Most businesses are run by Caucasian men, with a few token women and people of colour sprinkled here and there. But what if the way to create a diverse workforce wasn’t just to hire more women or people of colour? What if the solution was as simple as adding more women to the board? This article will examine three case studies showing how companies made diversity happen with female board members.
How Microsoft Got Eight Women on the Board
Microsoft added eight women to its board in 2013. The company’s board of directors was 30% female, which was higher than the average Fortune 500 board, but still, only 0.2% of the number of S&P 500 companies had that many women on their boards then.
Even though there are fewer women in the workforce overall than men, there is no reason why this should be the case in corporate leadership. Women make up over half of the college graduates and have an equal chance of getting hired as men do with similar qualifications. In addition to being qualified for these positions, research shows that companies with female directors tend to make better financial decisions: they are less likely to sign off on risky financial moves than male-dominated boards and tend to ask more questions during meetings which lead to better decision making (more on this later).
Why adding women to a board can be better than having a homogenous board
A diverse board is better at doing business.
A homogeneous board can be more profitable and innovative, but finding the best people in an industry is only possible if you look for candidates like you. A diverse team will help fill gaps in your company’s knowledge base and provide insight into how other companies have succeeded where yours has failed. Various groups also tend to be more creative, which leads to new ways of thinking about problems—and that’s essential as competition heats up and markets become more complex every year.
While it may seem obvious that a diverse board would perform better than one made up entirely of white men (sorry), there’s research proving just how much difference gender balance on boards can make: Research conducted by Catalyst found that Fortune 500 companies with three or more women directors saw their return on the invested capital increase by 31 percent over five years compared with those without any female representation on their boards; when those same companies had four or five female directors, ROC increased by 50 percent!
How Facebook Made Board Diversity Happen
Pay attention to the details. Be specific about what you want and why when looking for board members. Facebook found two women who met their requirements by asking candidates questions such as “What would your role be on the board?” and “Why are you interested in this opportunity?”
Diversity is essential in all aspects of business leadership—from hiring to company culture and beyond. Having a diverse group of people around the table helps companies make better decisions, reach new markets, and grow in ways they hadn’t previously imagined.
By creating an inclusive environment within your company, not only will employees feel welcome, but also customers will feel respected by your brand. Just ask any millennial: they love brands focused on being socially conscious!
Why Board Diversity is Good
You might be wondering why it’s crucial to have a diverse board. Here are just a few reasons why:
- Diversity leads to better decision-making. Everyone on the same page is critical when trying to decide how best to run your company. Having people from different backgrounds and experiences will help ensure that everyone has their unique perspective on what’s happening around the office—and what needs improving. That way, when it comes time for them all to vote on something important, they’ll know that they’ve listened carefully not just once but twice (or three times) before making any changes that affect their organisation. This means greater accountability across all organisational levels, ultimately creating better governance practices!
- Diversity leads to innovation in thinking, which is especially critical when developing new strategies or products/services within any industry sector.”
How Intel Added 2 Women on the Board According to California Law and then Added 2 More Women Anyway
Intel added two women to its board in response to a California law that mandates companies add women if they don’t already have a diverse board. Two years later, Intel also added two more women to their commission. According to Bloomberg Businessweek, Intel has done so to have a “diverse” board with “a representative mix of ages, races and ethnic backgrounds.”
The same article says that Intel’s board “is still overwhelmingly white and male,” with only two white women. Intel’s board is comprised of 17 members, out of which only seven are female, and all but one are white. The changes made by Intel have been viewed as a way for the company to avoid further scrutiny by regulators.
Intel has been under fire for its lack of diversity.
The company also said it would add more women and minorities to its board of directors, which currently has only two women and no black or Hispanic members. The changes come after pressure from investors concerned about Intel’s lack of diversity in leadership positions.
A diverse board of directors can make your company more dynamic.
A diverse board of directors can make your company more dynamic.
Diversity is one of the critical components of a successful business, and it’s essential for companies that aim to be at the forefront of innovation. A team that doesn’t reflect its customer base won’t fully understand them, which means it’ll fall behind other businesses in meeting their needs. This is why diversity on boards has been shown to improve performance in a variety of areas:
- Innovation: Research conducted at Stanford University shows that diverse teams can innovate more readily than non-diverse ones because they have greater access to different perspectives when making decisions. In this way, diversity on boards leads directly to innovation within companies; without it, you’ll likely see stagnation over time as old ideas hold onto their place at the top instead of being replaced with new ones.* Profitability: Another study from Stanford found that companies with higher levels of female leadership made 15% higher profits than those without any women on their boards—and another found similar results among African American CEOs compared to white CEOs.
- Decision making: When there’s only one voice among many saying “yes” all too often (or even just one dissenter saying “no”), groupthink sets in quickly—as does group paralysis when someone disagrees with what everyone else wants up until now.
- Crisis management: When crises emerge unexpectedly (like mass layoffs or environmental disasters), having an inclusive culture means teams respond better because they’re not caught off guard by how fast things can change overnight
Bottom-Line
There’s a lot of talk about the need for diverse boards and how to get there, but not much data on what it looks like in practice. A few companies have been brave enough to share their experiences, and we think it’s helpful to look at these examples.
Public policymakers also have a part to play. The law in California mandating companies to be diverse can be studied and adapted for local requirements by regions and countries around the world.
Who am I?
I am Dotun Adeoye, a Business Growth Strategist & Author of the 5 Pillars of Business Growth.
I’ve built up my experience via serial entrepreneurship, consulting leadership roles in business growth, business development and product innovation in large companies worldwide in the last 29 years.
Today, I consult with large businesses on how to sustainably grow their businesses, sustain infinite growth, ensure business continuity and achieve a legacy.
Hire Dotun Adeoye to Speak Virtually or In – Person at your company’s event to cover this or other topics. You can also get in touch via +44 203 097 1718
