Women on boards: The economic importance of diversity

By technical definition, discrimination is considered ‘the unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, or sex.’ A widely-accepted definition, by most accounts. But is there such a thing as positive discrimination? Absolutely. Some might see this as a negative, but it’s all contextual.

Discrimination, positively

Positive discrimination is the act of ensuring people of all genders, racial groups, religions, disabilities and any minority groups are given the same amount of equal opportunity as anyone else. In this context, it’s a good thing.

In the corporate world, we are seeing more and more cases of positive discrimination in various forms. Job seekers requesting female candidates, for example. While this isn’t inherently a bad thing, as a society we need to be careful about how we word such requests because, at the end of the day, discrimination is discrimination regardless of who it’s aimed at. And all too often, women are being sought out for job positions to allow the company in question to tick that diversity box by saying, ‘We have a woman on our payroll, we are progressive!’.

Diversity not Tokenism

Women shouldn’t be invited to positions, especially board roles, to simply fill a quota. Having women on your board is a valuable decision in every way. One of the main values can be seen from an economics viewpoint. According to a report conducted by Catalyst earlier this year, corporate boards that took on a woman/women had a 36 per cent better return of equity in comparison with those that were all-male. Furthermore, a 2015 PriceWaterhouseCoopers report stated that boards with two or more women outperformed other boards by 36 per cent.

Diverse boards that include women, younger people and other minority members are often believed to be better representative of their customer and client bases. It allows for a wider talent pool of successful board members, brings in higher levels of productivity and can encourage employee diversity further down the line.

The economic case for diversity

The need for diversity is, and always will be, a societal argument. But it also needs to be viewed in terms of economics, because economics will always be a better driver of change than societal issues. By introducing diversity into the boardroom and encouraging more cognitive thinking, we will be able to raise the bar of board performance through better mitigation of risk and the unlocking of blind spots held by many executive directors and chairpeople.

There is a human rights aspect to diversity, one that can’t be ignored. But for the corporate world, we have to argue from an economics point of view because that is the language in which they speak; it is what will drive board directors towards much-needed positive changes and a full embracing of diversity.