Major firms in Ireland are missing out on fresh opinions because of their lack of diversity at the top.
THE ISSUE OF gender pay has grabbed everyone’s attention recently, so much so that the government has launched a public consultation on the matter.
If you’re in business though, of equal concern should be gender imbalance at senior management and boardroom level.
Too few or no women in C-suite and director positions will negatively affect your business’s performance and results. The good news is that steps can be taken to improve things.
Even a brief look at the make-up of the senior management teams and boards of Ireland’s biggest companies will show you there’s a problem: not enough women.
Research conducted by Accreate shows that 38% of ISEQ-listed company boards have no women at all. Of the 423 board seats among companies on the index, only 61 – or 14% – are occupied by women.
It’s a similar story outside the boardroom as the vast majority of CEOs and members of senior management teams are men.
Women hold the top job in only 10% of these companies, and the trend is actually getting worse since 2014. Two of the biggest companies, Ryanair and Kerry Group, have senior leadership teams that are exclusively male.
Does this really matter though? Well, the international research says it does.
The first benefit of greater diversity is that it increases innovation. According to Scientific American, the research shows that people with different backgrounds bring with them new information and perspectives.
Another benefit is particularly relevant to Ireland – having more women at board and C-suite level results in less governance-related controversies.
And if that’s not persuasive enough for you, consider how better gender balance will affect your business’s bottom line.
Research from leading global equity experts MSCI says that boards with gender balance produce better results, including return on equity, capital investment and sales.
Companies with the most women board directors had 26% higher return on invested capital.
Before looking at the solutions, it’s worth considering why this is happening.
A big factor is men’s head start in leadership positions – women are only now starting to get appointed to these board and C-suite positions.
You can add to this misguided beliefs – an IOD survey in July said that men feel there aren’t more women in senior positions because there were too few suitably qualified female candidates.
For me, this issue is linked to the ‘rules’ of the club which exclude women. You have to already be ‘in’ the club to ‘join’ it.
When companies create shortlists of possible new board members, they start by looking to the network of their existing board members. This means they end up looking and finding people like them.
There also tends to be two selection rules that exclude lots of good candidates: they must have previously served on a PLC board or as a CEO of a PLC.
When you consider the low number of women on boards or in the CEO seat of PLCs today, no wonder our record on gender balance on boards is so poor.
So, how do we sort this out? Organisations must look first at how they recruit and succession plan for both their boards and senior leadership teams. They need to change the rules.
They should develop role requirements around the essential skills that they do not have and the gaps in diversity of backgrounds that will help them mitigate those shortages.
If they already have 99% of board members who either are PLC board members or in the past or have served as a PLC CEO, why do they need another one? They have that skill set covered off, right?
One great example is Anita Sands, a US-based Irish woman who was just 38 years old when she was appointed to the board of Symantec, a Fortune 500 company.
The company identified the skill sets its board needed but didn’t have. That’s why they chose a young, female, PhD graduate of atomic and molecular physics with a different industry background and from a different country.
Crucially, her background gives the board a range of different and very valuable skills and perspectives – and gender is just one of them.
While there is more risk in going with a candidate with no prior board experience, this can be addressed by a robust on-boarding process for the ‘newbie’. Ideally, an existing board member would do the mentoring.
Also crucial is ensuring that in-person time is given with the senior leadership team and that the new member gets to sit in on customer meetings.
Gender diversity is really just the start of the journey to the most successful possible board make up – one which delivers cognitive diversity.
This can only be achieved by ensuring board members have different backgrounds in experience, ethnicity, education, gender and age, to name but a few factors.