Gender inequality in the workforce remains a pressing issue worldwide. Under 50% of employable women are participating in the workforce, compared to 72% of employable men. The disparity becomes even starker at leadership levels. A recent S&P Global study found that women hold only 25.1% of senior management roles and 24.9% of board positions. In Canada, representation is slightly better as 29.8% of board seats among TSX-listed companies are held by women. However, this is still far from 50:50. Although there has been progress driven by growing recognition of diversity’s value, more is needed to close the gap. Decisive action is needed.
Diversity: Added Value For All
Before we explore how to create more female seats in corporate boardrooms, it is essential to understand why it matters in the first place. Companies with gender-diverse boards perform better financially. For instance, a study of FTSE350 companies showed that executive committees with more than 25% female membership realized a profit margin 10 times higher than those with no female board members. Diversity also improves decision-making by reducing groupthink and conformity bias. When the decision-makers reflect customer demographics, they are more innovative and better equipped to navigate complex challenges and develop solutions that align with user needs and interests.
Increasing female representation on boards can also improve diversity at lower leadership levels, as it signals to other women that leadership roles are within their reach. When women don’t aspire to these decision-making roles, companies miss out on critical skill sets. For example, women in the U.S. earn more associate, bachelor’s, master’s, and doctoral degrees than men. Excluding them from leadership opportunities represents a clear loss.
Credit: U.S. women have outpaced men in bachelor’s degree completion for decades, Pew Research Center, Washington, D.C. (November 15, 2024)
The Path Forward
Stronger action is needed to yield the benefits that come with prioritizing gender diversity. Organizations, like Women Get On Board in Canada, are an essential support, providing mentorship, financial training, and networking opportunities for aspiring female leaders. Canada and the United Kingdom use a “comply or explain” model, where companies must either improve gender diversity or justify their choice not to. Other countries have set mandatory quotas for female-held board seats. Japan mandates that companies on the Tokyo Stock Exchange’s Prime Market have at least one female board member by 2025 and reach 30% female representation by 2030. In Europe, Denmark, France, Italy, Norway, Spain, and Finland have introduced a higher threshold of 40% mandatory diversity quotas for boards of public companies.
Leaders’ Commitment To Inclusivity
Harvard Business Review has found that female leaders often excel in demonstrating empathy and collaborative decision making, which contributes to better team performance and innovation. I’ve seen this firsthand in my experience supporting boards in Africa and Canada; these traits foster healthier boardroom dynamics and lead to more effective governance. For instance, on one board, a new female board member was hesitant to speak up. The female board chair, the only other woman, would often deliberately create opportunities for the quiet board member to participate or share her opinion. When this board member did contribute, she had great insights, which the board would not have gotten if the board chair wasn’t skilled in fostering participation.
In conclusion, increasing female representation in corporate boardrooms is essential for both equity and improved financial performance, but it will not be achieved without dedication. If your organization has not yet set goals around advancing gender diversity, the best time to do so is now. A top-down approach, beginning with the board, is a great place to start.
This article was written by a guest contributor, K. Maseli.
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