Experts seem to all agree about one thing: companies need diverse leadership to be successful and to promote equality. But there’s still a long way to go before everyone is fully represented in the business sector. And one of the largest groups that’s often left out of decision-making positions constitutes roughly 50% of the population.
That group — women — accounts for only 20.4% of director positions on boards at major public companies across the world, according to a recent report by global executive search firm Egon Zehnder. The “Who’s Really on Board?” report studied data about 1,610 companies in 44 countries and found that change is happening, but it’s slow.
In the United States, for example, progress has nearly screeched to a halt in the past half-decade. Since 2012, the percentage of female directors on boards has increased by just over 3%, compared to the nearly 7% increase worldwide in the past six years.
There’s also a fairly large group of companies that belong to the “One on Board Club,” meaning that they have at least one female board member. Amid the countries whose large cap companies are part of that club, almost half have laws requiring that boards meet a quota of female directors.
The magic number
But on boards that usually consist of nine to 13 members, and sometimes expand to include 20 directors, one person’s voice can easily be drowned out. That’s why Egon Zehnder purports that boards need a critical mass of three women to successfully incorporate the female perspective.
That assertion is backed by research that indicates when someone is a small minority in a room, their voice often goes unheard. The phenomenon has financial repercussions — according to MSCI analysis, companies that have at least three women on a board perform better based on some measurements.
Some countries are on their way to meeting the magic number, or have already surpassed it. In France, on average, 42% of directors are female. But those gender ratios plummet elsewhere. In countries such as Japan, Hungary and South Korea, the average percentage of board members who are women is in the single digits.
In the U.S. and Canada, where the average number of board members is 11 people, only 2.5 of them are women. While that’s edging toward the three-person threshold, it’s not quite there.
So there’s still work to be done. And Egon Zehnder has at least one solution — fixing the pipeline problem by selecting first-time female directors. There are women who are willing and able to serve; they just have to be given the opportunity. And when they prove themselves, data suggests that everyone at the company wins.