While research continues to demonstrate that boards with greater female representation outperform those without, women are still failing to make it to the boardroom in significant numbers.
The Davos World Economic Forum made headlines in January when it announced it would require its strategic partner members, some of the largest corporations in the world, to ensure that a minimum of one in their cohort of five be a woman. The imposition of such a ‘quota’ is a reflection of the dearth of women at the head of major corporations.
Internationally, women are still not making it in great enough numbers to the boardroom. In the US in 2010, representation of women and minorities on corporate boards actually fell. Women held just 15.7pc of Fortune 500 board seats. This is despite the fact that census figures released in April showed that women outnumbered men for the first time when it came to holding advanced degrees. Among adults aged 25 and older, 10.6 million in the US who earned a master’s degree or higher were women, compared to 10.5 million men.
In Europe, the situation appears to be improving, according to research from the European Professional Women’s Network (EPWN). Its EuropeanPWN Board Women Monitor 2010 found that the proportion of women on the boards of the top European companies has grown to 12pc in 2010 from 8pc in 2004. However, the bad news is it found that the proportion of women on Irish boards of directors had fallen from 10.1pc in 2008 to just 8.9pc in 2010.
McKinsey has been publishing its annual Women Matter report since 2007, and its latest report, Women Matter 2010, found that “women are still underrepresented on boards of corporations, although improvements have been seen in this area in some countries” and “gender diversity within executive committees remains very low”.
Yet considerable evidence shows there is a direct correlation between the number of women in corporate leadership and improved business performance.
Indeed, the McKinsey research showed that across all industry sectors, companies with the most women on their boards of directors consistently outperformed those with none – by 41pc when measured by return on equity and by 56pc when measured by operating results.
What is also interesting is that there seems to be an awareness among business leaders of this link. A further McKinsey survey conducted in September 2010 of some 1,500 business leaders worldwide across all sectors, from middle managers to CEOs, found that the majority of leaders, both men and women, now recognise gender diversity as a performance driver.
Quota or no quota
Throughout Europe there are moves afoot to change this, although there are widely differing views on the introduction of actual binding quotas. In France there are plans to introduce a 20pc quota by 2012 for the largest 2,500 companies.
In February European Commissioner Viviane Reding met with business leaders to encourage them to sign a pledge to increase the number of women on their boards. The ‘Women on the Board Pledge’ asks for a voluntary commitment to increase women’s presence on corporate boards to 30pc by 2015 and 40pc by 2020. It is open for signature by all publicly listed companies in Europe.
Reding, who is in charge of gender equality in the EU, advised companies to become creative “so that regulators do not have to become creative”.