Women and Corporate Boards - It’s More Than Numbers
Across the developed world, legislation, government guidelines and pressure from large corporations have all attempted to address the lack of women on corporate boards by requiring a minimum quota.
The 30% Club launched as a campaign in the UK in 2010 with the express goal of having at least 30% of membership be women on FTSE 100 boards - currently that figure stands at 27.9% up from 12.5%. Statistics show that these efforts have worked, more women are on boards. But has the effort promoted gender equality? Has having more women on corporate boards helped to shrink the gender pay gap?
Some of the concerns previously raised about the impact of the quotas - such as the concern that there would not be enough qualified women to fill the quotas - have been alleviated. Many qualified women have been engaged for positions on corporate boards.
More Women, Fewer Changes
The quotas were put in place to improve the function of boards, improve the position of women in the corporate workplace and decrease the gender wage gap. Has it worked? There are benefits - women on boards have shrunk the pay gap for their positions. But women employed under these boards are still paid far less on average than their male colleagues. The process of decision-making on boards with more women has changed, but the decisions themselves are no different.
Corporations Need More Time and More Women
In part, the inclusion of women on corporate boards will take time to impact how boards themselves function and to improve the gender pay divide. As opportunities continue to be available, more women will become qualified and take their place on boards.
Research points to the need for at least three women to be on a board before financial performance shows a noticeable improvement. Companies with strong women leaders, especially on boards, are correlated with higher ROE and less governance-related controversies. Company culture plays an important role - a woman on a board in a hostile environment will have much greater difficulty in influencing decisions and changes. And the changes taking place as boards include more women may be too new to reveal how well it is/is not working long-term.
It is difficult to isolate the impact of women on corporate boards from all other factors that affect company performance. Larger companies, and innovative companies have more women on their boards, greater diversity in their companies, and better profits. All of these factors are intertwined.
Women on Boards - The Right Start
The increased inclusion of women on corporate boards is part of a work-in-progress, not a global solution to gender disparity within the workplace. While policies with quotas for women on boards provide a good start, corporations must continue to bring qualified women onto their boards to provide more benefits than just meeting a quota. They must continue to use an overall strategy to bring qualified women onto their boards, eliminate the gender pay gap at all levels, and create policies that are designed for diversity and equality.