Viewpoint — March 2017

Gender Diversity in the Boardroom
by Bob Gershberg, CEO/Managing Partner Wray Executive Search

Bob Gershberg, Managing Partner/CEO Wray Executive Search

If this is what your board meeting looks like, you’ve got issues:

Gender Diversity in the Boardroom

Despite increasing recognition for the value women bring to corporate boards, US companies continue a slow march toward gender diversity. While progress is being made, it is not at the pace needed to result in a significant expansion of board diversity in the near term, or to compete with public sector approaches being taken in other markets.

Despite increasing recognition for the value women bring to corporate boards, US companies continue a slow march toward gender diversity. While progress is being made, it is not at the pace needed to result in a significant expansion of board diversity in the near term, or to compete with public sector approaches being taken in other markets

Diversity of perspective does matter. Having a broad range of collective attributes, rather than overlapping or redundant qualities, helps the board significantly in fulfilling its responsibilities of providing good corporate governance and strategic oversight. Boards that can collectively draw upon a broad assortment of competencies, priorities and insights are an invaluable resource for CEOs and senior management teams working in complex business environments with wide-ranging, multiple constituencies. Diversity of perspective leads to more innovation, better risk management, and stronger connections with customers, employees and business partners. While tremendous progress has been made, there is significant work yet to be done. Notwithstanding many encouraging findings of recent studies, women often still are approached for boards because they represent a diverse demographic and not because they bring a specific, needed perspective. The good news is that the pool of C-suite women is expanding, and boards are becoming increasingly attuned in their thinking about the importance of maintaining a broad perspective.

Gender Diversity in the Boardroom

Fortune 500 companies with the highest representation of women board directors attained significantly higher financial performance, on average, than those with the lowest representation of women board directors, per Catalyst’s most recent report, The Bottom Line: Corporate Performance and Women’s Representation on Boards. In addition, the report points out, on average, notably stronger-than-average performance at companies with three or more women board directors.

“Clearly, financial measures excel where women serve on corporate boards,” said Ilene H. Lang, President of Catalyst. “This Catalyst study again demonstrates the very strong correlation between corporate financial performance and gender diversity. We know that diversity, well managed, produces better results. And smart companies appreciate that diversifying their boards with women can lead to more independence, innovation, and good governance and maximize their company’s performance.”

The report found higher financial performance for companies with higher representation of women board directors in three important measures:

Return on Equity: On average, companies with the highest percentages of women board directors outperformed those with the least by 53 percent.
Return on Sales: On average, companies with the highest percentages of women board directors outperformed those with the least by 42 percent.
Return on Invested Capital: On average, companies with the highest percentages of women board directors outperformed those with the least by 66 percent.
The correlation between gender diversity on boards and corporate performance can also be found across most industries—from consumer discretionary to information technology.

Boards of Directors at the most strategic level, steer the ship that is the company. Board composition is a critical facet in this equation. Diversity of opinions, ideas and experiences enhances the board’s capacity to make decisions, identify challenges and risks and to respond accordingly. Essentially it betters the ability to do their job. Female participation in this process should be a given but it is not. Getting more women on our boards is the right thing to do. It is also good business!

All the best, 


 

Bob Gershberg |CEO|Managing Partner|
bob.gershberg@wraysearch.com
(888) 875-9993 ext 102

Finding tomorrow’s leaders today!

 

Back to top