In 2015, a McKinsey & Company research discovered that “businesses where females are most strongly represented on board or top management levels are also the firms that perform best on both managerial and economic results.” For example, businesses with a higher percentage of females on board averaged 10 percent higher return on investment and 1.7 times higher inventory price development.
Only 19.9 percent of board seats at S&P 500 businesses are held by females, according to a study by Catalyst. Women still have a long way to go in the boardroom to achieve parity with males, and every chance to pursue directorship should definitely be provided.
How do women improve business performance?
Boards with balanced gender dynamics tend to consider a wider range of issues and options, resulting in more customer-friendly business decisions. The fact that females drive more than 80% of consumer choices in homes shows the depth of knowledge of the client that females can take to business boards.
The McKinsey report, Women Matter 2, discovered that females are more probable to use five of the top nine management behaviours that correlate with organizational excellence. These five management behaviours are those that are particularly associated with innovation and employee management. The study also states that the use of a multitude of management behaviours depends on organizational efficiency. Thus, by including both males and females in the board, companies are likely to benefit from management diversity as well as experience.
Catalyst’s study further demonstrates that having females on board leads to more females in senior management. Women in corporate governance provide favourable role models for other women to enter the workforce, providing them with an aspirational objective. A richer combination of board-level individuals sends a signal that the firm is concentrated on performance and talent, and is open to change and innovation, both to the industry and to employees.
Some companies say it’s hard through standard channels to discover suitably skilled females. Finding the correct applicants may involve a deliberate effort to alter the selection of applicants.
Experience is a major component of the skills, but the experiences of women may not be the same as those of men. Taking advantage of the distinct views and life experiences that females bring to the boardroom might require that they look beyond the profile of the usual board candidate. Also, it is unlikely that females will be present in the same numbers as males at the greater management levels. It is sometimes necessary to look outside the usual circles.
How essential is having females on the board of directors of the company? Well, if the priority is increased corporate results, the response is: very much. While gender diversity can be seen as a lofty social objective, there is growing proof that having more females on directors ‘ boards is not just the correct thing to do — it makes for a healthy company.
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