The research, examining data from 1610 public companies with market caps above €7bn in 44 different countries, shows that despite the slow improvement in the number of women on boards, nearly three quarters of all new board positions worldwide still go to men.
Jill Ader, Chairwoman of Egon Zehnder, said: “We need diversity, but it’s simply not happening fast enough. New voices and perspectives are essential to unlock the transformational capabilities that businesses tell us they need. Companies - starting from the very top - have to recognize the impact that a critical mass of women on the board and the executive committee makes and take the steps needed to bring that about.”
The biennial study finds that both female and international representation on boards has improved significantly since Egon Zehnder started tracking board diversity in 2004.
But for boardrooms to truly reflect society, a new approach is needed. Egon Zehnder calls on businesses to apply the “magic of three” rule. Appointing one woman to the board is not sufficient. In order to reap the benefits of gender diversity, at least three women are needed to change the way the board is run and the way women are able to share their insights.
The importance of making diversity part of a company’s strategy was underlined by the business leaders Egon Zehnder spoke to as part of the study. Paul Polman, CEO of Unilever, shared: “I would have a hard time even understanding how you can be successful as a business if you cannot mirror the society that you serve in the first place” and that driving diversity “really has to be done with conviction by the CEO of that company.”
The number of women on boards continues to increase, but is losing momentum:
- 20.4% of board seats of the largest companies globally are held by women, up from 18.5% in 2016. France is the global leader, with 42% female board members, versus less than 6% in Hungary, Japan, Saudi Arabia, South Korea, and the UAE.
- In 2018, new board appointments made up 11.4% of all board positions globally, of which 27.0% were women, an improvement on the figure from the last report of 24.1%. This means that just 3.1% of all board positions are held by new female board members.
- However, appointments of female directors to boards varies heavily by region. Of new board appointments in 2018, 35% were women in Australasia, Western Europe, the US and Canada, against 16.7% in South America and 12.5% in Asia. In the US the overall percentage of female directors has risen by just 3.2% since 2012.
While there has been significant progress in recent years, many companies are far from the “magic number” of three female directors:
- In 19 of the 44 countries studied, all of the major large cap companies have at least one female director—up from 15 countries in 2016, and just 8 in 2012.
- Yet in only 13 of 44 countries do the largest companies average three or more women per board, with five countries (Belgium, France, Germany, Sweden and Italy) averaging four or more. All of these countries except for Sweden operate under some form of quota system. Western Europe is leading the way with an average of 3.8 women per board, followed by Australia/New Zealand with 2.7, and North America third with 2.5.
Despite growing representation in the boardroom, the number of female executives and especially CEOs remains stubbornly low:
- Women make up just 3.7% of worldwide CEO positions, and that number has not changed over the past two years.
- Only 5.6% of executive board positions are held by women
- In 23 countries – including Norway, Germany and Canada that lead on other diversity metrics - there are NO female CEOs in the large set of companies studied.
Egon Zehnder believes the approach of business must change if we are to make real progress on gender diversity:
- Pick for Potential – our work with businesses has found that certain personal traits are better indicators of success than a lengthy CV
- Make Leadership Accountable – a focus on diversity has to be a core part of a company’s strategy, and an explicit goal set by senior leaders and directors
- Raise Your Ambitions: Focus on Three – until a board achieves the critical mass of three women, little is likely to change. Directors must be proactive in spotting female talent, and consider board term limits or more active turnover
- Train the Board for Success - chairs and directors must prepare the board for the fact that diversity of perspectives and opinions could make doing the work of the board less efficient, but more effective
The report’s full recommendations and findings can be explored and visualized using Egon Zehnder’s interactive tools at www.egonzehnder.com/global-board-diversity-tracker
The full report, including regional and country-by-country analysis, can be found at www.egonzehnder.com/global-board-diversity-tracker
NOTES TO EDITORS:
About Egon Zehnder
Egon Zehnder is the world’s leadership advisory firm, sharing one goal: to transform people, organizations and the world through great leadership.
We know what great leaders can do and are passionate about delivering the best leadership solutions for our clients.
As One Firm, our more than 450 Consultants in 68 offices and 40 countries bring our individual strengths to form one powerful collaborative team.
We partner closely with public and private corporations, family-owned enterprises, and non-profit and government agencies to provide Board advisory services, CEO search and succession, executive search, executive assessment, leadership and team development and organizational transformation.
We share a commitment and pride in doing work that contributes to successful careers, stronger companies and a better world.
For more information visit www.egonzehnder.com, and follow us on LinkedIn and Twitter.