According to 2020 Women on Boards, an organization focused on women’s leadership issues, and raising the number of women serving on corporate boards to 20 percent by 2020, the percentage of women serving on boards is increasing incrementally. In Pennsylvania, 18.1 percent of board seats for Fortune 1000 companies are held by women.
Why is this important? Simply put: diversity matters. Increased female board representation signals a shift away from antiquated attitudes toward women in business. With 3.6 billion women in the world, there exists a powerful voice and perspective that carries over into increased performance, dealing more comprehensively with risk, and higher profits.
In a 2016 Forbes article, Katie Kohler, a principal of Korn Ferry, an executive search and recruiting firm, stated, “It’s well known that diverse teams are smarter…Those [companies] in the top quartile for gender diversity were 15% more likely to have financial returns above their medians. And, it’s been shown that Fortune 500 companies with the highest representation of women board directors achieved better financial performance on average, than those with the lowest representation of women board directors.” 1 Women have a unique perspective that ought to be considered an asset, not a detriment, to a company.
Greater board diversity recognizes the importance of diversity of thought, experience, and perspective in business and management. These companies and organizations will be the ones who are better able to relate to an increasingly diverse consumer base, and will successfully navigate uncertainties and challenges in the marketplace.
They also recognize the role diversity plays in board performance. PwC’s 2017 Annual Corporate Directors Survey showed that 82 percent of directors think diversity enhances board performance and additional research shows a decreased likelihood of instances of bribery, corruption, fraud, and shareholder battles.
Gender diversity on boards helps push for selection of progressive leadership, as boards often have the power to appoint company CEOs and presidents. MIT Sloan Management Review found that, “When women lead a board, there tend to be more women in other powerful board roles. In companies where women occupy the board chair role, the percentage of women who chair at least one committee is higher, the percentage of women leading the compensation and audit committees is higher, and the average percentage of women on the board increases from 20% to 28% overall.” 2
Women also bring other skills to leadership positions, such as relationship management and the push for positive work-life balance. They can serve as role models for other women struggling to juggle their home lives with their careers, and they can help implement forward-thinking policies that benefit women broadly in the corporate world.
While we are generally seeing positive steps towards greater board gender diversity, there is still work to do. The good news is, more women are accepting and embracing the opportunity to become leaders and mentors to up-and-coming female colleagues. They are holding themselves out as role models and mentors, creating networks to harness collective resources and experiences, and empowering each other to grow and take on leadership opportunities.
This ongoing challenge requires working collaboratively towards the development of diversity in business leadership. Doing so will serve to strengthen Pennsylvania companies and business, and our overall economy.