ESG Metric: Governance body composition
Ease of implementation: Medium
Suitable for: All businesses
Suggested functional lead: HR, leadership team
Summary
The percentage of female representation in governance bodies can be improved though making a visible commitment to diversity and set quantifiable targets. These targets can include the percentage of women in governance bodies in a given timeline as well as shortlisting women for all open positions that need filling. It is advised to look beyond current members of governance bodies, so candidates that are wont currently in C-suit positions are considered as well. Overall, an active pipeline can help improve consistent hiring of women in governance bodies and ensure it is not just a one off.
Background Information
Governance bodies are a formalised groups of people with ultimate authority in the organisation, usually board members. It is crucial that these governance bodies remain diverse in its composition to ensure that various perspectives are incorporated in the decision-making process. McKinsey analysed companies in the S&P 500 and found that 33% of the top 50 companies had women occupying a board seat. There are many benefits of increasing percentage of women in governance bodies. Leaders interviewed by McKinsey outlined the benefits as: motivating other employees, representing customer base and higher decision-making quality. Many mainland European countries have now created gender quotas requiring all companies to fill at least 40% of the board with women, or risk losing their board certification. Overall, female representation increased by 24% since 2005 however we have a long way to go.
Implementation Steps
Make a visible commitment to diversity
Outline your aim to increase female representation in your governance body. Make the commitment quantifiable by setting a target and making it public.
Always shortlist women
Ensure that there is always a female candidate when looking for a new governance member. Make this clear to any recruitment companies you work with.
Look beyond current members in governance positions
When recruiting for new members, look beyond current C-suite member and expand your search criteria. Often recruiters will pick form a pool of C-suite candidates as standard practice, so ensure they are also expected to expand their criteria. Do not solely consider candidate with prior board experience. Instead consider candidate with the right expertise set out in the search criteria.
Maintain an active pipeline
Include more women in your network and explicitly ask recruitment firms to include female candidates. Ensure this is not a one off but a change in mind-set. When a prospective candidate has been identified, it is important to cultivate long-term relationships.