Why Gender Equality In Boardrooms Is Necessary For Business Growth?

Gender inequality in boardrooms will not be abolished until 2038 if current improvements in female participation continue, according to data provider MSCI, adding that progress in the United States has even stopped. According to MSCI statistics, firms in the data provider’s flagship global stock index will not have gender equality in boards for 15 years if the average pace of increase for the number of female members on boards between 2018 and 2022 continues. Based on current trends, women will not hold an average of 50% of board seats across the 2,811 businesses that comprise MSCI’s All Country World Index (ACWI) until 2038.

This is an improvement above the statistics received in 2021, which predicted that the 50% barrier would not be reached until 2042. MSCI has also pushed back its prediction for when women will hold 30% of seats on all ACWI boards by one year, to 2026.

After a slowing in the pace of inclusion of women on corporate boards in 2020, MSCI reported that the trend towards gender equality quickened in 2022, with the number of board seats held by women growing by 1.9% year on year.

MSCI attributed the rebound to a consistent increase in female representation on corporate boards in developed economies outside the United States, even though the US growth rate has been stagnant for three years.

Matter of fact, there is still much to be accomplished on a global dimension. Women held fewer than a quarter, or 24.5%, of director seats across the global index in 2022, compared to 22.6% in 2021, according to MSCI. Moreover, just 163 of the 2,811 enterprises had female CEOs.

In Qatar, none of ACWI’s 12 components had female directors. Just one of the 593 corporations in the United States has no female directors.

The need for gender equality in boardrooms. 

Politics, space science, technology, athletics, literature, and music have all seen females thrive. Women have demonstrated their ability to handle any obligation, engaging both society and the country as a whole.

Women’s economic engagement and decision-making are critical for long-term economic growth. According to one study, the firms with the highest financial success had more women in their senior management teams than the ones with the worst financial performance.

Yet, hurdles to women’s full economic involvement, employment, and advancement into leadership and board membership remain.

Businesses and organizations gain worldwide economic success when they take steps to eradicate gender stereotypes in the workplace and guarantee that women’s talents, abilities, and viewpoints are accepted and respected in the boardroom. Women, on the other hand, are not a homogeneous group, and when addressing impediments to their involvement, an intersectional lens may be utilized to target women from varied backgrounds with varying identities and skills.

Improved governance and decision-making.

Gender equality on boards promotes a variety of thought in company-wide decision-making. It encourages various viewpoints and improved decision-making by eliminating homogenous methods of thinking and decision-making, often known as groupthink. Gender equality in boards is more engaged in reviewing the company’s strategic direction and strengthening responsibility through audits and risk management. Employee satisfaction, corporate productivity, and consumer satisfaction all benefit from diversity.

Gender equality in leadership has also been linked to better corporate governance. According to a survey of 6,000 U.S. corporations, those with gender equality in boards outperformed those with no or only one woman on their boards, indicating fewer financial reporting restatements and a lower incidence of fraud.

Capability to attract and keep top personnel.

Businesses with women on their boards are better positioned to attract and retain top talent because they send a clear signal that they value merit and give equal chances for women’s career growth.

Brand building and improved customer understanding.

Boards that reflect the variety of today’s society and customers are better positioned to comprehend consumer requirements and preferences and, as a result, may develop their branding to encompass a broader consumer base. Women control around $28 trillion of worldwide yearly consumer expenditure and account for roughly 70% of global consumer demand.

Increased profitability and strong company performance.

Companies with gender equality boards and senior leadership teams have higher returns on equity, sales, and capital, and hence perform better financially. Research suggests that Fortune 500 businesses with three or more women on their boards outperform comparable companies with less female participation by an 84% higher return on sales, a 60% higher return on invested capital, and a 46% higher return on equity. Furthermore, according to ILO data collected from 13,000 businesses in 70 countries, 74% of organizations that track gender diversity in management reported profit improvements ranging from 5% to 20%. According to research, organizations with more gender equality on the board of directors had much lower volatility in return on capital.

The last line.

Gender equality on corporate boards is not only fair and moral, but it is also good business. Integrating gender equality into corporate governance and board leadership results in measurable success for businesses.

Edited By Prakriti Arora