Recently, more attention has been paid to the issue of creating more gender-balanced corporate boards of directors. Studies have demonstrated that having board members with diverse backgrounds leads to an inclusive and collaborative environment that is essential to good governance, better financial performance, increased innovation and improvements in opportunities for women. This Herman Trend Alert reports the results of a recent study from Equilar, the organization that helps companies accurately benchmark and track executive and board compensation and other important issues.
Some Progress Has Been Made
Looking at the data for companies in the current S&P 1500 index, the researchers analyzed company director data for gender diversity between 2007 and 2014. During that period, the largest companies realized the least gains; the percentage of female board members at S&P 500 companies, the largest companies surveyed, grew from 14.5 percent to 18.1, an almost 25 percent increase. At the same time, due to the smaller percentages they were starting from, the S&P 400 MidCap companies had a 40.5 percent increase in the number of women on their boards, and the S&P SmallCap companies had a 44.4 percent increase.
United States Lagging Behind
For years, the United States has lagged behind other countries in gender diversity. Many countries throughout Europe have joined Brazil (30 percent for state-owned firms) and Malaysia (30 percent for new appointments) in legislating some percentage of women on boards, though each country has its own set of regulations.
In December 2009, the US Security and Exchange Commission (SEC) took an important step in mandating that companies disclose their director nomination process for considering diverse candidates.
The Movement To Increase Gender Diversity
Organizations such as The 30% Club and 2020 Women on Boards are advocacy groups calling for greater gender diversity in the boardroom. Because of the significant advantages afforded by gender diversity on boards, the topic will continue to be important for years to come.
Companies with women leaders tend to have higher profits. We suspect that companies with more women on their boards also are more profitable. Organizations like BoardProspects.com and OutsideDirectors.net assist wise corporations in finding qualified women to serve on their boards. For the foreseeable future, advocacy groups and governments will continue to drive initiatives to put more women onto corporate boards.