The issue of gender equality in the boardroom is a contentious one. Should organisations be appointing more women to their boards simply to achieve a gender balance? Or should board appointments be made based on merit alone?
One thing we can all agree on is that there is a lack of women in business sitting on boards around the world. Despite accounting for almost 50 per cent of the workforce in North America, Europe and Australia, women hold only around 20 per cent of board seats in those regions.
Australian boardrooms still have a long way to go
The Australian Institute of Company Directors (AICD) has been tracking the representation of women on ASX 200 boards since 2009. Back then, women made up a meagre 8.3 per cent of directors, prompting the AICD to set a target for all ASX 200 boards to reach 30 per cent female representation by the end of 2018.
At the end of 2017, women accounted for 26 per cent of ASX 200 board directors. Although that figure is a vast improvement on 2009, AICD Chairman Elizabeth Proust AO, a strong advocate for the role of women in business, put the result into context by highlighting the discrepancy between the percentage of women on ASX 200 boards with the percentage of women who graduate from Australian universities (55 per cent).
The benefits of a gender-balanced board
There is evidence – empirical and anecdotal – to suggest that gender diversity in the boardroom can benefit an organisation.
The findings from a Catalyst report indicate that companies with a higher number of female board directors are more likely to achieve better financial performance than those with a lower representation of female directors, while a survey by the UK’s Chartered Institute of Personnel and Development found that 89 per cent of respondents believe a good level of gender diversity can improve boardroom effectiveness.
Corporate governance has also been found to improve when boards include female directors. In a study of Canadian companies, those with women on their board were shown to have higher corporate governance scores than those without.
Appointing women to boards can also increase the likelihood of further female board and C-suite appointments. A Deloitte global study found that companies with a female chair or CEO have nearly double the number of women serving on their board compared to companies led by a male chair or CEO.
When it comes to gender equality in business, boards that lead by example create a culture of fairness across the organisation, making them attractive to employees, customers and shareholders alike.
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