The business case for having more diverse boards has been well rehearsed with a raft of studies proving that more women in top roles leads to better performance, less risk and improved corporate governance.
The impact on the bottom line is significant. For example, according to a study from Leeds University, having just one female on the board can cut the risk of going bust by 20 per cent.
McKinsey’s Women Matter report found that more gender-diverse companies – defined as the top quartile in terms of the proportion of women on their executive committees – exceed operating results delivered by those companies with no women on their senior management teams by an average of 56 per cent.
And, according to the The Bottom Line report by Catalyst, companies with three or more female board directors also achieve return on equity 53 per cent higher than the average company as well as a 42 per cent higher return on sales.
Further research from investment bank Credit Suisse found that investors are better off with companies that have female directors on their boards compared to the return on equity on companies without. So the business case is compelling.
Diverse boards help to protect business as they avoid the “group think” that was partly blamed for the credit crunch
Vince Cable, Business Secretary, sums it up: “Diverse boards are better boards: benefitting from fresh perspectives, talent, new ideas and broader experience which enables businesses to better reflect and respond to the needs of their customers.”
But it is not only women in senior roles that are for good business. They are needed across the workforce. According to Women Matter, European countries face a 24-million shortfall in the active workforce by 2040 but, if firms can raise the employment rate of women to that of men, this drops to just three million.
Having more female employees in decision-making roles also helps businesses connect to customers.
Take one of the biggest global brands, Coca-Cola. With more women buying its products than men, the chairman and chief executive Muhtar Kent decided to address the gender imbalance within his organisation and launched a programme called 2020 designed to promote gender equality because it “was good business sense”. Within three-and-a-half years, Coca-Cola’s female management went from 23 per cent to 40 per cent.
Diverse boards also help to protect the business as they avoid the sort of “group think” that was partly blamed for the credit crunch.
According to Lord Davies’ Women on Boards report: “Inclusive and diverse boards are more likely to be effective boards, better able to understand their customers and stakeholders, and to benefit from fresh perspectives, new ideas, vigorous challenge and broad experience. This in turn leads to better decision-making.”
Research suggests that having three or more women on a board changes the boardroom culture, leading to greater scrutiny, inclusion and collaboration with more questions asked.
And 94 per cent of the boards, with three or more women, explicitly take responsibility for monitoring implementation of corporate strategy compared with 66 per cent of all male boards.
Keeping women rather than losing their talents also saves money. Research by Opportunity Now reveals that 78 per cent of managers recognise that flexible working increases employee loyalty, while government statistics show 65 per cent of employers feel it has a positive effect on recruitment and retention. With the Chartered Institute of Personnel and Development estimating the average cost of replacing a job leaver is around £7,750, retaining women makes economic sense.
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Business technology company Avanade is unusual in a sector where women are under-represented: it has promoted able women to leadership roles across Europe.
Pam Maynard, Avanade’s general manager UK and Ireland, won a First Women Award for Technology and Science for helping to bring more women into the sector. She says: “The technology industry has repeatedly failed to attract female graduates in great numbers and, in this male-dominated environment, employers must actively pursue a policy of attracting talented females to positions of influence.”
Women typically work hard, keep their heads down and hope that someone will notice them
Ernst & Young, which features in The Times’ Top 50 Employers for Women list, has a successful maternity coaching programme, an established programme of mentoring and career watch schemes for high-potential women. Senior role models include a chief operating officer who is a mother working part-time.
Liz Bingham, Ernst & Young’s managing partner for people, says: “Career Watch pairs women with a senior partner from another part of the business to get a different perspective with the ‘watcher’ acting as an independent sounding board helping the individual to navigate their career.
“Women typically work hard, keep their heads down and hope that someone will notice them, which does not always happen and is one area where Career Watch really helps. Role models are also important and I am a senior woman, on the executive board, an out lesbian, a non-graduate and from a working-class background.”
Accenture, another of The Times’ Top 50 Employers for Women, has women in 30 per cent of UK executive roles.
Fiona O’Hara, human capital and diversity lead, who joined Accenture 17 years ago and has moved up to global director of operations despite two maternity leaves, says: “Graduate intakes are commonly around 50 per cent, but once you get to the middle layer of management that is where we all see a drop off in the number of women.
“We are looking at the pipeline, particularly when women make career moves in their late-20s or early-30s, as at this stage we do not have as many women applying as they do not tend to apply unless they are 110 per cent qualified.”