Why the Influence of Women on Boards Still Lags

The representation of women on corporate boards has risen substantially over the past decade, but the growth rate is slowing. Meanwhile women’s power on the boards on which they sit is often limited.

Almost all Fortune 500 executive boards now include at least one woman, and many have two or more. The average board among these companies is made up of nine men and two women — double the number of female board members in 2006. While these gains are promising, they appear to be slowing. Last year, the overall number of female corporate directors in the Fortune 500 actually dipped slightly.

Why the apparent flattening? It’s not because women haven’t performed well in their board roles. Indeed, many executives are convinced that having more women as directors improves performance. A.G. Lafley, who has served on a number of boards including Procter & Gamble (as chairman), General Electric, and Legendary Entertainment, tells us that in his experience, women add important perspective: “I believe the advantages of diversity and, more broadly, inclusion, are relatively well-known and for some of us confirmed by experience. More creativity, more innovation, more inquiry, more and broader experiences to draw on, better problem-solving, greater ability and willingness to suspend judgment and work together to find a better ‘third way.’ I have seen this not only on large public corporate boards, but also in small private startups and not-for-profits.”

A range of consultants and academics have demonstrated that boards with more gender diversity are more innovative, more strategically minded, and generally more effective. A 2012 study by McKinsey & Co. of 180 publicly traded companies in France, Germany, the United Kingdom, and the United States found that companies in the top quartile of board diversity (with diversity defined in terms of both gender and nationality) saw return on shareholder equity that averaged 53% higher than that of companies in the bottom quartile. Their margins were also 14% higher than those of the companies with the least diverse boards.

Our research has led us to believe that the reason women aren’t making more rapid inroads is that few have reached the most influential board leadership positions. Although more women are on boards now than 10 years ago, very few have been promoted to a post that would give them influence beyond their seat at the table.

“There are three layers of progress for women,” explains former Xerox Corp. CEO Anne Mulcahy, who currently sits on several Fortune 1000 boards. “There’s the breaking in part of getting onto boards.

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