Everything You Need To Know About Women On Corporate Boards

Fadzai Danha / Posted On: 23 September 2020 / Updated On: 21 October 2021 / Organisational Design and Development / 10

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Everything You Need To Know About Women On Corporate Boards

Introduction

Gender equality has been a recurring and prominent feature on the global development agenda for almost a quarter of a century now. Despite the universal appeal of its rhetoric and the regular policy conversations on the topic, progress in terms of gender diversity on corporate boards is slow and insincere as companies acknowledge it for the sake of how they are viewed in the eyes of others. Board gender diversity is not only an issue of addressing gender equality but it has also been proved to provide some gains for many stakeholders within the companies.

 

The Board of Directors is a control governance mechanism, aimed to monitor managerial activities to mitigate agency costs (Jensen, 1993), and to set the strategic objectives which should orientate the course of the company (Hillman and Dalziel, 2003). The Board's supervisory tasks include: monitoring the CEO, and the implementation of the firms long term strategy, firing and hiring the CEO and assessing and rewarding the CEO/top managers of the firm (Hillman and Dalziel, 2003). Gender representation on corporate boards of directors refers to the proportion of men and women who occupy board member positions. To measure gender diversity on corporate boards, studies often use the percentage of women holding corporate board seats and the percentage of companies with at least one woman on their board.

 

A 2016 study of more than 21,000 companies in 91 countries showed that firms with at least 30% of women in the c-suite are more profitable. In another report on Fortune 500 companies, a direct relationship was discovered between companies with more female directors and achieving greater returns on sales and equity. Other studies show that female directors enhance the effectiveness of boards at governing, (Renee B. Adams, Daniel Ferreira,2009). Women have better attendance, and their presence improves the attendance of men. Female directors are also more apt to serve on monitoring committees and more likely to hold CEO's accountable for poor financial returns. Female directors, too, tend to ensure that corporations are more environmentally responsible. (Glass, Christy & Cook, Alison & R. Ingersoll, Alicia. (2015)). Three or more women directors also correlates with employee productivity, higher dividend payouts, and a greater diversity of ideas, (MSCI,2018)



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