Now open for applications It’s time to make all-male company boards an extinct species
Melissa Scully, Director and Corporate Governance Leader in Deloitte.
Despite female participation in the workforce increasing and research showing diverse teams are more likely to achieve better business outcomes and outperform on profitability, the percentage of women on company boards in Ireland remains significantly lower than many other countries. Investors, regulators and the government continue to push for more gender diverse boards. We need to see the pace of progress quicken, otherwise failing to improve gender balance will have a detrimental effect on Ireland’s reputation and competitive position in the global marketplace.
In Ireland the percentage of women on companies listed on the Euronext Dublin market is just over 16%. A third of Euronext companies have no female board member whatsoever. That’s despite the Better Balance for Business Review Group’s goal that by the end of 2019 there should be at least one woman on the board of each of these companies. 12 companies look set to fail this basic target despite there being a significant pool of senior female executives with valuable skills, experience and perspectives that boards need, which remain underutilised. Meanwhile, the UK hit a major milestone this week with the proportion of women on listed boards reaching 30 per cent for the first time in history.
The business case for diversity is well established. Research by Deloitte indicates that diverse and inclusive teams are:
Looking specifically at gender, the addition of women on boards is reported to have a positive impact, with diverse perspectives providing more challenging debates, improving decision-making and reducing ‘groupthink’. These different perspectives are becoming more important at a time when boards are expected to have a better understanding of their customers, employees and other stakeholders and to take their views into consideration as part of decision-making.
Aside from bringing different perspectives, women also have valuable skills and experience to offer boards with recent studies finding they score higher than men in most leadership skills.
One of the most important actions, which underpins all others, is for a board to set a culture that promotes diversity and inclusion at every level of the organisation, recognising the value that diversity brings, not simply seeing it as a tick the box exercise. Nomination committees play a key role in supporting this. Committee members can therefore expect increased scrutiny, with some investors threatening to introduce votes against all committee members if a company does not have at least one female board member.
Recent research conducted by the Chartered Governance Institute highlighted the process by which directors are appointed as a key reason why many boards still lack diversity. Recruiting more females means widening and deepening the pool from which they are drawing potential directors. A simple step towards this is to review the selection criteria to ensure that it is not too restrictive, determining absolute ‘must haves’ and separating them from other ‘desirable’ factors.
It is concerning that only 45% of boards think their executive pipeline will be sufficient in providing a sustainable pool of talented and diverse board members. Everyone has a role to play in encouraging women to realise their leadership potential in the boardroom. Boards and nomination committees have a responsibility to ensure that the companies they are governing are developing a diverse pipeline. This means adopting meaningful initiatives that empower female employees. Examples include providing mentoring programmes; sponsoring high performing females; providing leadership and governance training; and supporting them to secure external appointments. All these can help pave the way and increase female participation in the boardroom.
In addition, the support of experienced board members and leaders in the business community is very powerful. This can be through leveraging their networks and providing introductions, as well as advocating for board ready females. It is positive to note some of this is already evident in Ireland through various initiatives, including those led by the 30% Club Ireland.
Gender diverse boards are better positioned to navigate today’s challenging, and fast changing, business environment. To make traction those boards lagging behind need to shift their approach into high gear. Now really is time to change to change the board composition paradigm and make all male boards an extinct species.