Sector News

What women add to boards

October 3, 2016
Diversity & Inclusion

Women elected to corporate boards tend to have more experience in risk management and human resources than their male counterparts—a boon for corporate governance, a recent study says.

In fact, according to the research, women board members were likely to bring a half-dozen skills important to decision making that weren’t well-represented on their boards before their arrival: risk management, human resources, sustainability, politics or government, regulatory or compliance, and corporate governance.

These are the findings of Daehyun Kim, assistant professor of accounting at the University of Toronto’s Rotman School of Management, who says he reached his conclusions after reviewing proxy statements filed with the Securities and Exchange Commission that detailed the skills, qualifications and expertise of incoming directors. Dr. Kim focused on smaller companies, the S&P SmallCap 600, because there is less gender diversity in smaller companies, he says. But according to his research, he says, similar results can be seen on boards of the largest 1,500 public companies in the U.S.

Dr. Kim also found that four of the five least-represented skills on boards were more likely to be possessed by female than male board members: risk management, human resources, sustainability and politics or government.

Dr. Kim doesn’t recommend a quota or minimum proportion of women to serve on boards. Still, he says, looking at the listed skill sets in this way provides a new way to measure the impact of adding women to boards. The additional expertise is a benefit in a boardroom setting.

“The quality of group decision-making is enhanced with diverse opinions,” he says. “Functionally diverse teams are more innovative, set clearer strategies, are more likely to react to competition, and are quicker to adapt to organizational changes.”

By Alina Dizik

Source: Wall Street Journal

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