Wednesday, 28 May 2014

Prospectus blog: Diversity leads to more Professional Boards

Prospectus, a specialist recruitment consultancy working exclusively with the beyond profit sector, is a Trustees' Week supporter. Here, Borge Andreassen considers how better gender balance on boards could lead to better governance.

Check out Prospectus' trustee pages here, and follow @prospect_us

Recent figures from the Government show that 19% of company board directors are now women. For FTSE 100 companies the figures are more mixed with the number of companies with a woman on their board has fallen; this is concerning as it means that there are still leading businesses with all-male boards. The figures are also more mixed for company executives; only a disappointing 6.1% are women.
The issue of boardroom diversity has recently had a higher media profile following news that the German government is considering making it a legal requirement that women make up 30% of non-executives on company boards.

In my native country Norway, the Government introduced a mandatory 40% female quota on listed companies’ boards in 2004, and the lessons to date are overwhelmingly positive.

According to research by Agnes Bolsø from the Norwegian University of Science and Technology, the experience is highly positive and evidence shows that more diversity resulted in better decision-making processes. Not only did boards operate better, respondents to Bolsø’s research said that they had become more professional. No wonder then that in Norway, women now make up 42% of board directors, exceeding the state imposed quota.

At Prospectus we established our Board Practice to improve governance through a greater focus on finding skilled, talented and diverse trustees, giving charities a real alternative to relying on networks and the traditional ‘who-do-we-know’ approach. To date, more than 42% of appointed trustees are women. Not yet as high as the 58% of executives Prospectus has helped clients appoint, but a significant step in the right direction.

Charities are not as different from companies as many assume. Whilst charity governance still needs to improve, to my knowledge no charity has yet had to be bailed out with billions of tax payer money. With that in mind, it is fantastic news that the number of women on company boards are increasing, hopefully leading to better corporate governance. In addition, the Norwegian experience suggests that more women on boards also lead to better gender balance on executive teams.

We still have a long way to go in terms of board room diversity, not just relating to gender but also ethnic, socioeconomic and cultural diversity. Hopefully the Government’s (voluntary) target of 25% women in the corporate boardrooms helps achieve some of that.
And wouldn’t it be great if more of the talented, high-impact executives, both men and women, from the charity sector could be appointed to corporate boards? That’s the aspiration at Prospectus!

No comments:

Post a Comment