Bad news for gender equality in the boardroom

• 4 Jul 2017

Recently the executive search firm Heidrick & Struggles released their annual Board Monitor 2017 report and the results were an answer to the reason why we focus on responsible investing geared at women.  The number of women on Fortune 500 boards fell for the first time in 8 years.

Their key findings are these and we encourage you to download the full report on their site for more insights.

In 2016, Fortune 500 companies filled 421 vacant or newly created board seats with non-executive directors. That represents a new high as recorded by the Board Monitor, Heidrick & Struggles’ annual study of board composition, experience, turnover, and diversity.

In addition to the increase in appointments, their analysis surfaced the following key findings:

• The share of seats that went to women in 2016 fell by two percentage points, to 27.8%, ending a seven-year run of year-on-year gains. This represents a drop to a level predating that of 2014.
• In the past four years, the aggregate proportion of African-American, Hispanic, Asian, and Asian-American appointments averaged 20.1%.
• In 2016, the percentage of Hispanic appointees, though still low compared with the overall US Hispanic population, reached the highest level recorded. Consumer companies led the way—almost 60% of Hispanic appointees went to boards in the consumer sector.
• Almost 41% of Asian and Asian-American appointees went to technology boards.
• About 33% of African-American appointees went to boards in the industrial sector.
• Current and former CEOs and CFOs together accounted for almost 66% of director appointments in 2016—down from the eight-year high of 73% in 2015.
• Of the 421 board appointees in 2016, some 315, or almost 75%, had previous board experience.

Keep in mind that CEO roles are even fewer and further between! In 2016 Fortune 500 list included just 21 companies with women at the helm – fewer than the 24 recorded the previous year and in 2014. Meaning women held only 4.2% of CEO positions in America’s 500 biggest companies.

Similarly, research from Catalyst, a non-profit organization that conducts research on inclusive leadership, shows that women currently hold 23 (4.6%) of CEO positions at S&P 500
companies.

And a global study by Grant Thornton, Women in Business 2017 finds that the percentage of women in senior management teams has risen just one percent in the last year – from 24% in 2016 to 25% in 2017. However, the number of organisations with no female participation at a senior level has risen from 33% in 2016 to 34% in 2017. Women in CEO roles are up (yes up) to 12% in 2017.

Bloomberg also ran a piece on this news, Women Lose Ground on New Board Seats for the First Time in 8 Years, that includes some information that show these decisions seem to run counter to returns.

In a 2015 study, McKinsey found that companies with above-average gender equity are 15 percent more likely to outperform markets than those who lag in gender diversity. Last year, a Credit Suisse report determined that companies with a more diverse workforce return more money to investors.

Watch the Bloomberg report…

Other resources you could look into:

• Catalyst: Women On Corporate Boards Globally
• 2020 Women on Boards (U.S.)
• Fortune Knowledge Group: Women in the C-Suite