Board Diversity: Increasing Representation Of Women On Corporate Board

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Organizational demography is one of the important research fields that attract many researchers. The concept of organizational demography was initially introduced by Pfeiffer (1983) who suggested the importance of workforce composition for group processes; he argued that demographic composition is a better predictor of organizational outcomes. Organizational demography is defined by Pfeiffer (1983:303) as “the composition, in terms of basic attributes such as age, sex, educational level, length of service or residence, race and so-fourth of the social unit under study”. Organizational demography is important for all levels of the organizations, and even more important for the top-executives who are the strategic decision-makers. The board of directors is a group of the elected persons whose main responsibility is to ensure the best performance of the organization.

Board diversity can be considered as a source for competitive advantage (Cox and Blake, 1991). There exists a positive relation between diversity and organizational performance. Board demographic diversity is referred as the composition of board members in terms of different variables such as gender, age, nationality, ethnicity, educational background and experience.

One of the important diversity dimensions for organizations is the gender diversity. Due to dramatic increase in the percentage of female employees, gender diversity became an important issue almost for all of the organizations. Gender diversity is important both at the employee level and at the managerial level as well. Apart from the managerial positions, women are also being increasingly present in the boards. This is due to the increase in concern for corporate governance. Board diversity is emphasized widely both by the regulators and academics. In addition to the ethical considerations of diversity, there exist studies demonstrating the effect of board gender diversity on performance. Companies that appoints at least two female board directors have a better organizational performance.

The representation of women on corporate boards continues to increase, but the number of women leading boards still remains low globally. Overall, women now hold 12 percent of seats worldwide with only 4 percent chairing boards. There has been a welcome increase in women on boards; however, the number of women securing the top spot remains elusive even in the most progressive countries. Of course, in many countries, the chair is an executive position, but this absence of women among chairs is revealing.

WOMEN ON CORPORATE BOARDS

A decade ago, Women all over the world had reason to expect change following a much – heralded global conference that set ambitious targets to transform the lives of women across the world thereby giving access to women in leadership posts in different cooperate boards.

During the last 30 decades, African women has since been taking stock of progress and asking to what extent promised reforms are being implemented as they are also examining why progress has been limited in many countries and are seeking ways to overcome the obstacles.

However, there have been outstanding Nigerian women have “broken the glass ceiling”, defied odds, scaled over their limitations, and through all these, have contributed to shaping our dear country, Nigeria, and immensely contributed to its development. Examples are; The DG of WTO and minister of Finance in Nigeria, Prof. Ngozi Okonjo-Iweala, leading social crusader, Aisha Yesufu, the Deputy Secretary-General of the United Nations, Amina Mohammed, and the former Minister of Education, Oby Ezekwesili and many more.

IMPACTS OF HAVING WOMEN ON CORPORATE BOARDS.

Most published work on gender diversity among companies, as well as regulatory and shareholder focus, has majorly been at the boardroom level. As essential as an appropriate balance in key supervisory functions is, assessing whether diversity is represented among those making the executive and day-to-day decisions and hence driving financial performance is arguably more important which explains our reasons for discussing on the impacts of having women on corporate boards.

In a research conducted by Credit Suisse Research Institute in 2012 titled “Gender diversity and corporate performance” one of the countries that were involved in the research is Turkey, in which they used the sample of 24 companies from Turkey, and found that in 2005 companies that have one or more female board members constitute 30% of the sample and in 2011 it increased to 50%, as such general findings stated that, from 2006 to 2012 corporations that have women in their boards outmarched their counterpart that have no female board representation in terms of share price performance.

Prior studies have found that women could enhance the decision-making process because of their different insights and innovative ideas that boost firm performances. Moreover, women on corporate board expand perceptions of the board’s lawfulness and reliability, thus promoting stockholder’s confidence in the company as they are positively related with financial performance (measured in terms of return on assets and return on sales) and with ethical and social compliance, which in turn are positively related with firm value.

However, by accessing the underutilized talent pool of knowledgeable, competent and motivated women, organizations can better understand their customers and stakeholders and bring diversity of thought to the boardroom, thus strengthening the company’s competitive advantage as more and more companies are seeing the value of investing in women.

Women inclusion on the corporate boards brings a lot of improvement on organization’s Yield but looking at it from the other side of the mirror, gender diversity also has some tension playing under that may as well reduce yield and efficiency of corporate boards. Some of these things include:

1. With the general trend of women inclusion on corporate boards increasing yields, men tend to see women as threats and brings out intense competition which may sometimes be unhealthy and slow down efficiency of an organization. Here the women can be seen as competitive elements.
2. Women generally are perceived to be a lower cadre of human and hence denied some opportunities which in the end is the means to increased productivity. This curbs the general mentality of women possessing the ‘magic hands’ and placing both male and female on the same value level

CONCLUSION

Encouragingly, we find that boardroom diversity continues to improve globally with an average of almost 24% female representation in corporate boardrooms. Between 2015 and 2021, the percentage of women on boards (defined as the total number of female board members as a proportion of total board size across companies in the Gender 3000 database) has increased by 8.9 percentage points and more than doubled if compared with the start of the decade.

#WomenValue
#womenonboards
#womenbusinessleaders
#corporateworld

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