The United Kingdom and Australia have significantly increased the number of women on corporate boards in recent years, while representation in the United States has stalled. Nneka Orji of The Glasshammer reports that female representation in the United Kingdom’s FTSE 100 company boardrooms increased from 12.5 percent in 2011 to 26 percent in 2016. Similarly, Alexandra Spring writes in the Guardian that 26 percent of the director positions in Australia’s ASX 200 companies are now held by women, with a target of 30 percent by 2018. In contrast, Linda Colby of Bloomberg News reports that only 19.9 percent of board seats in S&P 500 companies were held by women in 2015, up from 19.2 percent in 2014. At this rate, Colby notes, it will take more than forty years for women in the United States to reach 30 percent representation on corporate boards. How have the United Kingdom and Australia made so much progress? In the United Kingdom, the Davies Review found that setting a clear five-year target in 2011 of achieving 25 percent representation by women, along with a public commitment from senior leaders to proactively address unconscious bias and other obstacles for women, resulted in the increase. In Australia, research from 2005–2011 found that companies with more women on boards showed higher financial performance. This research led to a 2011 report that called for organizations to set numeric targets and report on them. Australia’s implementation of these recommendations also increased the representation of women on corporate boards to 26 percent in 2016. Why does it matter that more women be on boards? A 2016 study by EY and the Peterson Institute of International Economics showed that “companies with at least 30 percent women in leadership may boost profit margins by 15 percent.” In addition, an earlier study by the index provider MCSI found that companies with more women “delivered 35 percent better ROI since 2010 than those groups lacking board diversity.” It just makes business sense to have more women on boards—but talk won’t get us there. Here are three important components of what worked in the United Kingdom and Australia:
- Setting specific and time-bound goals
- Being transparent about committing to those goals
- Building in accountability and linking remuneration to progress against gender diversity targets