Check board diversity

Board members should have skills and experience that match the company’s needs. They also should have enough clout to challenge top management or the chair-man, if necessary. These challenges, sometimes leaked by board members to journalists, make excellent stories that reveal a company’s inner workings.

In recent years, governance advocates and shareholder activists have pressed to diversify boards, most notably by adding more women, and some countries have passed laws requiring it.

Advocates say that gender diversity leads to more variety in opinion, experiences, competencies and skills on boards. The advantages, they say, are balanced decisions, efficient oversight of financial management, enhanced accountability to shareholders and prudent risk management.

Story Toolbox

Story idea: Examine the structure of board committees for the companies that you cover.

  • Does the board have all the recommended committees?

  • What kind of qualifications do committee members have?

  • Do committee members have special expertise? (for example, members of the audit committee?)

  • Are committee members independent? (see definition, this chapter.)

A 2012 report by GMI showed “incremental improvement” in female representation on boards from the previous year’s survey. The survey of 4,300 companies in 43 countries found that women held 10.5 percent of the total number of board seats, up from 10 percent the previous year. The percent of boards with no women at all fell just slightly below 40 percent. For the first time ever, GMI said its survey found that women held one in 10 board seats globally.

For more on gender diversity on boards, see “Women on Boards: A Conversation with Male Directors”: http://bit.ly/LEphFk