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Shailja Dutt

Shailja Dutt is the Founder & Chairperson of Stellar Search.

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Leading the Change: Gender Diversity in the Boardroom

The percentage of women occupying board positions is improving, but progress is genuinely slow. Initiatives are coming in place geared towards supporting women who’re coming through the ranks and assisting them in becoming “Board ready”.

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Boards have evolved & continue to do so. In the 80s & 90s board constitution was different, people on boards were reliable, like-minded and supported the promoter. After all, the purpose of the board was to support their friend or family and provide assurance to the shareholders that their interests were being taken care of by experienced, trustworthy and wise people.

This approach had a few downsides. A board built entirely on a handful of like-minded individuals becomes stagnant very fast. Unfortunately, too many privately held companies did not even establish a Board of Directors and instead set up relationships with a small circle of "friends" or “family”, their lawyers, or other business contacts. The board was only sought for occasional advice and would not offer sage advice and or objectively challenge the way business was being conducted. They were worried about damaging personal or business relationships.

This led to stunted communication which resulted to incidents like this:

• A leading mobile-phone maker falls out of step with its market — and struggles to catch up.
• An energy-trading company rises high — and then suddenly implodes.
• A mighty oil company presides over an environmental disaster — one that spills over to become a PR disaster as well.
• The board of an airline hires a CEO — and then cancels his contract after just three years.

But that was back then.You see why this doesn’t work anymore?

Research around the world has shown that board diversity enhances corporate performance by bringing in a wide range of perspectives. This is critical to effective corporate governance. It’s important to have women on the board. When only one woman is on a board, there is a tendency to assume she represents all women. This is tantamount to assuming that one man can be expected to represent all male viewpoints – a highly publicized debate in recent times should tell you how untrue that is.

Someone once said that one woman on a board is a token, two is a trend, and three adds the most value because it is no longer about one woman’s point of view or her skill sets or background. Each woman is able to contribute her unique expertise and perspective without the burden of being the only woman in the room. Having more women in the boardroom contributes positively to the health, well-being, and performance of the enterprise. It also changes the culture of the boardroom. Best illustrated by the fact that women often bring directness and candour to the conversation. It is in the best interests of the enterprise and the shareholder for the board to have very candid conversations about talent, performance, strategy, and the future.

The percentage of women occupying board positions is improving, but progress is genuinely slow. Initiatives are coming in place geared towards supporting women who’re coming through the ranks and assisting them in becoming “Board ready”. Mentorship programmes are also coming up to guide them as they assume governance roles. This is seen most vividly in Fortune 250 boards which include a large number of women directors from non-business sectors. Women from government service, academia, nonprofits and the legal profession currently account for nearly half of all women directors in these organizations. Among women directors who have joined these boards more recently, however, we see an increase in those with corporate backgrounds.

At the turn of the century, less than 17 years ago, women with significant professional accomplishments were more likely to be found in universities, foundations and government. These sectors were quicker to lower the barriers to their most senior leadership ranks. As more women gain C-suite experience, director candidate pools are bolstered. That said, I’m now seeing a trend where many boards conduct a formal assessment of the skills and experience of incumbent directors and review that composition against current and future requirements to identify gaps. Boards then typically conduct a comprehensive search to identify directors able to fill vacancies. It’s a small, but significant difference, when as the MD of a Search firm, I hear inquiries along the lines of “I need to hire a brilliant new Head of HR, preferably a lady”. Previously, that used to be “I need a new man for my company”. It’s minor, but it’s telling.

Today, we are on the cusp of having a critical mass of women with the experience, expertise, and skill sets required to serve on boards as directors. What that means is over the next 5 to 10 years, we will almost certainly see a notable increase in the number of women serving on boards. I firmly believe it will all be achievable without having to resort to quotas or other regulatory procedures to artificially inflate the presence of women in the boardroom.

When boards consider their membership, they need to look at their strategic objectives and find people with the knowledge, experience, and skills to help them achieve those objectives and meet their challenges over the next three to five years. As they do, they should be blind to gender. They should not, however, be blind to merit and experience.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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gender diversity Boardroom Shailja Dutt Stellar Search

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