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Does putting women on boards really matter?

At the end of the day, the evidence shows women make better leaders – whether you're on board (sorry) with the principle or not

We’ve all heard the stats. More large American firms are run by men called John than by women. Only 7 of the 100 biggest companies on the London Stock Exchange (also known as the FTSE 100) have a female CEO. About 26% of UK board members are women. The fact is, women are underrepresented at the top.

Men Called John Vs Women On Boards
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But does it really matter? It takes decades of experience to get to board level, so today’s executives started their careers when gender inequality was a much bigger problem. Since the gender pay gap is much smaller for younger generations, and is more linked to socioeconomic status and the work sector, these stats are more revealing about policies in the past.

So if putting women on boards isn’t going to solve gender inequality, is there any reason to bother? Maybe so. Evidence suggests that women on boards is good for company performance, as well as for equality. Here’s why.

1. Women on boards are good for investor confidence.

Investors want return on their money. And it seems like they think women will get it. Shareholders and credit rating agencies (who decide whether a company is going to be able to pay back debt) are beginning to include “number of women on boards” as a criteria on their assessments. Two big investment funds, Calpers in the US and Amazone (no, not Amazon) in Europe, use a gender-balance indicator when they choose where to invest.

Bloomberg, one of the world’s leading financial software providers, developed a gender equality index to meet the needs of their investor clients looking to use gender equality data to inform their decisions.

It seems even for those without a vested interest in insisting on equality on principle, a balanced board is good for business.

2. Women are better bosses.

It sounds like an outdated gender stereotype, but the evidence shows there might be something to it – women tend to be more considerate, have more empathy, and build more trusting relationships in working environments… which generates more profit.

One study surveying 600 board directors found that companies with female board members were more likely to use a cooperative approach to decision-making. It also found that women were fairer in situations of conflict of interest.

Interestingly enough, it wasn’t just the traditionally ‘feminine’ qualities women were seen to have more of – another study demonstrated that women were rated by their colleagues as more likely to take initiative and show drive towards results than their male counterparts, reported as better leaders overall.

3. Diverse groups make better decisions.

Diverse groups make better decisions. So says a recent study where groups were tasked to read interviews from a murder investigation and decide who was the most likely suspect. When groups had a member in them who identified differently from the others in some way, they were more likely to guess correctly – but were also less confident in their decision.

This is one of many studies to show that groups that are heterogeneous – i.e. all the same – tend to make poorer decisions, and be more confident in them than groups which are more diverse. This is generally because we are more self-conscious around people who we feel are different from us, and therefore more likely to be careful in what we say. Plus, a group offering a range of life experiences is more likely to come up with a range of ideas.

Bringing women onto boards will bring women’s life experiences into the decision-making process. It’ll give groups new ways of thinking about problems, and likely lead to more innovative ideas.

4. Including women doubles the talent pool.

It’s simple maths. More women, more talent. Dismiss 50 percent of the population when you’re hiring for the top jobs, and you’ll be missing out on a whole lot of potential. Statistics prove time and time again that women have the skills that employers need. In the UK, women are 35% more likely to go to university than men. They’re also less likely to drop out and more likely to get a higher grade.

In other words: the bigger the pool, the more likely you’ll find the skills and experiences you’re looking for.

So there we have it.

Of course, all these studies are making big assumptions about how women behave, and – shock horror! – not all women behave in the same way. And we should be asking questions about masculinity in the workplace as much as we do femininity. Breaking down stereotypes to identify what makes good leaders, regardless of their gender, is the long-term solution – but in the short term… get those women on boards!


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