Is the U.S. leading the way on how to go about making gender diversity a reality ?
On Fortune 100 boards, women now represent nearly 40% of new directors, and they are younger than their male counterparts. At 57, the newly appointed female directors are just slightly younger than the men just joining (59). About half of the new class of 2016 in these boardrooms (49%) also have non-CEO backgrounds as corporate executives or have backgrounds outside business – they include scientists,, academics and former government officials. Against the backdrop of a lot of angst around how to make boards more diverse by gender, it’s worth asking whether an extension of the intellectual parameters of experience currently considered to be a suitable background is an obvious way to add more women into the mix of the boardroom.
In a world in which diversity, especially ‘gender diversity’ is increasingly being demanded by institutional investors, a report by the EY Center For Board Matters ,which includes these findings, is worth noting. Because it was always clear that the international push for gender diversity had to move from persuasion from the outside to demand from the inside, and that demand had to come from multiple stakeholders in powerful positions before it started to gather pace.
Among Fortune 500 companies – which represent two-thirds of U.S. GDP with $12 trillion in revenues, $840 billion in profits and $17 trillion in market value – board diversity earlier this year was found to be at an all-time high. A study by Deloitte and The Alliance for Board Diversity found that in 2016, women and minorities occupied about 31% of the board seats of Fortune 500 companies—an increase from 25.5% in 2010, and 26.7% in 2012.
The latest EY findings among the Fortune 100 reflect an annual list of the 100 largest public and privately held companies in the United States. “While experience as a CEO is often cited as a historical first cut for executive search firms (also known as ‘headhunters’) about half of the Fortune 100 class of 2016 have non- CEO backgrounds as corporate executives or have non-corporate backgrounds (e.g., scientists, academics and former government officials)” it says.
This is something U.K. boardrooms need to be aware of, as a matter of some urgency, as the recruitment model for the boardroom in Britain has proven remarkably resistant to change. Never mind women, just look at the situation regarding minorities . The voice of British business, the CBI has felt compelled to speak – and to follow up recently in 2017 with the launch of a #TimeForAction campaign calling for inclusion.
Going back to EY’s report: some 10% of new appointments to Fortune 100 boardrooms, it says, worked at an institutional investor. This is stated in the report as “an experience which was highlighted to communicate the company’s interest in shareholder perspectives.” Another 9% were described as “bringing experience in innovation or having the capability to drive innovation.” It’s also worth noting that 17% of the entering class appear to be joining a public company board for the first time.
This report leads to an interesting question: how well does it bode for agility, innovation and resilience in publicly listed businesses (wherever headquartered) if the strategy set by a boardroom is struggling to catch up with change on multiple levels yet excludes the voice of fresh ie younger individuals from broader geographical, social and economic backgrounds who might also perhaps be more digitally savvy?
Boardrooms should be calling for more international and inclusive debate on this subject, for the sake of better business, best corporate governance and stakeholders everywhere.
That might also concentrate minds on the need to open the way to allow for better, more concise and targeted information coming into the boardroom before every meeting. You never know : it might result in better decisions coming out.
By Dina Medland
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