Raising the bar in boardroom diversity


Article by: Max Ballard

Raising the bar in boardroom diversity, women are making their presence felt in Britains top businesses.

The number of women in UK boardrooms is on the rise. Recently, a report from the Cranfield School of Management revealed that the presence of female leaders has reached 22.8% and 17.4% of the FTSE100 and FTSE250 boards respectively. This is the result of a targeted push by many different stakeholders trying to balance the gender inequality in the top business echelons. The study also reports that FTSE companies are taking steps to improve the gender balance with 85% of companies having a clear board room diversity strategy and more than half setting objectives to increase the number of women on the board.

So does the increasing number of women in decision-making roles make a difference to how companies perform? Well, there are suggestions of a link between the number of women on the board and the financial performance. With one woman on the board, a company will perform better than an all-male led company. However, with three women on the board, the company will vastly outperform both financially and in terms of reducing staff turnover. While there is nothing to prove that this is directly linked, one could speculate that the results are due to women bringing a new perspective to the boardroom that serves the company well, especially in times of financial hardship, a study claims, provided Credit Suisse Research Institute. Company boards with female members also tend to be more innovative and open to new business ideas as well and more effective, reducing conflict and employing better risk control.

There are, however, some issues that have arisen with the push for greater gender equality across board rooms. One of them is the lack of candidates for the positions. Board members are typically recruited from a pool of CEOs and CFOs. As there are few women in these positions to begin with, it is not always obvious where to look. Where the adjustment has been done as a requirement enforced by the government, like in Norway, the lack of female candidates has forced companies to recruit younger, less experienced board members and seen its stock prices drop as a result of it. There is also the long-running saga of gender inequality in pay with female managers and business leaders making significantly lower salaries than their male colleagues.

With only an additional 24 women needed to reach the FTSE100 and FTSE250 target of 25% gender diversity, a much needed reform is well on its way. However, with women making up 50% of the total population this should only be regarded as a pit stop on the way to complete gender equality in the workplace.


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