- IMD Business School

Putting gender diversity on the board agenda

A first step in addressing the gap and making progress towards gender diversity
3 min.
March 2017

Today, there are still fewer women than men on company boards, even though in many countries that belong to the Organization for Economic Co-operation and Development (OECD), women have obtained higher educational qualifications than their male counterparts for the past two decades. Apart from issues of fairness, this gender gap affects company and country competitiveness: According to the World Economic Forum’s Global Gender Gap Report, countries with lower gender gaps are more economically competitive.

Countries have approached the question differently, with some creating quotas for female representation, while others have done nothing. Many lie in between. As a response to the persistent underrepresentation of women in the highest echelon of firms, companies need to boost representation of female directors on their corporate boards. But boards vary in their level of openness towards gender diversity and in their pro-activeness toward the recruitment of female directors.

Board laggards are neither open to gender diversity nor do they actively recruit women until it becomes impossible to thwart sanctions from non-compliance. For example, Anglo-Swiss commodity and mining multinational Glencore was the last FTSE 100 firm to retain an all-male board until 2014. It was only after personal letters were sent, did Glencore place one highly qualified and experienced woman on its board in 2014. Such non-diverse board laggards are characterized by behaviors that continuously reinforce the “old boys’ network” as new board positions are continuously recruited from existing relationships.

Exemplary governed boards on the other hand actively recruit for diversity and place gender diversity at the forefront of their board recruitment agenda; the result is that these boards tend to successfully recruit multiple board-ready women. For example, Norwegian boards were fastest to comply, have more female directors, and in general also older directors with more CEO experience. In the UK, where there is no quota but a 33% target, global professional services firm KPMG determined that a failure to increase its 15% share of female partners would lead the firm to lose out on valuable and experienced talent and incur increased recruitment and developmental costs. Viewing diversity as a performance driver, another global professional services firm, EY, enacted functional inclusive leadership actions plans to increase the share of female partners to 20% by 2020.

Progress towards gender diversity

One of the most important starting points is for leaders to develop a clear statement on objectives and measurable targets for the share of female directors. In several countries, firms are now expected to share current and aspirational diversity figures and report on progress. This is a first step in addressing the gap and making progress towards gender diversity.

Bettina Büchel is Professor of Strategy and Organization at IMD.


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