There was a time when company boards were overwhelmingly male, pale and stale. They tended to be made up of what were known as ‘grunt a month men’ – invariably male non-executive directors who turned up once a month to mutter agreement with whatever the chair or CEO proposed before picking up their fee and repairing for a very long and expensive lunch.
A better recipe for groupthink would be hard to find.
We know to our cost in this country about the negative consequences of groupthink but research also shows positive reasons for having more diverse boards. For example, the Board Diversity and Effectiveness in FTSE 350 Companies study carried out by the UK Financial Reporting Council found that higher levels of gender diversity of FTSE350 boards positively correlate with better future financial performance, as measured by EBITDA margin. It also found that FTSE350 boards with well-managed gender diversity contribute to higher stock returns and are less likely to experience shareholder dissent.
The good news for Ireland is that strong progress has been made in achieving greater gender diversity on boards in this country. Figures released earlier this year by the Balance for Better Business Review Group showed the percentage of women on the boards of ISEQ20 companies had reached 35 per cent, exceeding the 33 per cent target set for the end of 2023.
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All listed companies in Ireland now have, on average, 32 per cent female representation at board level, pushing the country into the European top 10 for the first time.
However, the figures also pointed to slower progress in achieving gender balance at senior leadership level of Irish business. At 25 per cent, the ISEQ20 are significantly behind their target of 30 per cent female representation by the end of the year. The figures also show that three in 36 CEOs across listed Irish companies are women, having fallen from 11.1 per cent to 8.3 per cent in March this year. Meanwhile, women make up only 14.8 per cent of chief financial officers among the same cohort of Irish business.
“The progress we have made to date tells us it is possible to achieve real gender balance on boards,” says Balance for Better Business co-chair Carol Andrews. “We reached 35 per cent female representation on ISEQ 20 boards in 2022 and we will see the numbers go up again this year. We started at 11 per cent five years ago. That shows how much progress has been made.”
Gillian Harford is country executive with 30% Club Ireland, another organisation promoting greater gender balance on boards. She sees a certain degree of enlightened self-interest at work.
“Companies are now seeing that diversity is good for business,” she says. “It is good for talent and customer retention, entry into new markets and development of more sustainable business models. Research shows that organisations with greater gender balance at the top have better profits and performance. We are also seeing how it influences a more balanced approach to risk management.”
Institute of Directors CEO Caroline Spillane sees external influences at work as well. “It has a positive impact on the company’s reputation and brand image,” she says. “Companies with more diverse boards are viewed more favourably by consumers. There is also an argument that having improved involvement of women at senior management and board level is important for labour market activation of women.”
All three women point to the CSO Gender Balance in Business Survey which has tracked female participation on Irish boards and at senior executive level since 2019. “That survey is very important as it allows us to track progress,” Spillane points out.
It also highlights areas in need of attention. “The focus has now moved to leadership teams,” says Andrews. “The proportion of CEOs and CFOs is much lower than that of board members. In Balance for Better Business we have all the sectors coming together around the table to think about what we can do about that over the next five years. It’s a very exciting thing to be part of and I do feel we are moving forward.”