Gender balance in the board of directors

Abstract

Globally, men occupy more board seats than women. In this article the author is dealing with the issue of legislative gender quotas, which seems to be the fastest way to achieve gender balance on the boards. Also, the “comply or explain” governance system, meaning an approach to equality when all people should be treated similarly, regardless of prejudices, preferences, or historical disadvantages, unless particular distinctions can be justified. Controversial questions of racial diversity among female directors are mentioned. The gender pay gap on corporate boards, concerning differences between pay received by men and women for comparable work. And it appears to be dependent on several factors, including whether the company is in a male dominated industry and whether the female director is married or has children. Gender diversity can play an important role in supporting innovative activity and organizational change. That’s why inclusion of female directors has a direct and positive impact on a company’s profits and risk management. Women board directors also broaden a company’s market knowledge as well as raise its profile. Researches have found that women need to hold at least three board seats to create a “critical mass,” which can lead to better financial performance. Studies suggest that enterprises need to reach a critical mass of women in top positions in order to reap the benefits of gender diversity, such as improved governance. Reaching this threshold allows a minority to exert their influence and ensure their voice is heard. Summarizing all the above, we can name the following main results of this study: There are more women on boards and more boards with women. More boards are reaching a 30 per cent critical mass of women. All-male boards are on the decline, but they still exist. The enterprise survey shows that gender balanced boards are more likely to have enhanced business outcomes compared to those with fewer women on their boards. In addition when there is gender balance on the board, the enterprise is more likely to have women in senior management and in top executive positions. Alternatives to quotas gaining popularity include “comply or explain” commitments, and rules of national stock exchange regulators. “Glass walls” are limiting women’s influence in boardrooms due to the lack of a critical mass, women’s absence from key committees, the low number of women appointed as board chairpersons, and women serving as nonexecutive board members.

Keywords

• gender quotas
• gender balance in women’s representation on boards
• “comply or explain” governance system
• gender pay gap
• female directors