Lack of gender diversity in the C-suite and on corporate boards is a persistent issue. PwC’s 2016 Annual Corporate Directors Survey reminds us how homogeneous boards still are: of the 884 public company directors surveyed, 17 percent were female and 83 percent were male. Those numbers aren’t unexpected. Women represent less than 5 percent of Fortune 500 CEOs. Only 19 percent of U.S. Congress and 26 percent of college presidents are female. The real surprise might be that when asked about lack of gender diversity, male board members’ response was basically the shrug emoji.
“PwC asked the men on these boards about adding women as members, and in many cases the answer was, in effect, ‘We don’t see a need,'” reports Business Insider.
A (Slightly) Greater Focus on Diversity
In fact, one in 10 directors told PwC that they felt the “optimal representation of women on boards” was 20 percent or less. Unsurprisingly, 97 percent of the directors who felt that way were male. A mere 5 percent set the optimal level of female representation at 50 percent or more.
The good news is: investors are starting to value gender and racial diversity more now than ever, and directors are responding. Forty-one percent of directors now consider gender diversity “very important,” compared to 37 percent in 2014, while 34 percent say the same for racial diversity, compared to 28 percent two years prior.
Compared to the gender composition of S&P 500 CEOs, S&P 500 board member diversity seems to be a bit more female-friendly: “Twenty percent of S&P 500 board members are female, and 31% of all new directors joining S&P 500 boards in 2015 were women,” according to PwC’s report.
Where Are the Female Board Members?
This is great news, as some studies are finding that companies run by women perform better than those run by men. One such study, conducted by Quantopian over a 12-year period, found that “women CEOs in the Fortune 1000 drive three times the returns as S&P 500 enterprises run predominately by men,” reports Fortune. The cherry on top: “[T]he 80 women CEOs during those 12 years produced equity returns 226% better than the S&P 500.” Not too shabby, right?
The lack of gender diversity on boards may have something to do with how organizations find new board members.
“[M]any boards look to current or former CEOs as potential director candidates,” reports Business Insider on PwC’s perspective on the issue. This is a problem because “only 4% of S&P 500 CEOs are female.”
In fact, PayScale’s report, Inside the Gender Pay Gap, shows that women get promoted less often (and earn less when they do):
To expand the pool, PwC suggests looking a “few steps below the C-suite” level. There, boards can find “untapped, highly-qualified, and diverse candidates” who are just as capable and willing to fill a board member seat.
Tell Us What You Think
If you’re a board member (male or female), we’d love to hear what you have to say about the matter. Share your thoughts with our community on Twitter, or feel free to leave your comment below.