Gender diversity at board level is stalling. Where to from here?

• 17 Dec 2016

IT MATTERS … because identifying what drives gender diversity is key to tapping its benefits

The push towards greater diversity at the boardroom level has a long way to go in Asia and appears to be stalling in North America and Europe.

Greater gender diversity is important to the bottom line of companies. Both McKinsey & Co. and Credit Suisse, early proponents of diversity, have undertaken research that suggests increased financial returns and gender diversity go together.

And yet, progress may be stalling.

Not a single company on the FTSE 100 (the largest companies on the London Stock Exchange) has an entirely male board but data from Spencer Stuart shows the share of S&P 500 company board seats held by women grew just 3% in the decade between 2004 to 2014, from 16% to only 19%. In Asia, progress is even less visible. A Korn Ferry study in 2016 of the 100 largest listed companies in the region suggests it will take a decade to catch up. The worst culprits are South Korea and Japan, where women held just 2.6% and 3.3% of board seats respectively.

The board is the standard bearer for a company and should reflect what happens throughout the organization. A greater level of diversity within the board inevitably leads to healthy debate and broader perspectives. In turn, greater diversity throughout an organization brings a plethora of benefits, including a more inclusive culture, improved conflict resolution capabilities, increased ability to attract and retain talent, more cultural intelligence and higher levels of innovation.

The counterarguments are generally among semantic lines. Case in point is the work of Stanford University economists Renee Adams and Daniel Ferreira who suggest that successful companies attract diversity rather than being driven by it – a chicken and egg debate.

They also point out in a 2015 study that the net impact on firm performance may actually be negative, the Economist reported. Hans van Dijk, a Dutch academic, found that gender diversity had not overall effect on company performance.

But these studies were done in countries with high levels of gender diversity at the top of companies, places where the performance gains of diversity have already been counted.

In Asia, gender diversity is more of an idea. Progress has been faster in countries where diversity has been mandated, like Australia, India and Malaysia, but elsewhere it is far, far from being commonplace. And that means companies are not tapping into a wealth of valuable human resources and leaving performance gains on the table.