This January, Germany has dominated the news for women in business, with their bold step to require stock exchange-listed companies with executive boards of more than three, to have at least one woman on those boards.
The cabinet have approved draft legislation to this effect, which according to the Justice Ministry, “would affect about 70 companies – of which 30 currently have no women at all on their boards”.
The AllBright Foundation produced a report in October 2020 which compared the proportion of women on the executive boards of leading companies. Despite lots of positive press for change in recent years, the results show slower progress than one would hope. Below are the results for the countries where research was conducted:
- USA: 28.6%
- Sweden: 24.9%
- Great Britain: 24.5%
- France: 22.2%
- Poland: 15.6%
- Germany: 12.8%
It is clear that Germany is lagging behind other countries in their efforts to encourage and promote women in leadership. This is likely to be a strong incentive behind the legislation announced. Yet the results also demonstrate that there is a long way to go globally before we achieve more equal representation in the boardroom.
However, is such bold legislation a good move for other countries across the world to promote women leadership and influence?
I would argue, yes! Global research has repeatedly demonstrated the positives of diverse boards and women leaders.
As Caroline Criado Perez writes at the start of her 2019 Business Book of the Year, Invisible Women, “Most of recorded human history is one big data gap.” She goes on, in over 300 pages, to identify and question why and how the world has been set up for the “default male.”
She makes the case, with a huge quantity of supporting data, that there is a “presumption that what is male is universal” and this is a “direct consequence of the gender data gap.” This presumption causes huge problems in the world of business, but luckily there is a solution.
Every business has the opportunity to close this data gap by making it a priority to diversify their employees. I would argue the best way to start is at the top of the company.
By ensuring your company has an executive board and/or senior leadership team that includes people from different genders and backgrounds, you will notice this naturally shifts the entire company in a more diverse and inclusive direction. The positives of a diverse board don’t end there!
Why Is It So Important to Have More Women on Executive Boards?
There are countless reasons that it’s important to have more women on executive boards but for my top picks, carry on reading.
Diversity and Innovation
Bringing diversity to your board encourages a diverse team of employees, which in turn, brings innovative ideas to your products, services, and industry. “Having women on your boards helps you develop a broad talent pool at all levels” As Erica Hersh notes in her article, by having a diverse senior leadership team in a company, you naturally encourage a more diverse applicant pool for your company.
As well as encouraging new applicants to the company, it will also benefit current employees. By seeing people who look like us in positions that we aspire to, employees and applicants at all levels, will feel more confident and valued in their position and progression in the company.
By developing and encouraging this broad talent pool throughout a company, the voices in every room will naturally be more diverse. Gaining insight into other people’s experiences and listening to contrasting viewpoints helps generate new and exciting ideas that will allow the company and industry to develop as a whole.
Reflecting the Market
Outside of your employees, having more women on executive boards simply reflects the market. The world is made up of people who identify as women, men, and non-binary. If you want your business to grow, then it’s a necessity to consider all types of customers when making decisions.
Embracing a culture of diversity in your business means you get wider perspectives and ideas. After all, in many markets, women actually have higher purchasing power than men. Recent research found women drive 70-80% of all consumer purchasing!
Having more women on executive boards helps businesses to make fairer decisions. “A study conducted at Canada’s McMaster University surveyed 600 boards members of which 75% were male. The women directors consistently outperformed their male colleagues in fairer decision making.”
Fair decision making is essential in a business in order to uphold company core values and the everyday running of a business.
Finally, and most importantly, women should be on executive boards because there are many women with the skills, attitude, and experience to be incredible leaders given the opportunity! Many countries are working hard to encourage and promote women in leadership, but unfortunately there is still a long way to go!
Progress takes time and patience, but with hard work, new legislation, and commitment from businesses across sectors and countries, change can happen!