Women on boards—how to increase both supply and demand
“Board-ready” women may appear to be in short supply, but research shows that the demand for such candidates also remains sparse.
There is no doubt that board diversity has seen huge leaps in recent years. In 2011, one in five boards was exclusively male, compared to just two organizations now. Over the past year alone, the number of women on FTSE 100 boards has risen from 17.3% to 20.7%.
Nevertheless, while most organizations are not making conscious efforts to exceed this proportion, diversity will never fully be realized. At the end of 2013, only 30% of FTSE 100 companies had made policies to increase women’s presence in senior management, with only 13% creating measurable objectives.
The backgrounds of those women who are in demand are particularly interesting; the 2014 Cranfield Female FTSE board report revealed that 36% of newly appointed female directors in 2014 had experience in multiple sectors, a far higher proportion than that of their male counterparts.
This loosely relates to an interesting trend in external board recruitment. A study by Strategy& found that 35% of female chief executives were hired from outside, compared to just 22% of male chief executives.
Other research from KPMG showed that female leaders in levels directly below executive committee level in FTSE 100 companies are two times less likely to be promoted internally and four times less likely to leave than their male peers.
There are several arguments for nurturing and retaining female employees. The same study by Strategy& showed that chief executives promoted from the inside generated higher returns than those who are employed from elsewhere.
Rachel Short of YSC said: “In order to increase the pace of change, we need to stop framing the lack of women at the top of organizations as a supply problem and focus instead on building up demand.”
Short suggests several strategies to achieve this, including: giving women a voice throughout organizations; and correlating external stakeholder measures with internal diversity measures.
Short also posits measures to increase the supply of female talent, such as: “Making diversity an explicit focus and measuring outcomes [… and] Developing female talent through professional development, coaching, sponsorship and mentoring programs.”
IZA World of Labor’s Nina Smith makes a similar case for increasing gender diversity on boards of directors, noting that it can improve decision-making processes. She also highlights the need to ensure there are more good female candidates for senior management by boosting the skills of women lower down in the company.
Read more here.
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Gender quotas on boards of directors, by Nina Smith
Gender diversity in teams, by Ghazala Azmat