This week’s EVE VOICES is discussing trends about gender equity on board of directors and more practically, how to grow a successful board career in times of increasing corporate transformation & governance demands.
By Diana Wilde, Co Founder, Aurora 50
Be it academic research papers, or real corporate compositions – the positive link between boardroom diversity and corporate performance has been well and truly established. Pre-pandemic, progress towards increasing board-level diversity had been slowly but steadily moving in the right direction, yet the impact of COVID-19 threatens to reverse this due to considerable losses in female talent. The long-term boardroom impact is a fear that has not gone unnoticed.
An analysis of over 8600 companies across 49 countries showed that women held almost 17% of all board seats in 2018, an increase of 2% from 2016. Wall Street Journal reported that in 2019 women held 1/5th of board seats in America.
The logic behind this move towards diversity is rooted in profitability and performance.
Diverse boards can avoid the risks of ‘groupthink’, a term coined in 1972 by Yale University social psychologist Irving Janis. This theory suggests that when people of similar backgrounds are put into a group, they can make irrational decisions due to their desire for harmony and/or conformity, despite their individual intelligence.
Moreover, diverse thinking can lead to faster problem solving, more effective risk management, reduced instances of fraud, better managing conflict and maximising creativity and innovation. Further, the ‘tone from the top’ can have a positive impact on the overall organisation by boosting talent recruitment and retention, fostering innovation and enhanced market reputation.
The impact of the pandemic on businesses across the globe has only increased the need further for good corporate governance, robust decision-making processes and sound judgement. The risk the pandemic poses to the future of our boards is very real.
In the UAE, the regulator – Emirates Securities and Commodities Authority (ESCA), has stipulated that women must represent 20% of directors on listed company boards. However, women currently hold only 3.5% of these board seats. There are several reasons for this gap, many of which have previously been seen in more developed markets as well.
The lack of women in senior leadership is often referenced as the reason for the lack of female board appointments. The “leaking pipeline” plays a pivotal role if women are to take a seat at the table. The challenge though, does not end there and more must be done to support women in gaining board experience.
Encouragingly, the UAE has always championed gender equality and this has formed a core tenet of the country’s foundation, as laid out by HH Sheikh Zayed. The government’s work in this area has not gone unnoticed, as evidenced by the UAE’s recently declared standing on the UNDP Gender Inequality Index – first in the Arab world, and 18th globally, for commitment to advancing women’s rights.
The changing landscape is helping to balance the playing field for women, especially those in the early stages of their professional lives but to reach the high echelons of board service means thinking ahead. With the right planning, you can get a head start and position yourself favourably for board opportunities.
The first step in planning begins with reviewing the competence and skills required for board roles, and then charting a career path that allows you to gain the required experience, and develop relevant networks.
Corporate boards often look for prior board experience, and relevant C-suite experience. The rationale for this is simple – as a board director, one of your responsibilities will be to appoint and/or guide the CEO, where prior experience and the resulting maturity is an asset. This is especially true for the boards of large companies with significant fiduciary duties.
Here are our recommendations for you to work towards your first board appointment:
If you are interested to develop a successful board career, start by planning your career trajectory in the company you’re with. You also need to consider the kind of board you aspire to be a director with – aside from common board skillsets such as governance and financial acumen, different boards require expertise on specific areas. For instance, large corporate boards often value M&A experience, or look for prior C-suite experience in similar sized companies. Make sure your HR teams are aware of your career aspirations, and ask them to support you with charting your career development path.
While you’re building your corporate profile, volunteering on a board of a not-for-profit, academic institution or similar organisations can help to get a head start on your board career. These opportunities will enable you to develop essential board skills – such as governance, and gain the experience that will positively contribute towards future board appointments. Additionally, this serves as a great way to build your network – you never know who is volunteering beside you!
Increasingly, boards have started appointing individuals – especially younger ones, with specialist skill sets in directorship roles. Areas such as AI, big data, cyber security and digitisation are only some of the new, in-demand skills that boards are looking for, in response to a changing digital-first landscape.
Don’t assume that people are aware of your board aspirations. Make sure you tell relevant individuals, such as those who currently serve on boards, so they can recommend you where possible. You can also explore opportunities within your own organisation that allow you to volunteer for internal committees, such as ‘youth councils’ etc. Find a mentor or coach, preferably within your company, who can help with furthering your career aspirations. Make sure you make the best of networking opportunities – whether professional mixers, industry events or training and development sessions.
Serving on the board of an organisation is a position of great responsibility. As a board director, you are responsible for aspects such as ‘horizon scanning’, risk planning/ mitigation and overall financial control and governance. In short – you can be a part of, and drive, the success of a company!
To know more about Diana, and the mission of Aurora 50, listen to episode 8 of our Equivalence podcast (release Feb 9th 2021). We discuss her journey, why and how will we increase number of women on board of directors, and what professional and trained directors bring to the governance of the companies of the future.
Connect with Diana on LinkedIn