A number of considerations need to be made in determining the composition of the board of a company. These considerations include but are not limited to the qualifications of the members, skills, experience, age, race, gender and independence of the members of the board.
Lately, there has been a significant push for both advocacy and policy changes aimed at increasing the presence of women on corporate boards. This is done as a means to enhance corporate governance within businesses.
Indeed, the data suggests that diversity of board members aids in ensuring that businesses make better decisions and also improve financial results. It must, however, be noted that despite the advocacy, the representation of women on boards is still underwhelming.
In Ghana, the 2022 Board Diversity Index Report indicated that only 25% of the board seats for companies listed on the Ghana Stock Exchange were allocated to women. In South Africa, the most recent research conducted by the Businesswomen’s Association of South Africa from 2012 to 2017 shows that approximately 45 of the 277 JSE-listed companies had no female directors at all.
How do we improve this situation?
Board or Gender Diversity Policies
Crafting and executing gender-focused policies for boards within companies stands out as an effective approach to enhancing the inclusion of women in boardroom representation. These policies will set out a minimum quota for female participation in terms of board composition, and ensure participation of women on board committees.
It is important to note that these policies should not be of mere tokenism, but should also ensure that women on such boards are provided with the same resources and are given the same opportunity to be heard as that of their male counterparts.
Legislation on Mandatory Quotas
In most countries, there is currently no legislation in place that makes the representation of women on boards mandatory for companies. There are, however, policies that encourage or set voluntary targets for women on boards although these are mostly difficult to enforce or are very limited in scope.
In this era of growing focus on diversity, equity and inclusion, the next step is for legislation to be put in place requiring a minimum quota for representation of women on boards, especially for state-owned or listed companies.
Stronger regulations requiring some minimum level of gender diversity on boards has achieved the best results in terms of the representation of women on boards. In Norway, there are laws that provide strict and precise quotas for women on boards depending on the size of the board and this ensured that as at 2022, they had 45% diversity on their boards.
Creating a Pipeline of Talent
One of the reasons given for the low representation of women on boards has been the lack of enough women willing to take up positions on boards. While quotas are very helpful in this regard, it is also important to ensure that there is a pipeline of talent who are willing to take up positions on boards and also to perform when given the opportunity.
The issue seems to be the lack of awareness of female executives ready to serve on boards rather than a lack of women willing to serve on boards. It is important that companies look beyond the traditional existing avenues when looking for women to place on boards. There are a host of competent women who can serve on boards that are not in academia or are part of professional bodies. It is also important that businesses sponsor or train their female executives to be able to take up such roles.
By adhering to the aforementioned steps, businesses and companies can secure a heightened level of women’s representation and involvement on their boards and in their businesses.
