September 07.2017, 5.38pm
Diversity in the boardroom: 5 ways your company can support women in leadership
Just 4.2 percent of CEO positions in America’s 500 biggest companies are filled by women – even though research shows that there’s a correlation between boardroom diversity and superior financial performance.
Other studies show that the collective intelligence of a group rises if it contains more women. A study of companies in the UK, North America and South America found that for every 10 percent improvement in gender diversity, there was a two to four percent increase in profits.
Women board members clearly bring value, but the gender imbalance means that most boards lack the necessary diversity to encompass a broad range of perspectives, voices, and experience. Diversity can sometimes be perceived as a numbers game but inclusiveness is about making those numbers count.
A new Deloitte report revealed that only 15 percent of boardroom seats are currently occupied by women. The report found that women were making gradual inroads into the boardrooms of Fortune 500 companies, with a 20 percent increase in the number of women on these boards between 2012 and 2016. Legislators are increasingly calling for change, though progress can be slow.
In the UK, a government-backed report from Lord Mervyn Davies called for FTSE 100 companies to achieve the target of having 33 percent female boards by 2020. Encouragingly, a European Commission equality report found that countries with binding legislative measures to increase boardroom gender balance, like Germany, France, Belgium and Italy had recorded increases of 24 percentage points since 2010. This shows the benefits of taking a proactive stance on boardroom diversity.
From a HR point of view, implementing change is not about change for change’s sake. It’s about creating a more diverse boardroom that can ultimately drive financial success. Taking on people from different backgrounds or people who think differently brings a fresh perspective to the table. This can lead to more innovative approaches and give the company a deeper well of ideas to draw upon.
Supporting women in leadership may require HR to take a proactive approach but what do you need to do to start the process in your own organisation?
1. Hire diversely across your business
Tackling the underlying issues within your organisation is vital if you’re going to implement change. However, before you tackle the issue of diversity in your boardroom, you need to understand why your board is lacking a female presence – is there a lack in succession planning? Does your company have an unconscious bias towards men of a certain profile? Do your teams in general lack diversity?
Women can find it almost impossible to break into male-dominated boards that are primarily composed of men of similar age, backgrounds and experience so HR needs to study the boardroom profile. The Harvard Business Review conducted a survey that found that women needed to be more qualified than men to be considered for directorships.
Diversity needs to start at grassroots levels, with HR teams consisting of diverse members too. Celebrate boardroom game-changers and ensure that directors address the gender disparity as a business imperative.
2. Create a Succession Plan
Introducing greater diversity has a disruptive effect that refreshes leadership pools and introduces fresh blood at a decision-making level. At a societal level, there is a greater demand for this type of policy, with Apple just one high profile company to come under pressure from investors to become a more diverse company.
A “Bringing Diversity on Board” report by Massachusetts State Treasury advised that companies should recruit a pipeline of diverse directors before seats open in newer industries like technology. In more established companies, it recommended that HR consider introducing term or age limits to create more openings at board level that could be filled by women.
Succession planning is an obvious way to create a talent pipeline for women who aspire to board positions. In addition to identifying and developing potential board members, introducing sponsoring and mentoring programs is vital.
If female mentors are unavailable, getting male board members to actively share their knowledge with female colleagues can bridge the existing experience gap. This kind of social interaction can also overcome unconscious biases and help emerging candidates to network with board members.
Interestingly, promotion to the C-suite tends to leave the pipeline of women candidates at other senior management levels depleted so it’s vital to maintain gender diversity among leadership candidates.
HR must establish a skill-based framework of knowledge and expertise required to qualify for an optimally-diverse board, with input from board members and other shareholders. Succession training should then be geared around providing the tools required to excel within this framework.
Secondly, HR needs to consider enabling strategies for female workers such as flexible working policies, support networks, and work from home policies. While this may be seen as a ‘disruption’ to the traditional working model, it will give a more diverse range of applicants the possibility to move up through the ranks.
A report by the Fortune Knowledge Group highlighted the need for organisations seeking greater gender diversity at the top to “employ transparent, gender-neutral hiring criteria, have transparent processes for identifying high-potential candidates, offer maternity leave beyond legal minimums (paternity leave ranks lower still), or track gender diversity at key career milestones.”
HR needs to focus both on succession planning and populating its own team with a diverse profile.
3. Set goals for success
Set targets for gender diversity and identify the metrics needed to measure your progress. Lean In Founder and Facebook CEO Sheryl Sandberg recently wrote that measuring progress is a vital step towards setting goals in this area.
“Although most companies track the gender breakdown of their hiring and promotions, fewer than 35 percent set targets—and it’s harder to make progress when you don’t have clear goals in place,” she explained.
Measure the number and percentage of women at all levels of your business and continue to track the progress of aspiring female stars. Use ongoing surveys and employee feedback to identify potential obstacles to female career advancement like marginalisation, biases, or the proliferation of ‘the old boys club’.
Several major companies have announced gender diversity goals, including Accenture (40 percent worldwide by 2017), AOL (50 percent of leadership roles filled by women by 2020) and Twitter (38 percent of overall employees and 31 percent of management by 2017).
Using succession planning can help to create a talent funnel but it’s important to constantly measure the success of these programmes. Offer female workers an ongoing support network that includes training and mentoring programmes and use performance data to track how effective these initiatives are.
Adopt your recruitment policies to ensure diversity and to identify stand-out female candidates so you have development plans for every facet of your organisation.
Tracking retention will also reveal if you’re prematurely losing your top female talent due to a lack of opportunities. HR needs to be aware of the employee lifecycle across the board and relevant skillsets so that all appropriate candidates are fairly considered. Outboarding and leaving interviews can help you to assess if you need to do more to engage and facilitate women who are pursuing opportunities elsewhere.
Ultimately, if employees feel motivated and nurtured, your company will see a higher retention level and will enable stand-out candidates to rise to the top. Success isn’t just about quotas or numbers. It’s about changing the culture of your business to embrace diversity, benefiting financially from that decision and building a brand that is recognised for its gender diversity and forward-thinking approach.
4. Address unconscious bias in your organisation
One misconception that is perennially used as a defence for male-dominated boardrooms is the notion that there is a lack of board-ready women. Restrictive job profiles for board members or policies against first time directors will disqualify many female candidates and perpetuate the gender gap.
For instance, boards continue to prioritise CEO expertise in prospective new board members but it is less common for women to have a CEO background. Research from 2014 shows that 20 percent of the female CEOs running Fortune 500 companies took jobs straight out of school at the companies they now run, working their way up through the ranks.
However, in many companies, the “old boys” network is a problem, as incumbent board members often fill vacancies through their own limited networks. Women report fewer substantive interactions with senior leaders than their male peers and this gap widens as female workers move up the ladder.
Managing Director at Blackrock, Michael Edkins, revealed in a recent Forbes interview that aspiring female directors can lose out at a networking level.
“Candidate short-lists drawn from professional networks are not necessarily a bad thing if the appointment process is robust,” Mr Edkins explained. “However, women and men often network in different hemispheres, which means there is not always great visibility into the pool of board-ready women.”
Gender-based stereotypes can cause women to self-check or self-monitor their behaviour, for fear of having their behaviour judged. This can be perceived as a lack of confidence. A recent Women in the Workplace report notes that women who negotiate for a promotion or compensation receive feedback that they are “bossy,” “too aggressive” or “intimidating” – something their male colleagues rarely face.
Organisations need to convince employees why gender diversity matters, according to Cheryl Sandberg.
“They can invest in gender-bias training—especially for managers, who make many of the decisions that affect women’s daily work experience and career progression,” she added. “Companies can also encourage everyone, from entry-level employees to leaders, to talk openly about gender stereotypes and provide women with more leadership opportunities, access to sponsors, and recognition for their contributions.”
HR can organise networking and social opportunities to develop a culture of diversity and inclusiveness. Adopting a data-led approach can also introduce a culture of transparency that can undermine gender-based assumptions or misconceptions.
5. Make gender diversity a strategic policy
Gender diversity can vary from industry to industry. Research shows that approximately 30 percent of all female directors appointed in 2016 were on consumer boards, with industrial boards following closely on 24 percent.
Life sciences is the lowest, at 7 percent. However, these numbers don’t necessarily reflect the number of new director appointees who were women.
For instance, half of all new director appointees in business services were women and 40 percent of new directors in technology were female. Technology has typically been an area that’s criticised for the lack of female representation at board level. A number of tech companies have sought to remedy this and these figures suggest that conscious efforts to implement change can result in greater diversity.
“Companies that have built gender diversity successfully at the leadership level are twice as likely to place gender diversity among the top three priorities on their strategic agenda, to have strong support from the CEO and management, and to integrate gender diversity at all levels of the organization,” according to a new McKinsey report.
The introduction of gender pay gap reporting in 2018 is another opportunity to identify yourself as an organisation that embraces gender diversity and inclusion. With details of the pay gaps within your organisation set to be publicly published, it’s a chance to establish a reputation of transparency and an example as a company with a culture of equality and inclusiveness.
Having the tools to carry out this type of reporting is vital. Not only to fulfil your legislative requirements but also to give you time to address any potentially damaging revelations once this information becomes public. This process can take time so you need to be proactive about it with the 2018 deadline looming.
Fostering growth, being known as a great place to work, succession schemes, and nurturing driven individuals will encourage top female performers to join your organisation and rise through the ranks.
With this kind of cultural input and a data-led focus on developing female talent, you can overcome unconscious and conscious prejudices and move towards establishing a more diverse board. That will ultimately give you a broader range of experience and talents at board level and a greater understanding of your customer base.
Are you in the process of initiating change within your organisation? Learn more about the Role of HR in Change Management, and our top tips for success below!
By Sharon Looney