Importance Of Women In Corporate Board

IMPORTANCE OF HAVING WOMEN ON CORPORATE BOARDS


"If you want something said, ask a man; if you want something done, ask a woman."
-Margaret Thatcher

INTRODUCTION
Previously believed to be too hard for women to even understand, women have achieved success in every sector in recent years. This can be attributed to both the overall shift in public opinion that has altered people's perspectives on women's potential and the initiatives of the government that are designed to empower and uplift women. Women can now be seen achieving great heights even in the male dominated spaces and now stand shoulder to shoulder with them. Nothing less should be expected in this 21st century.

Women are generally expected to take up traditional roles such as housekeeping, giving into the whims and fancies of others, keeping her own opinions and needs at bay. But things are changing, for the better. As previously mentioned, the position of women in the corporate world is improving thanks to the policies curated by the government for betterment of women and to provide them with equal opportunities as the men get, even providing extra incentives to them for participating in such events.

DIVERSITY ON BOARD OF DIRECTORS
An organization's board of directors must function effectively. The board of directors is responsible for managing the company's day-to-day operations, making strategic decisions, selecting new regulations that will benefit their organizations, and much more. They are the backbone of the corporation. But are these boards of directors diverse?
This question has arisen in recent times. Are women given the opportunity in the corporate world to make important decisions for the organization? A diverse board is statistically proven to be more efficient in working and pitching better ideas, leading to the overall development of the organization. Higher ESG (environmental, social, and governance) standards are positively correlated with more women in leadership roles, according to research, which improves corporate performance and promotes inclusive economic growth.

In the United States as a whole, there are approximately 11% to 12% more women on boards than there were ten years ago. The percentage of women serving on boards varies widely between health-related organizations: it is 9.7 percent for biotech companies with fewer than 1,000 employees and 27 percent for hospital boards. Although women comprise half of the workforce of Fortune 500 healthcare corporations, women typically make only 21% of the board members of these organizations.

The research titled 'Diversity in the Boardroom: Progress and the Way Forward' was produced by EY. It presented the findings of the study regarding the representation of women on Indian boards and stressed the steps that organizations need to take to enhance gender diversity. India had notable and quick development in this area, with women's representation on boards rising from 6% in 2013 to 18% in 2022. In the past, women on Indian boards were limited to leadership roles in the CSR (Corporate Social Responsibility) and grievance committees. But things are beginning to change, with more women serving on board of directors of Indian companies. India had notable and swift progress in elevating the proportion of women on boards, rising from 6% in 2013 to 18% in 2022. India still trails far behind nations like France, Sweden, the US, and the UK in terms of gender diversity on boards, despite improvements in this area.

Nearly 95% of the NIFTY 500 companies now have a woman on their board of directors, according to the EY research. However, there is still space for progress as less than 5% of businesses have female chairpersons. The International Labour Organisation (ILO) found that increasing the proportion of women in the workforce by half would boost India's GDP from 7.5% to 9% and reach US$700 billion by 2025.

The Seventh edition of the Women in the Boardroom: A Global Perspective report from the Deloitte Global Boardroom Programme features updates on gender diversity in the boardroom from 72 different nations.The study looks at initiatives to encourage gender diversity in boardrooms across 72 nations. Out of 10,493 companies that were analyzed, 14739 women were on board of directors.

BENEFITS OF HAVING WOMEN ON BOARD
Having a diverse board of directors is beneficial to the companies as well as for the society as a whole. This statement is backed by various statistical reports.

●Businesses with gender diversity on their boards in the top quartile were shown to have a 25% higher chance of achieving above-average profitability than those in the worst quartile, according to a 2020 McKinsey analysis.

●Businesses with higher percentages of female executives and directors outperformed others, according to many studies on women on corporate boards that looked at Fortune 500 and 1,000 companies as well as a larger sample of US and European enterprises.The global enterprises exhibited a 53% average increase in return on equity, accompanied by 42% higher earnings and 66% better returns on invested capital. A minimum of three women on the board produced the best results, according to one study.

●Women on corporate boards were found to be cooperative and prepared to participate in consensus-building, according to a thorough assessment of the literature. Additionally, female directors typically handle complex, multifaceted crises and social challenges that increasingly plague businesses today with effectiveness. They are adept at striking a balance between the interests of many stakeholders to arrive at judgements that are advantageous to all parties. They approach decision-making with an inclusive and cooperative mindset, taking their time to identify the best option.

●A fresh viewpoint on decision-making could be offered by female leaders. Research indicates that companies can move from maximizing short-term profits to focusing more broadly on longer-term objectives if there are more women in higher management roles. Boards with a higher proportion of women tend to support pay linked to long-term success and make decisions that result in big but delayed rewards.

●Businesses with a higher proportion of female directors typically have better corporate governance and more openness. Businesses run by women tend to act more morally and participate in fewer unethical commercial practices. They also put in place robust governance frameworks, step up managerial oversight, and exhibit high standards of openness and disclosure. In addition to promoting moral business conduct, female executives establish clear policies, guidelines, and programmes to combat unethical business practices. Businesses with female executives face fewer significant scandals.

CONCLUSION
As the quote says in the beginning of this blog, women tend to get things done. Women, if given to fulfill their potential, are hard working and goal-driven who are passionate enough and emotionally mature which helps them focus on every aspect of development, be it profits for their company or thinking about giving back to mother nature. Women development in the corporate sector has taken long strides but still there is a lot of space for improvement. Slowly but surely, we as a society should work towards fulfilling this gap.

REFERENCES
(1) HARVARD T.H. Chan School of Public Health, https://www.hsph.harvard.edu/ecpe/why-diversity-matters-women-on-boards-of-directors/ (last visited Feb. 21, 2024).
(2) EY India, https://www.ey.com/en_in/news/2022/10/womens-representation-on-indian-boards-has-tripled-in-10-years (last visited Feb 21, 2024)
(3)Deloitte, https://www.deloitte.com/global/en/services/risk-advisory/research/women-in-the-boardroom-seventh-edition.html (last visited Feb 21, 2024)
(4)IFC, https://www.ifc.org/en/what-we-do/sector-expertise/corporate-governance/women-boards-business-leadership (last visited Feb 22, 2024)
(5) The CSR Journal, https://thecsrjournal.in/women-corporate-boards/ (last visited Feb 22, 2024)