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Bolstering the board room: Why the addition of women is integral

Posted by DeeDee DeMan – For generations the appearance of a company’s board was very … homogeneous. Entirely white. Entirely male. In the last few years, however, women and people of color are finally being allowed the opportunity to make their mark on company boards.

There’s more room to grow, though, and companies that shift their board away from homogeneity and toward inclusion stand to benefit considerably.

Shifting the trend

In California, the newly signed Senate Bill 826 requires at least one woman be a part of the board for any public company. Opinions of the bill vary, but it’s a perfect example of the state of California trying to help companies help themselves.

Research from MSCI shows companies with a strong female presence on their board displayed a Return on Equity of 10.1 percent, far above those that did not (7.4 percent).

In addition, research from Catalyst finds that companies possessing the highest percentage of women on their board outperformed those with the smallest percentage by 53 percent in return on equity, 42 percent in return on sales and 66 percent in return on capital investment.

Diverse boards provide for different viewpoints and better represent the company’s customer base to spur future growth. After all, if your company specializes in female healthcare products, can you really reach your customers with a board made up entirely of men?

Bringing women on board

Bringing women’s unique perspectives to a company’s board is not as simple as merely adding a seat for them. They — like all rookie board members — must be trained in on what it takes to be a successful board member and they also need the support of their current companies, allowing them to balance their real-world responsibilities with their board obligations. It’s a large time commitment, but worth the investment both for the company and its board members.