% of the highest paid men
  • Add to this the interesting differences relating to ego and confidence: 70% of women rate themselves as equivalent to their co-workers. 70% of men, rate themselves higher than their co-workers
  • Women have a proven higher perception of barriers to career success and lower ambition on average. The repressive power of traditional bias and a sense of the ‘old boys’ network’ is not to be sniffed at
  • To a small extent, the situation is aggravated by supply, with women coming through the ranks in smaller numbers than men.

The barriers to a woman’s rise to corporate board level are weighty and numerous. Constructive measures to address the issues include:

  • Over time monitor the gender balance in your company. Do it at every level and record disparities in pay, attrition, recruitment, departments and explore changes that would benefit the business
  • Consider flexible working options, for both men and women
  • Consider offering flexible career breaks, for both men and women
  • If not already in place, consider providing childcare facilities at work
  • Increase the opportunity for female networks
  • Try and address confidence and ambition issues that may be holding back the women in your organisation (eg executive mentoring programmes)
  • Review HR guidelines and policies

Norway, Spain, Iceland and Finland have all introduced quotas to rectify the lack of balance on company boards.  France and the Netherlands may follow soon. Countless others, including the US, Germany and Australia have introduced compulsory monitoring or threatened legislation if the imbalance continues.

Media outrage about pay inequality is going nowhere, with well reported fact that the UK’s female graduates earn less than 20% of their male counterparts.

The trend is clear. Companies that adapt early and on their own terms will flourish. Getting your company in touch with its feminine side could be the best thing you ever do for it.

 

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