Women On The Board of Directors: Should it be Required?

By: Shreya Sunil

The board of directors is a very crucial component of the overall life of businesses and organizations. The board of directors produces decisions and initiatives for every little thing, no matter how unrelated the topic is. Without people present on the board of directors, businesses and organizations will break apart and eventually go bankrupt. Therefore, bringing in a variety of perspectives, backgrounds, and experiences can be the secret key to a company's success. One way to bring in these diverse perspectives is through the introduction of gender diversity on the board of directors.

Let us go back to the beginnings of the rights of women. The right for women to vote was granted on August 18th, 1920, after years of longing protest through the ratification of the 19th Amendment. The government passed the 19th Amendment and gave the women to have an equal voice that men had. The problem still existed in our minds; we believed that women were not capable of doing any "hard work". Women were only required to stay at home and commit to taking care of the family and doing household chores. This is not right. Women have equally capable minds and should be respected as such. Now a century later, as a country, we have moved on from this terrible time in history and have somewhat accepted the fact that women can be successful and be the breadwinner in households. We come back to the same point; we are biased in employing; no matter what job, we will always favor a male. We need to change this mentality and move forward in the fight for gender equality.

So here are the current stats on the percentage of women on the board of directors. Of the 842 active companies on the Fortune 1000, women only make up about 20% of employees on the board for each company. This percentage has hardly increased over the past decade. Additionally, over 55 percent of the companies that became inactive on the market had one or zero women on their boards. The failed businesses that lacked diversity illustrate how a business needs a variety of diverse minds on its directorial team without which it can not succeed. Companies with women directors on their board also perform better than those without women by specific metrics. For example, when Fortune-500 companies were ranked by the number of women directors on their boards, those in the highest quartile in 2009 reported a 42 percent greater return on sales, and a 53 percent higher return on equity than the rest. A small population of people look at women and make them a valuable person in their business. For there to be a more successful company, there must be diversity among those in charge.

It is proven that having a diverse board is good for business. Since there’s diversity of thought and experience, board members will have a different approach to how to go about this problem and will offer valuable input that will help enhance the overall business itself. Men and women both face different experiences. Each will have different mindsets and beliefs, which can be a pivotal contributor to either the downfall of the uplift of the business. Think about this in the scenario that it also creates a new learning or teamwork experience, which can promote greater diversity of thought and reason. These diverse groups are prone to make better decisions. There are several reasons that companies with more diverse boards perform better. One is that diverse board's often better mirror customer and client bases. This is particularly true in a health care setting, which is a complex space with a very full-on customer base. Having a diverse board can help you better understand purchasing and usage decisions, particularly as studies have found that women drive 70-80 percent of purchasing in the United States. Even for B2B businesses, having a diverse board can help you better understand your customers. In hospitals, for example, women make up 83 percent of the general workforce, 65 percent of directors, and 43 percent of executives. Without women on your board, you are missing a valuable opportunity to bring in voices that represent this broad swath of potential and actual customers and clients.

Whichever reason resonates most strongly with you, having a diverse board is great for businesses or organizations at all levels. By making it a priority to bring in a range of voices and not just limited to a defined group of people you can improve the performance of the organization and create a fantastic pipeline for future organizational leaders and bring your organization/business to its strongest point. Some things that you could to increase the diversity on your board is to include a good pool of candidates; have the same criteria in mind for all genders without systemic bias. We can encourage the government to take a stand for these issues and promote gender equality. So what do you think?

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