Here’s Why You Want Women on Your Board

Here’s Why You Want Women on Your Board

We’ve seen plenty of research showing that companies with more women in leadership roles, whether in the C-suite or on the board, tend to be a bit more profitable, outperform their peers at corporate governance, and enjoy more positive reputations; what’s less understood is why. What, specifically, do women executives or directors bring to the table that all-male leadership teams don’t have? A recent study sheds some light on this question, Alina Dizik writes at the Wall Street Journal, finding that women directors are “likely to bring a half-dozen skills important to decision making that weren’t well-represented on their boards before their arrival: risk management, human resources, sustainability, politics or government, regulatory or compliance, and corporate governance”:

These are the findings of Daehyun Kim, assistant professor of accounting at the University of Toronto’s Rotman School of Management, who says he reached his conclusions after reviewing proxy statements filed with the Securities and Exchange Commission that detailed the skills, qualifications and expertise of incoming directors. Dr. Kim focused on smaller companies, the S&P SmallCap 600, because there is less gender diversity in smaller companies, he says. But according to his research, he says, similar results can be seen on boards of the largest 1,500 public companies in the U.S.

This research further illustrates how harmful it is for boards to buy into the myth that there are no qualified women available to join them. Not only are these organizations losing out on the invaluable perspective to be gained from including women, they are also ignoring a talent pool with critically important competencies. If a board can’t find any qualified female directors, perhaps their definition of “qualified” is excluding women with skills they don’t realize they need. Especially at a time when boards are under increasing pressure to step up their governance activities and get more involved in HR and talent management, these findings make the already strong case for gender diversity on boards even more compelling.