3 Reasons You Want More Women on Your Board

It’s a man’s world. At least in the board rooms of Fortune 500 companies, where women continue a pattern of holding less than 17 percent of corporate board seats. Compare that to other countries, some of which are so concerned about the lack of females on boards that they have set quotas. These countries have set quotas of 40 percent and have come a long way toward meeting them.

The top five countries in terms of percentage of female representation are:

Norway: 35.5

Finland: 29.9

France: 29.7

Sweden: 28.8

Belgium: 23.4

Germany hasn’t fared much better than the U.S., with just 18.5 percent of female board members. However, it recently introduced a quota of 30 percent by 2016.

While mandating quotas for U.S. companies may not be the answer, it’s time for companies to take a good look at their numbers and what having more women on the board could mean for them.

Here are three reasons you should consider adding more women to your board.

  1. Having women on your board is good for your bottom line

A study done by Catalyst, a non-profit organization for women in business, found that Fortune 500 companies in the top quarter of number of female board members outperformed those in the lowest quarter with a 16 percent higher return on sales and 26 percent increase on invested capital.

These numbers increased to 84 percent higher return on sales and 60 percent increase on invested capital for companies with sustained high representation of women on their boards.

A study on decision-making was conducted by Chris Bart, professor of strategic management at the DeGroote School of Business at McMaster University, and Gregory McQueen, a McMaster graduate and senior executive associate dean at A.T. Still University’s School of Osteopathic Medicine in Arizona, and published in the International Journal of Business Governance and Ethics.

For their study they surveyed 600 board directors on how they made decisions. The results showed that while men prefer to make decisions following rules and tradition, women are more likely to consider the rights of others and to take a collaborative approach to decision-making, which translated into better performance for their companies.

  1. Having women on board can decrease your company’s chances of going bankrupt

A study done by Leeds University Business School found that having just one woman on your board could cut your risk of bankruptcy by 20 percent. Having two or three members lowered your chances even more.

The study involved 17,000 companies in the UK that went insolvent in 2008. The results were published in an article in The Times with the title “Higher Heels, Lower Risk: Why Women on the Board Help a Company Through Recession.” Unfortunately, this one didn’t seem to be available online as I was intrigued to read more.

  1. Having women on your board can result in less fraud, corruption and scandal

This from a recent article on thinkprogress.org, “Appointing Women to Company Boards Helps Avoid Scandals, Fraud and Corruption.”

MSCI, Inc., a provider of investment decision support tools, looked at the presence of women on the boards of thousands of companies and their corresponding propensity for scandals and tensions with shareholders. The results showed “a clear pattern between having higher than mandated percentages of women on boards and fewer governance-related controversies.”

The research is clear. Having a diverse board can benefit your company in many ways.

Yet, U.S. companies have been slow to respond. In fact, the article points out that male board members named John, Robert, James or William outnumber all women on boards.

Want to improve the performance of your company? Get a woman on board.

Take Time to Develop Your Own Leadership Skills

When you’re running a company there are plenty of things to focus on. Sales of your products, marketing strategies, long-term goals just to name a few. You may spend a lot of time and money on training your sales staff. But do you ever take time out to consider your own development?

Some CEOs or business owners get around to themselves last when it comes to improving skills, either due to lack of time or considering it a low priority. But what could be more important? If you’re the head of the show, shouldn’t you keep your own skills sharp?

I recently read an article in INC, “7 Reasons You Can’t Learn Leadership on Your Own,” and two of the reasons in particular struck me.

The first is that observing leadership is not the same as developing leadership. I have found that to be true. There seems to be a prevailing belief that people will just “grow into” being leaders.

The article also pointed out that many board members and investors are not good leaders, although they think they may be.

They also operate with an agenda, which may not include developing your skills as a leader. That would not necessarily work to their benefit as it may interfere with them pushing through those agendas. So you can’t expect your board or your investors to encourage you to develop leadership skills. You’re on your own there.

So how do you do it?

There are courses you can take and plenty of articles available on the Internet. There is no shortage of books on the topic. Here is a list from Forbes.com of leadership books it recommended from 2013. In addition to some new titles, it includes some classics like “The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change,” by Stephen R. Covey and even an 80-year-old classic from Dale Carnegie, “How to Win Friends and Influence People.”

One of the most effective ways I’ve found to improve my business skills is by sharing ideas, problems and concerns with other CEOs and business leaders. If you can find such a group of leaders, you can learn a lot from each other as a lot of the issues you deal with are similar.

For example, the Vistage Chief Executive Program brings in 16 peers from noncompetitive businesses that serve each other in an advisory capacity. They have monthly problem-solving meetings and personal coaching sessions. They can also attend up to eight workshops a year led by a Vistage expert speaker.

If you don’t want to attend a formal group, form your own informal one from your acquaintances, again in noncompetitive businesses. Arrange to meet weekly for coffee and discuss your leadership challenges.

Just like you don’t neglect developing your muscles at the gym for your health, continue to develop your leadership skills as well by whatever method works for you.