Boards Need More Women Leaders: Business Benefits of Diverse Boards

Just over 20% of Board members in publicly listed companies worldwide are women, according to a recent Deloitte report. How do we get more diverse Boards? 

Despite progress, and despite the proven benefits of diverse boards, women still hold only a small slice of Board seats in big companies around the globe. Just over 20% of Board members in publicly listed companies worldwide are women, according to a recent Deloitte report.

Not only is this a giant chasm that needs closing, it’s a missed opportunity for organizations to thrive. It’s been proven that diverse boards boost companies’ performance, while companies with homogenous boards lag behind. Don’t take our word for it; the statistics speak for themselves. Let’s break it down.

The Business Case for Gender-Diverse Boards

Stronger Finances

McKinsey & Company found that firms with gender diverse executive teams were 21% more likely to outperform on profitability. The reason? Diverse groups bring varied perspectives. Having a variety of backgrounds and genders in the room means brainstorming can reach greater heights. When it comes to problem-solving, the greater the wealth of experience in the room, the more chance there will be a positive outcome. This not only relates to financial gains but also sustainable growth, enabling companies to adapt and innovate continuously. 

Smarter Risk Management

Having a mix of genders in the Boardroom can lead to more considered and less risky decision-making. According to research in the Journal of Business Ethics, Boards with more women tend to have a better handle on management and lean towards making safer, more calculated choices overall. This approach reduces potential legal and financial liabilities and enhances the overall resilience of the company against market fluctuations and crises.

Having a variety of backgrounds and genders in the room means brainstorming can reach greater heights.

Closer to the Customer

Women on boards mean insights that resonate with a wider customer base. A prime example of this in action is large companies like Target and Johnson & Johnson developing products that better meet their customer needs under the guidance of their gender-diverse Boards. This positive reinforcement leads to increased customer loyalty and higher satisfaction rates, which are critical competitive advantages.

Happier Places

It’s not just about business and financecompanies with diverse Boards influence company culture. Diversity trickles down to create an environment where all employees feel valued and heard. Happier staff leads to lower turnover and higher levels of employee engagement, which are crucial for attracting and keeping top talent. These employees may become future C-suite or Board members, fuelling a cycle of positive growth and inclusion. 

Higher Standards

Reputation is everything in business. Companies that make room for women at the top are often seen as more responsible and ethical. They tend to score higher on environmental, social, and governance (ESG) factors. This attracts investors and translates positively to regulators and consumers. Moreover, such companies are often ahead of the curve in adopting innovative practices that enhance their market standing and overall societal impact. 

Practical Advice for Creating Gender-Diverse Boards

Set Specific Targets 

Just saying you value diversity isn’t enough. Set clear, actionable targets – like Salesforce’s commitment to achieving leadership parity – and make them public. This demonstrates a firm commitment to diversity, inviting scrutiny and support from peers and stakeholders. 

Revamp Your Recruitment Process

Use a structured recruitment process to counteract bias and ensure a diverse candidate pool. This can involve standardized interview questions and opting for recruitment firms that focus on diversity as a priority. Implementing blind recruitment strategies can also help in minimizing unconscious biases and focusing purely on the skills and experiences relevant to Board roles. 

Mentorship and Sponsorship 

Help women climb the ladder. Mentorship and sponsorship programs, or WeQual membership, can provide the necessary visibility and connections women need to reach executive levels. Establishing these pathways is essential for nurturing the next generation of female leaders within the corporate sector. 

Assess Regularly 

Frequent evaluations can help maintain an effective and balanced Board, pinpointing gaps in diversity and governance practices. These assessments should be transparent, and results should be shared with all stakeholders to ensure accountability and continuous improvement. 

Be Flexible 

Policies like term limits and flexible retirement ages encourage regular Board renewal, making room for fresh faces and perspectives, including more women. This ensures that Boards remain dynamic and reflective of the current business landscape and societal norms. 

In Summary

Giving women more seats in the Boardroom is a win-win. It’s not just about playing fair; it makes sound business sense. Gender-diverse Boards are more in tune with their markets, more careful in their governance, and better at creating a workplace where everyone thrives. 

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