By Roberta Attanasio, Forever Leaders Editor
The number of women who serve on corporate boards of directors is increasing a little at a time in the U.S., but we need more. According to 2020 Women on Boards—a nonprofit organization that conducts research studies about the gender composition of the boards of directors of U.S. companies—women hold just a small number of board seats. In 2015, the 2020 Women on Boards Gender Diversity Index of Fortune 1000 companies showed that women hold 18.8% of board seats, an increase from 17.7% in 2014. The percentage of board seats held by women in 2011, the first year of reporting, was 14.6%. However, 18.8% is a small percentage “when you consider that: women comprise about half of the total U.S. workforce; hold half of all management positions; are responsible for almost 80% of all consumer spending; and account for 10 million majority-owned, privately-held firms in the U.S., employing over 13 million people and generating over $1.9 trillion in sales.”
Why should we care about board composition? A board of directors is made up of a group of senior advisors who oversee the activities of a company and represent its shareholders. “Boards of directors make decisions that can impact you, your community, and the country. That’s why it’s important that membership on corporate boards be representative of a company’s constituents. Boards of directors choose CEOs. They make decisions about executive compensation, whether to buy, sell, or merge with other companies, where corporate offices close and relocate, and how much priority a company gives to issues other than profits, such as social responsibility.”
A frequently cited study details the advantages that women bring to boards. Women provide a collaborative leadership style that benefits boardroom dynamics by increasing the amount of listening, social support, and win-win problem-solving. The study also found that although women are often collaborative leaders, they do not shy away from controversial issues. They are more likely than men to ask tough questions and demand direct and detailed answers. Women also bring new issues and perspectives to the table, and women of color add perspectives that broaden boardroom discussions even further.
Catalyst—a nonprofit organization with a mission to accelerate progress for women through workplace inclusion—reviewed several studies to identify the benefits that women’s representation brings to corporate boards and found that, when more women seat on the board of directors, there are higher return on sales; better stock growth; lower risk of insolvency; and lower likelihood of financial restatement. In addition, the presence of more women on the board appears to facilitate the advancement of women to the C-suite.
A board with women is a better board—increasing women’s representation on corporate boards is good for business and good for the economy.
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