In today’s world, the importance of equity and inclusion cannot be overstated. This is especially true in the corporate world, where decisions made in the boardroom can have an overreaching effect throughout the company and beyond. However, despite the growing recognition of this need, many organisations still struggle to achieve true equity and inclusion, especially when it comes to women’s representation in executive and corporate leadership positions. For instance, in the African corporate landscape, the numbers are particularly alarming: only 5% of CEO positions and 29% of board seats are occupied by women, according to a McKinsey and Company.
Based on the reported disappointing figures above, you’ll agree that there is a pressing need for more significant action toward promoting equity in the boardroom. Therefore, in this blog post, we’ll explore why equity and inclusion are crucial in the boardroom, the hurdles that come with them, and actionable steps that businesses can take to promote equity in their boardrooms, with a specific emphasis on including women in leadership positions.
What is Equity in the Boardroom?
Professional and industry leaders have explicitly explained the subject of equity in the boardroom, what it means, and why it matters. Nonetheless, there has been a major consensus that equity in the boardroom means ensuring that individuals from diverse backgrounds are fairly represented in corporate leadership. It involves fostering an inclusive environment where everyone’s opinions and contributions are respected and valued, and where everyone has an equal chance to succeed. This does not only pose social and moral issues but also a significant business issue.
Challenging the Status Quo
Essentially, the first step in embracing equity in the boardroom is acknowledging that there is a problem and that it needs to be addressed. Based on the Thisday newspaper on NGX company listings revealed that women hold less than 25% of corporate board positions in Nigeria. This lack of representation not only limits the opportunities available to women but also deprives companies of valuable perspectives and insights women tend to bring to an organisational board. Consequently, to celebrate International Women’s Day (IWD) 2023, the Society of Corporate Governance Nigeria (SCGN) is hosting a panel conversation about boardroom equity. The panel conversation will feature a diverse set of speakers, including both male and female professionals with extensive experience in promoting Diversity, Equity, and Inclusion (DEI) in corporate leadership and the workplace. We hope that you join us as we discuss the barriers that promote the underrepresentation of women and how we can embrace boardroom equity. Please click here to register for the event.
With that out of the way, let us talk more about equity in the boardroom. Here are some of the prevailing challenges of equity in the boardroom and how the glass ceiling can be broken.
- Gender Bias: Gender bias is a significant factor contributing to the underrepresentation of women in executive leadership positions. The main reason for this is the existence of pervasive gender bias in many organisations. This bias can manifest in various forms, such as unconscious biases influencing hiring decisions, overt discrimination, and harassment. For example, in Nigeria, Centre for Gender Economics found that unconscious bias is a major factor that affects women’s access to leadership positions. The study found that many board members have implicit biases that favour male candidates over female candidates, even when the female candidates have equal or better qualifications and experience. This bias is often based on stereotypes about women’s leadership styles and priorities, such as assuming that women are less assertive, less competitive, less committed to their careers, and more emotional than men.
To address this issue, organisations could provide training for board members to recognize and mitigate unconscious bias, such as implicit bias training, which would raise awareness of the ways in which unconscious biases could affect decision-making. Organisations can also establish diversity targets and quotas to ensure boardroom equity and create a more level playing field for women and other underrepresented groups. It is worth noting that in South Africa, the Johannesburg Stock Exchange has implemented a gender diversity policy that requires all listed companies to have at least 30% of their board composed of women. This has led to increased female representation in leadership positions and this has also set a framework for other corporate organisations in Africa to embrace equity in their boardrooms. This would be a welcome policy for Nigeria to advance DEI.
2. Reengineering The Recruitment Process: In the past, recruitment for executive roles, including board members, has commonly relied on personal networks and relationships. Although this method may have successfully identified suitable candidates with relevant qualifications and experience,, on many occasions, better-qualified female candidates are ignored as a result. Therefore, to promote equity in the boardroom, companies could implement more equitable recruitment practices that prioritise selecting the right people for the job, rather than solely relying on personal connections.
One way to achieve this is to prioritise a more diverse candidate pool by utilising online job boards, recruiting firms, and targeted outreach to underrepresented groups especially their female counterparts. This strategy can ensure that the candidate pool reflects the diversity of the population and promote a more equitable and inclusive selection process. Another approach is emphasising skills and qualifications over personal connections when evaluating candidates. This could be accomplished by establishing an objective set of criteria for board members and using it as a guide when assessing candidates. Companies can identify the most qualified and capable candidates by focusing on specific skills and experience, regardless of their gender, background or connections.
3. Increased Female Mentorship and Sponsorship: While many organisations have implemented mentorship and sponsorship programs for female employees to reach higher levels of leadership, there is often a lack of focus on applying these initiatives to include the board/executive levels. It is important to recognize that mentorship and sponsorship are critical to career advancement, and without these opportunities, women may struggle to reach executive positions. Overall, organisations must go beyond simply creating mentorship and sponsorship programs and work to ensure that these programs are effective in advancing the careers of their diverse staff, including women. By tailoring these programs to the specific needs and experiences of women, ensuring their visibility and accessibility, and establishing accountability measures, organisations can create a more equitable and inclusive boardroom where women are represented at all levels of leadership. In addition to these programs, attending panel roundtables would provide practical insights from experienced professionals on how to advance DEI initiatives in the workplace.
The Benefits of Representation of Women in leadership Positions
Just to remind ourselves of the value of increased equity in the boardroom as women bring a different perspective and set of skills to the table. These skills lead to better decision-making and a more holistic approach to addressing business challenges. The benefits include:
- Enhanced Organisational performance: Companies with more women directors tend to perform better in various aspects such as corporate social responsibility, firm reputation, financial metrics, and auditing and risk management.
- Increased Financial Metrics: Organisations with more women in the boardroom tend to perform better financially. Specifically, they outperform their peers on financial metrics such as Return on Equity, Return on Sales, and Return on Invested Capital.
- Increased Innovation and Creativity: Female directors bring a unique set of skills, experiences, and values to the boardroom that can impact both the content and process of decision-making. For example, research has found that women tend to be more focused on long-term sustainability and are more likely to consider the interests of multiple stakeholders when making decisions.
- Groupthink Prevention: Having gender equity in the boardroom is important because it can prevent groupthink, which leads to poor decision-making. By including various perspectives, a diverse board composition can help prevent tight group cohesiveness and promote effective decision-making. Assigning a Devil’s advocate, creating subgroups, and soliciting opinions broadly are strategies that can help mitigate groupthink and ensure everyone’s voice is heard in the boardroom.
Embracing equity in the boardroom is an essential step for companies seeking to enhance their social responsibility and long-term success. Organisations that prioritise boardroom equity and inclusiveness would continue to benefit from a broader range of perspectives, ideas, and experiences that can help drive innovation, growth, and success.
Join us on March 9th, 2023, for the 2nd Annual International Women’s Day Roundtable hosted by the Society for Corporate Governance Nigeria (SCGN).
The theme for this year’s global celebration is “Embrace Equity,” and we are excited to discuss “The Board-Ready Female: Modelling Ethical Leadership and Driving Transformation.” This event provides a unique opportunity to network, connect, and learn from inspiring men and women leaders who have made a difference in their respective industries.
Don’t miss out on this empowering and thought-provoking roundtable.
Click here to Register now!!!!
About The Society for Corporate Governance Nigeria
SCGN is a registered not-for-profit organisation committed to the development of corporate governance best practices in Nigeria. Today, the Society is the foremost institution committed to the development and promotion of corporate governance best practices in Nigeria.