Women in Corporate Boardrooms: What does the Trend Show?
Typically, a corporate boardroom has always been dominated by men. The culture of male domination within the corporate board meetings is a prevalent practice laying root in the patriarchal notion of society. The boardroom can be understood as a special category of individuals who form a board which in turn is responsible for taking managerial decisions in the interest and the welfare of the company. So, these boards and the boardroom meetings tend to streamline the key issues of the company that require attention and through which the company can decide the future course of operation. Statistically, it has been held that 82% of seats in the Boardroom are held by men with only a 1% increase every year in the seats of women within the board.1
What is the benefit of having a diverse boardroom?
Certainly, if we have a diversified boardroom, there is a vision to have stronger control over employers. One essential element of the employee-employer relationship is the level of engagement. The engagement level can be increased if they have their representatives sitting in the boardrooms as well. For example, a woman who is a victim of sexual harassment at the workplace or is going through any personal crisis, she will be more comfortable speaking to a female director as she will have the confidence that her issue would be understood and measures would be taken to address the same. So, therefore, a sense of representation is promoted through having a gender-neutral and diversified boardroom. Even more, these corporations stand on a higher footing in regard to their social acceptability. It is perceived that with a diverse board, there would be a greater level of business understanding, and eventually, the management would independently function. Nonetheless, male supremacy has refrained from accepting the new social norms.
Sign of progress and hope
However, with the whole dynamics of the society changing, the statistics related to gender representation in the Boardrooms have shown signs of improvement. Apparently, the newer research studies have signalled towards finding a higher percentage of diverse Boardrooms. In the 6th edition of the Women in the Boardroom report prepared by Deloitte2 where a study has been done on a global level by analyzing 8648 companies in 49 countries, it has been found that 16.9% of board seats are held by women in the year 2018 as compared to 15% seats which were held in 2016. It has been also shown that where the CEO is a woman, 29.3% of women are on Boards whereas only 16.5% of women are board members when any man is a CEO. On the lower side, only 5.3% of women chair the board, and even the tenure of women being a board member is proportionally less compared to a man being a member.
When it comes to other countries, Norway has topped the list with 41% of women being the board members followed by France and Sweden with 37.2% and 33.3% respectively. Asian countries have failed to perform well including India who has just 13.8 % women in boardrooms. Qatar and Saudi Arabia have stood to be the worst performers with only 0.6% and 0.7% respectively. Seemingly, after analyzing the previous records, the ratio increase is comparatively good especially within the large-size companies who have been working more towards having diversified boardrooms.
The effective role played by the Laws and Policies
In countries, where there has been a markable increase, the credit can be attributed to the effective role played by the legislature of the respective states as they have enforced laws and policies which oblige the corporate houses to have women directors on boards. One such example is Norway which has secured the 1st rank. In Norway, there was a quota law introduced in 2005 which made it mandatory to have 40% of members of the Board members be women. The time period of 2 years was given to comply with the same and in case of non-compliance and in case of a breach, there will be forced liquidation.3
Similarly, Spain has also introduced such quota through Gender Equality Act making it obligatory to have 40% of each gender on Company Board. Even Italy has adopted such an approach where it is mandatory to have 33% Board members belonging to under-represented gender.
Beyond Europe, if we analyze, India4 and Israel have laws where it is necessary to have at least one women director on board. Likewise, Malaysia has even adopted a 30% target for women in company leadership and decision-making positions. It had also set a target in 2017 to have 30% women representation on Boards within coming years. Singapore, on the other hand, does not have a quota law but their company boards are required to have a suitable mix of skills and experience followed by having a diversity policy that also includes gender and age.
The stringent laws and policies have potentially contributed to ensuring women representation on board. There is no particular measure that could be said to be the best amongst all but certainly, every new measure is setting up a precedent for other jurisdictions to ponder upon. These laws could be a result of a strong generational shift and the willingness of younger women to break stereotypes by asking for what they should have got in the first place. A diverse workforce which has become a need requires diverse leadership to manage and therefore, with the increasing rate of literacy, it is for society to make certain that the rights of every gender should be protected and the gender-neutral approach should be taken.
Need for more inclusive measures
One can say that the ratio has only become better but is still not convincing. Where 83% percent of the adult females and 89% of the adult males are literate according to World Bank,5 it is surprising to see that the similar ratio is nowhere closer to the ratio of gender diversity in boardrooms. It can be argued that although women are capable of holding such positions, the patriarchal mindset is hindering the process of having a fair representation of the same. This situation puts women at a disadvantageous position as females tend to have a diminutive impact on financial distress since their presence on the board is very low.
Even where there is a slight increase in the presence of women, such increase could be only associated with companies just complying with the state’s law and policies. There is a need to have a more inclusive approach where such no tolerance policies should be adopted in the Memorandum and Articles of Association of the Companies. The government and the executive machinery of the State should incentivize diverse boardrooms over male-dominated boardrooms. Additional subsidies and advantages should be given to companies showing gender-neutral boardroom profiles. However, this method initially would be an obligation on companies but in the long-term, it would change the scenario leading to a higher rate of women on boards. It has become a necessity to take such problems seriously and to ensure that every gender gets an opportunity of fair representation.