Rationale for Improving Gender Balance and Broader Diversity of Boards
8. The literature suggests that there are two main rationales for improving the diversity of private sector boards:
- Diversity leads to more effective boards by broadening the range of perspectives and expertise, which in turn delivers business benefits including improved organisational performance, improved access to resources (especially human resources) and increased financial value.
- An equalities perspective requires that individuals from across the protected characteristics are represented across all aspects of the labour market (and society more generally), including at board level.
9. Both of these rationales were also highlighted by the key stakeholders interviewed as part of this study - although there were different views across the stakeholders about which was more important or the balance in emphasis that should be placed across these different rationales.
10. Many companies completing the e-survey felt that the composition of their board was having no impact on the company, how it is perceived or its performance. In addition, a substantial proportion of companies had no idea whether the composition of their board was having an impact on these factors.
11. The elements that the composition of the board were most likely to be seen to be having an impact on by companies included:
- Range of skills, capabilities, experiences and perspectives available at board level).
- Perceptions of existing staff and potential recruits.
- Understanding of customer need.
- Quality of corporate governance.
12. Companies where females accounted for 40% or more of the board or where the number of female board members had increased over the last 5 years were more likely to say that board composition was having an impact on each of the elements of the company, how it is perceived and its performance. This is important evidence in support of the concepts set out in the literature about the benefits of improving gender balance and broader diversity of boards. It also suggests that companies do not necessarily need to have achieved 50/50 gender balance to see these benefits - moving towards gender balance can help generate these benefits.
13. Case study companies generally felt that equality and diversity are important principles - but had mixed views on:
- Whether taking action to address the gender balance or broader diversity of their board was necessary or even appropriate.
- Whether improving the gender balance and broader diversity of boards brought business benefits.
14. Some stakeholders highlighted concerns that seeking gender balance and broader diversity on boards may lead to tokenistic approaches that may underpin the achievement of women (if they are perceived to be appointed to achieve parity rather than as a result of their skills and experience) and/or to raising expectations that cannot be met. Similarly, many case study companies had concerns - normally focused around whether this would lead to them recruiting individuals to their board that do not best meet their needs.