New research has highlighted significant benefits to companies that not only move to have more women on their boards but also include them in more meaningful ways.
According to governance research firm Diligent Institute, “while the influx of new talented women entering public company boardrooms is a story worth telling, the level of inclusion of these new directors has received less coverage but is an important part of the story”.
In its “A few good women: Gender inclusion in public company board leadership” report, Diligent sought to measure the levels of inclusion of women board directors on public company boards in order to determine whether they were merely being asked to join boards or take on leadership roles, how soon they were put into such roles and how often they take up such roles.
The good news is that “by seeking more women directors, companies tap into a deep talent pool”, the firm found.
Women directors bring specialised skill sets, as well as valuable perspectives in collaboration with their male counterparts, Diligent posited.
“Given the level of pressure companies are under to increase the gender diversity of their boards, many are working hard to meet this demand,” it wrote.
“But at the same time, companies might use this moment as an opportunity to refresh their board along multiple axes – not only along gender lines, but also to diversify the age range, skill set, and other perspectives of their directors.”
This was supported by the fact that female directors are younger in age than male directors, younger when they assume board leadership roles, and younger when they chair committees, Diligent continued.
The research found that the average age of male and female directors is 62.44 and 58.84 respectively, the average age of those in leadership roles is 66.18 (male) and 62.07 (female) and that the average age of committee chairs is 65.14 (male) and 60.99 (female).
Furthermore, women directors bring specialised skills to the board by virtue of fewer of them having come from previous roles as CEOs, Diligent said.
“Many boards seek candidates that bring previous experience in chief executive and board roles, and as few women have had the opportunity to have both of these experiences at large public companies, they are more likely to bring other highly desirable skills to the board, such as digital technology expertise, specific legal or HR knowledge, or experience in implementing ESG and sustainability programs,” it said.
It also hypothesised that the women who join boards are exceptionally qualified in part because it’s been traditionally so difficult for women to gain board seats.
“Female board candidates have likely needed to be the ‘best of the best’ to gain the attention of recruiters, and therefore might be ready for board leadership roles faster than male peers, who might not have had to be as highly qualified to gain board seats.”
Elsewhere, women directors can help steer companies through times of crisis, Diligent argued.
“In some cases, companies bring on women directors and appoint them to key leadership positions in the wake of a corporate crisis or scandal. This might be in part to provide more visibility to the company’s efforts to improve diversity and overall corporate culture, or to improve the company’s reputation by addressing a perceived leadership imbalance,” it wrote.
However, it qualified, companies cannot simply bring women into such roles without fostering the right culture of belonging.
“Companies that have hired women CEOs as saviours when the company has already experienced multiple challenges might be setting both the new candidate and company for failure. Women who experience this ‘glass cliff’ phenomenon can find themselves first praised for their potential to help get the company back on stronger moral, ethical and financial footing, and then vilified should the company not be able to survive because of its past failings,” it said.