Studies Show That Women on Boards are Good for Business: So Why Aren’t There More of Them?

The evidence is in, but the appointments haven't followed.

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The body of evidence continues to grow that more women on corporate boards leads to more profits. Recently, a survey conducted by researchers from A.T. Still University in Arizona and the DeGroote School of Business at McMaster University showed that in Canadian boardrooms, women board members were more adept than their male counterparts at solving problems, because they were more likely to emphasize collaboration and consensus-building.

A study from the Credit Suisse Research Institute released last year looked at over 2,300 companies and found that stock prices of businesses with at least one woman on the board outperformed those without one by 26% over a period of six years.

Researchers at Pepperdine University began showing in 2001 – and again in subsequent years – that Fortune 500 companies that place emphasis on promoting women do better than their industry peers when it comes to profits.

This evidence is just the tip of the iceberg – Mitt Romney could fill binders and binders with it. The Canadian survey also showed that women board members were more likely to think outside the box. Another study found that women introduce new issues and perspectives in boardrooms and frequently demand greater accountability. And we’ve all heard of the proof that companies with women board members were more risk-averse during the recession and their stock prices fared better.

So with all of that, how many women would you expect to see on corporate boards these days? Those binders are all too easy to file away, it seems.

According to research from Catalyst, a nonprofit that seeks to improve workplace diversity, women held only 16.6% of Fortune 500 board seats in 2011. Of the women who held those seats, only 18.8% were women of color. Not only that, but the proportion of companies with more than minimal female representation is incredibly small. In 2012, less than a fifth of Fortune 500 companies had 25% or more women board directors, and only 1.8% had women make up 40% or more of board directors.

So what gives?

Kathleen McQuiggan, president and founder of Catalina Leadership, says that “while many [chief executives] claim to understand the ‘business case’ for gender diversity, I find that there are still many senior leaders who can’t articulate it.” McQuiggan’s firm specializes in investing in women and helping companies with the expanding role of women in business.

The business case is simple: Women are the future. “Women are the future talent pool of most organizations, women continue to be the ‘future client’ of most organizations and women are controlling more of the wealth of the nation,” she says. And the numbers make this obvious: Women represent 45% of American millionaires, women are currently graduating from college at a higher rate than men, and 51% of business school applicants are women.

One problem is that increasing gender parity on corporate boards continues to be seen as a social goal rather than an economic one, making it a less urgent priority. For that to change, says McQuiggan, “more organizations need to realize that it is not one versus the other.” As for when that will happen, she suspects it’s mostly a matter of time. “I think many organizations haven’t hit their ‘pain point’ yet. They are getting jobs filled, growing their businesses and don’t feel that by not embracing more gender diversity in their organization that it is negatively impacting their businesses.”

Another major hurdle, she says, is a lack of male leaders advancing the issue. When it’s “not just the one senior woman that is sitting at the table” talking about promoting more women to leadership roles, “that is when I think we will start to see the dial moved.”



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