A Case for Women in the Boardroom

Photo Courtesy of G(irls) 20

By: Guest Blogger Archana Somasegar ’18, HCWC’s #WCW 10/28/15

Over the past century, the demographics of our consumer base and labor force have radically shifted. While women were once confined exclusively to the domestic sphere, they are now increasingly integrating themselves into the workforce. As they begin to represent more households in both the consumption and production spheres of business, it is necessary for our economic system to welcome this previously untapped resource into the fold. In fact, the Global Women’s Report has declared women as the third largest emerging market, following closely behind China and India. (WIB Global Report) Yet these swells of female participation are not reflected in the upper echelons of corporations worldwide. In fact, data indicates that only 4% of Fortune 500 companies have a female CEO (Catalyst, 2013). Beyond simply our moral obligations to provide women with same opportunities as their male counterparts, there are tangible economic benefits to reserving seats in the boardroom for women. As discovered time and time again through board operation analysis, “there is a danger of group-think if we allow boards to be comprised of individuals who share the same backgrounds, experiences and biases.” (Sealy et al,2009) Women are an emerging market that has the potential to offer the diversity that corporations so desperately need for growth.

The argument for women’s involvement in boards can be reduced to simply the idea of diversity. While many think of diversity as merely a box to check or an ideal to pay lip service to, diversity is the foundation upon which any growth must build upon. As delineated by Burgess et al, incorporation of women on boards is essential because: (a) women bring unique opinions to the table that expand the discussion and generate original thought (b) women directors bring unique strategic input to the board (c) women have distinctive influences on decision making and leadership styles of the organization, (d) women at the top create a beneficial cycle by providing other high potential females with role models and mentors, and (e) women representation helps create better relationships with shareholders who have vested interest in diverse representation (Burgess et al., 2002) While these measures may seem to be qualitative, they are correlated with quantitative higher returns and improved operating margins. In fact, aggregate data throughout global history has indicated that firms with higher percentages of female directors have higher levels of innovation which translate to higher profits. (Alsott, 2014) In light of such quantitative results, many researchers posit that female integration is going to be essential for continued economic growth moving forward (Alsott, 2014).

However, in the clearly male dominated arena of business, it is essential that corporations and communities understand on an intuitive level why better performance is correlated with higher female valuation and leadership opportunities. This paper calls for action and a fundamental shift in our deep-seeded prejudices, which requires a deeper-level understanding of why the idea of “male-dominated business” is flawed. It is undeniable that women now represent a large fraction of our working force. According to the Global Women’s Report, women represent more than half of our labor force today (WIB Global Report). In neoclassical economic terms, the undervaluing of female labor constitutes a suboptimal allocation of resources, leading to inherent market failures of efficiency. These swells of female representation on the production end are mirrored by increased female representation of households in the consumer base. As diverse consumers begin to pepper the market, it is becoming even more important for shareholders that companies prioritize diverse boards that will better represent and connect with this consumer base. (Stephenson, 2004) In this way, female leaders become an invaluable asset in assessing and addressing the needs of the general public in order to foster corporate growth.

But in addition to providing a consumer connection, women bring a diversity of thought to the table that is necessary at high levels for companies to grow. Innovation is bred from these varying perspectives and is vital for companies to stay competitive (Stephenson, 2004) In addition, women tend to have a more collaborative and communicative leadership style that allows for more productive group discourse and strategic analysis before decision-making; this kind of discussion allows ideas to grow from one another, ultimately creating original and unique solutions. (Daily et al., 2003) In addition, the public appointment of women to the board sends a message about the priorities of a company. By signaling a company’s commitment to the advancement of women, they strengthen ties with like-minded shareholders and begin to shift the culture within the company to welcome females. (Daily et al., 2003) More women on boards demonstrate a company’s commitment to valuing a woman’s contribution and investing in her advancement. This in turn increases employee retention rates as more and more females enter the labor force. When an employer demonstrates an investment in their female workers’ wellbeing, they are more likely to stick with the company, yielding a higher return on the human capital investment (Conference Board of Canada, 2012).

Works Consulted

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Bagues, M. F. “Will Gender Parity Break the Glass Ceiling?” 2006. Digital file.

Blakebeard, D. S. “Taking a hard look at formal mentoring programs: A consideration of potential challenges facing women.” Journal of Management Development (2001): n. pag. Print.

Burgess, Z., and P. Tharenou. “Women Board Directors: Characteristics of the Few.” Journal of Business Ethics (2002): n. pag. Print.

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Catalyst. (2013). Catalyst quick take: Statistical overview of women in the workplace. New York.

Conference Board of Canada. The Business Case for Women on Boards. N.p.: n.p., 2012. Print.

DeFrank-Cole, L., et al. “The Women’s Leadership Initiative: One University’s Attempt to Empower Females on Campus.” Journal of Leadership, Accountability, and Ethics (2014): n. pag. Print.

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Sweigart, A. “Women on Board for Change: The Norway Model of Boardroom Quotas As a Tool For Progress in the United States and Canada.” Northwestern Journal of International Law and Business (2012): n. pag. Print.

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Terjesen, S., R. V. Aguilera, and R. Lorenz. “Legislating a Woman’s Seat on the Board: Institutional Factors Driving Gender Quotas for Boards of Directors.” Journal of Business Ethics: n. pag. Print.

Terjesen, S., R. Sealy, and V. Singh. “Women Directors on Corporate Boards: A Review and Research Agenda.” Corporate Governance: An International Review (2009): n. pag. Print.

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