Women in the Boardroom

According to Moody’s, women held 29 percent of corporate board seats in Europe and North America in 2022. That represents a substantial improvement over 2020, when women constituted 24 percent of board members. A separate Bloomberg report examining 45 countries and regions worldwide found that women occupied 7.5 percent of CEO positions, 23 percent of executive roles, and 29 percent of senior management roles across 418 companies in 2021.

Similarly, in the 2021-2022 academic year, women constituted roughly 32 percent of the presidents of
colleges and universities in the United States (U.S.), a 6 percent increase from 26 percent a decade prior. International statistics noted 6.8 percent of colleges in Arab countries and 29 percent in the United Kingdom had a female president in 2018, while Latin American colleges reported 18 percent in 2020.

As of 2021, only 23 countries around the globe were led by a female officially titled as the head of state or head of government. The United Nations projects that national legislative bodies worldwide will remain gender-imbalanced until at least 2063.

Both overall numbers and percentages of women in senior-level positions have grown in the twenty-first century. Among the largest listed companies in the European Union (EU), the representation of females on boards increased from 12 percent to 23 percent between 2010 and 2016. From the 2022 Moody’s investor report, it is apparent that there is a gradual trend to increase the number and percentage of women in positions of power, whether running a university or a country or sitting on the board of a Fortune 500 company.

Still, progress has been slow and sporadic. Females remain underrepresented in leadership positions throughout the world in such industry sectors as business, politics, law, education, medicine, and the military. As CNBC observes, women continue to lag behind men “in power and influence on the board level, especially in energy and natural resource industries.”

Organization benefit when women ascend to leadership positions, as this article demonstrates. We’ll also explore some of the barriers to advancement and how to overcome them.

Driving gender diversity on boards

Why focus on the demographics of leadership teams? Diversity results in better decision making, a Credit Suisse report concludes. Institutions understand this, which is why for decades human resource management has advocated for the elimination of gender bias.

The term diversity, equity, and inclusion (DEI) has become a buzz-phrase at all levels of organizations worldwide. In the field of human resource management, diversity (or DEI) is considered a priority for organizations, especially in the search process to fill vacancies or increase the size of a staff. Internal promotion and professional development similarly prioritize the promotion of diversity. Executive-development training is becoming more commonplace as a means to promote trusted, qualified individuals to positions of power on a board.

Why haven’t women ascended to board positions at the same rate as men? The lack of a concerted effort to attract qualified female candidates, for one. Male-dominated boards frequently rely on internal referrals to fill vacancies. Unsurprisingly, men are far more likely to suggest other men. Diversifying boards requires a concerted, exhaustive effort to identify, recruit, and secure the under-represented population.

In corporate or non-profit boardrooms, such efforts may be delegated to an executive search firm that is typically trained and experienced in providing companies with a diverse pool of qualified candidates. However, the efforts to ensure a substantial pool of qualified female candidates actually begins when the leadership within the company clearly articulates its goal of securing a female. Holding an internal search committee or an external third-party search firm accountable for increasing gender diversity among an executive board produces results only if the final hiring authority is committed to the goal. The final hiring authority reserves the right to reopen or extend the search process until the goal of securing a competent female is achieved.

To increase the number and percentage of female executives, boards must:

• Value diversity
• Provide more women with executive development training
• Make a concerted effort to recruit women

Policy drives change

Arguably, the strongest driver of gender diversity in board positions is policy. Policies drive change and, in terms of policies affecting diversity among board positions, the evidence demonstrates a positive impact.

Mandates for a minimum percentage of board seats allocated to females are more prevalent in Europe than the United States. As a result, European companies have a higher percentage of women executive board members. Deloitte reports that in 2021 women occupied 30.7 percent of board positions at 2,026 companies in Europe while only 24.3 percent of board positions at 3,345 companies in North America were occupied by a female. The industry sectors with the highest percentage of females were consumer business, financial, manufacturing, and technology media/telecommunications.

Similarly, according to the Council of the European Union (2022), 31.5 percent of board members at publicly-traded companies in 2022 were women due to mandatory gender equality legislation. By European Union law, women must constitute at least 40 percent of non-executive positions and 33 percent of all director positions by 2026.

The U.S. has made small strides in legislating gender diversity in boardrooms, with gender compliance mandates in Illinois, Washington, Maryland, and New York.

In 2018, California state law (State Bill 826) required public companies to provide a minimum of two to three seats (depending on the size of the board) to female directors, with violations subject to fines of $100,000 to $300,000. Despite strong opposition, the board quota has worked. According to the California Partners Project, the percentage of board seats at 3,000 U.S. public companies occupied by women increased from 17.7 percent to 25.6 percent between 2018 and 2021, while the rates in California rose from 14.6 percent to 32.1 percent. California more than doubled the national rate of increase (17.5 percent vs. 7.9 percent). Sadly, despite its clear effectiveness, California SB 826 was overturned as unconstitutional in 2022.

Contributions to a boardroom

The role of a board for a corporation, non-profit, or institution is one of trust and oversight to provide guidance and direction. The board serves as a fiduciary of the organization’s assets while ensuring the fulfillment of its mission and achievement of its goals within the scope of all laws and regulations.

A board of trustees, board of governors, or board of directors is often assessed on its degree of institutional control, which equates to its ability to exercise its inherent power for making and enforcing decisions for the betterment of the organization and its stakeholders. Responsibilities include long-range strategic planning and forecasting, risk assessment, fundraising, policy creation, and budget approval. Boards typically operate through standing committees or commissions that report back to the board-at-large.

Women typically succeed on boards once they surpass institutional obstacles and can participate in meaningful dialogue and activity. A female’s contribution to a board is the same as any member whereby her assets, experience, and knowledge should naturally dictate the appropriate committee or commission. The processes and systems practiced by board members are such that gender is not a consideration. Routine functions of board participation, approvals, and communication are fundamental to operations and fulfillment of duties to the organization and its stakeholders. The important consideration is the individual contribution that enhances the collective contribution to the organization.

Gender-based bias, though illegal, unfortunately persists. Nonetheless, women must ascend to boards with an attitude of self-confidence and the expectation of respect and acceptance. Any perception of inadequacy due to an individual’s gender should be met with disgrace in the twenty-first century.

The final thought

Board composition offers a good reflection of an organization’s commitment to diversity, equity, and inclusion. Important factors for any board member include demonstrating authenticity as an ethical community-minded individual as well as showing unwavering commitment to the success of the organization. It is more important to have an impact than to merely be a contributor. Gender bias has no place in the boardroom.

(Last Updated on February 26, 2024).

Questions or feedback? Email editor@noodle.com