Gender equality in the workplace has long been a hot topic of conversation, and in recent years the gender diversity of the board of directors for all organisations has been thrust into the limelight. While it may seem that progress to hire more women at board level has been slow at best, it appears that, finally, not only is the lack of diversity being acknowledged, but real action is being taken. Take the recent move from Legal & General Investment Management; this year, they’ve begun voting against the proposals of 19 large Japanese companies that have no women at executive level or above. As the UK’s largest asset manager, they already vote against UK businesses that have a board made up of less than 25% women, and will vote against all companies globally next year that have no female directors. And they’re not the only ones to be calling out large businesses on their lack of gender diversity. So, what is this? A PR stunt to show they’ve joined the fight for gender equality? Or is there another reason why organisations like this fund giant are applying global pressure on businesses to have more diversity among their directors?
Why does gender diversity on the board matter?
Quite simply, businesses that demonstrate better gender equality at executive level and above are more profitable, so it’s no wonder that major global investors like LGIM are taking a stand; for better performance, businesses need to have a strong female representation at board level. For the same reason that you wouldn’t have a board made up of just one person, because you want a variety of insight and experience, adding diversity to your board means you’re able to make more intelligent decisions; you’ve got more diversity in thought and approach.
Women in the boardroom also supports gender diversity throughout an organisation. A report from McKinsey, “Diversity Matters”, demonstrated several key findings in diversity and, specifically gender diversity, to support the importance of this diversity throughout an organisation. It highlights:
- Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.
- Companies in the bottom quartile both for gender and for ethnicity and race are statistically less likely to achieve above-average financial returns than the average companies in the data set
- In the United Kingdom, greater gender diversity on the senior-executive team corresponded to the highest performance uplift in our data set: for every 10 percent increase in gender diversity, EBIT rose by 3.5 percent.
In short, those companies that aren’t harnessing the power of diversity were not simply falling behind their more diverse peers; their financial performance was below the industry average.
How many women currently sit on company boards?
While we’ve seen some, albeit slow, improvement in the number of women that sit on the boards of large organisations over the past decade, women are still woefully under-represented. Just 17.7% of board seats in the Russell 3000 companies are held by women, and 50% of Russell 3000 had one or no women at board level in 2018. In FTSE350 companies, just three remain in 2019 with an all-male board, but women still make up less than a third of board positions.
There’s also variation across sectors, where some fare much worse for gender diversity than others. There’s significantly less women sitting on the boards of STEM businesses globally than in any other industry; as the manufacturing sector undergoes a massive digital transformation, not having enough female presence on boards throughout the industry could have a significant effect on their ability to successfully navigate this transition.
How to attract, recruit and retain top female talent
If you’re not attracting female talent, you’ve already halved the talent pool. Availability of skills remains a real threat in many industries. That’s why this isn’t a box-ticking exercise; there are many fears around tokenism and these are shared by women who want to make sure that companies are hiring them because they see their skill and ability, not because they see a quick hit to reach their gender diversity target. So, how do you attract the right female talent to your business?
1. Flexible working
Since 1996, the number of mothers in employment has increased from 61.9% to 74% in 2018. That’s a lot of working mums. If you want to attract the top female talent, you need to be able to demonstrate that your flexible working policies can accommodate their family commitments. When it comes to millennials, it’s so important that almost a third would rather have flexible working than a pay rise. It’s also a common misconception that this only appeals to women; in fact, it’s now a big draw for men, too. Nearly three quarters of couple families had both parents working in 2018 – flexible working is about families and lifestyle, and not just females.
2. Make your female leaders visible
We’re not in a place where we need to be astounded that women have made it to board level; many businesses make the mistake of highlighting their female leaders’ careers as though it’s nothing short of a miracle that a female has managed to climb the career ladder. But what women do need to see is other women within your organisation to show that they belong there; there’s strong evidence to support that social belonging has a big impact on perception. Find ways to make your current female talent visible.
3. Ensure your current leaders know that attracting female talent is on your priority list
World class leaders know how to identify, develop and retain top talent. And as businesses globally are trying to gain that competitive edge, leaders are increasingly looking towards female talent to fill the void; according to PWC, the number of CEOs focussed on diversity and inclusion rose from 64% in 2015 to 87% in 2017 to drive innovation and creativity. Ensure your leaders are on the same page when it comes to finding female talent to nurture to develop future female leaders.
4. Remove gender bias from your hiring process
There are several types of bias that might work their way into your hiring process through your people, and when bias, even unconscious and unintentional, creeps into your recruitment, you’re jeopardising your chances of achieving diversity. Almost a third of UK bosses admitted to not hiring a woman because they felt she was likely to have children in the near future. Train anyone involved in your hiring process to understand gender bias and how it can be managed, to ensure that you’re maximising the potential for female talent to make it fairly through your hiring process.
It doesn’t look like the debate of the impact of gender diversity at board level is going anywhere any time soon, but what is clear is that businesses that fail to embrace this diversity and actively attract more female talent are already falling behind. As other businesses move to make gender equality at board level a focus for their future success, it’s time to figure out how your organisation can lead the way for attracting and appointing female directors of the future.