Gender Diversity Corporate Boards Management-Myassignmenthelp.Com

Question: Discuss About The Gender Diversity Corporate Boards Management? Answer: Introduction During 2016, Credit Suisse AG, a leading financial services provider released a report entitled, The CS Gender 3000: The Reward for Change, on a worldwide basis. The main focus of this report was to analyse the Credit Suisse Gender 3000, that covers more than, 27000 senior managers in more than 3,000 companies globally. This report analyses the collected database to determine whether the gender diversity at the top level can be connected to better performance and studies those organizations that have more than 50% female representation in venture capital companies, Micro-finance institutions and senior management (Catalyst, 2017). As per this report, the company confirmed its findings that the companies that employ a large number of women who function in the decision-making roles continue to generate a superior profits rate and market returns. As part of this report, the organization also documented the percentage of women or gender diversity on the corporate board throughout the world including Australia and some of the figures related to this issue are as follows. As per this report, the women continue to remain under-represented, although boardroom diversity continues to increase at a fast rate, for example, in 2015, women held 14.7% of the total corporate board seats. Although this figure increased to 54% ever since 2010 and 12.4% since the previous year, only 20.1% of the companies that were researched in the study had three women on the board (Lee et al., 2015). Further, the women held only 4% of the board chair positions regardless of business sector. Not only that as per MSCI study, more than 73.5% of companies included in the study had at least one woman director (Lee et al., 2015). As per Credit Suisse, to reap the benefits of the diversity the board must have at least 3 or more than 3 women as it changes the boardroom dynamics in a substantial manner yet only 20.1% of boards have appointed more than 3 women. When these figures are compared with Australian figures, the research findings indicate that up to 2016, the women hold 23.4% of board seats and almost a quarter of ASX Board seats that is up from 8.3% in 2009 aicd.companydirectors.com.au, 2015). However, 10% of the ASX company boards do not have any woman. But, as per latest figures, during first six months of 2016, women comprised 40% of latest appointments in the company boards. This figure is on the rise when compared with the figure in 2015, that is, 34% and 22% in 2013. One of the best examples this is GWA Group limited where there are 8 Directors in the Company Board and there is only one woman director. Performance of Gender Diversity Corporate Boards One topic that remains the part of the debate in this area is whether the company boards that have a higher female representation perform well when compared with other company that does not have much gender diversity and corporate board level. In 2014, Post and Byron published a research article where they conducted a meta-analysis of more than 140 research studies related to board gender diversity that synthesized sample of more than 90,000 companies from more than 30 countries. In 2015, the other remarkable study on this topic was published by a team of researchers that comprised of Pletzer, Nikolova, Kedzior, and Voelpel. The main focus of this study was to complete a meta-analysis of 20 studies and tested the relationship between the financial performance of the company such as (ROE) or return on equity, (ROA) or return on assets, and diversity on company board. As per these results, the researchers need to consider other factors rather than considering only the representation of women on board and the financial performance of the firm. According to Post Byron (2014), the firms that have more women director report a slightly higher accounting returns, that includes return on assets among the others when compared with the organizations that have few women directors. This statement is also confirmed by other research studies such as Pletzer, Nikolova, Kedzior, and Voelpel, (2015) and Eagly, (2016). However, as per report published by Credit Suisse, the figures confirm the benefits of gender-balanced boards for example; the firm with most women directors had a higher ROS such as 16% when compared with the companies that do not have women directors (Strm, DEspallier, Mersland, 2014). Not only that these companies also reported the higher level of ROIC or return on invested capital that reaches up to 26%. According to statistics published by MSCI, the companies that have strong women leadership is correlated with higher ROE when compared with the companies that do not have strong woman leadership, that is, 10.1% vs. 7.4% (Lee et al., 2015). Further, this difference can also be noticed in superior price-to-book ratio, that is, 1.76 vs. 1.56. In addition, the report also concluded that the companies that have fewer women on company boards face more governance-related issues when compared with the companies with strong female leadership (Lee et al., 2015). This is also confirmed by the study finding of the research study published by Pathan, Faff during 2013. operations, Find Room for her, Rebecca Shambaugh, the author offers different causes of this improvement in performance such as the leadership performance and style of women who are in leadership positions. She also strongly supports the inclusion of more women on corporate boards. To validate her point, she offers some statistics such as women anywhere represent 80% on the consumer decision and they also possess important leadership perceptions and styles such as democratic and transformational that enhances profitability of the company. A research study published during 2009 by a team of researchers, Terjesen, Sealy, Singh supports and confirms her research finding on this topic. She also states that this is due to the fact that women possess natural skill sets related to listening to other people, sharing constructive criticism, avoiding autocratic leadership style and keeping an open mind related to any matter. Located in Queensland GWA Group Limited remain the leading Australia n supplier of building fixtures as well as fittings to commercial and household premises. This company has 8 Directors on its corporate board but only one woman director. Conclusion It is clear from above research that gender-balanced corporate board remains the best choice for a company that would like to achieve success and maintain it in an increasingly competitive market. However, when the normal figures in AXN companies, that is, 23.4% are compared with the figures related to GWA Group Limited, the percentage is just 12%. It is a fact that as per many studies, there is a close correlation between the financial performance of a firm and the number of women on corporate board. Not only that there is a strong relationship between the leadership styles favored by women and the profitability of the company. Recommendations It is a fact that presently, the company is showing an average performance that continues to fluctuate between small ranges for last five years. To better its financial performance, the researcher offers following recommendations The company needs to increase the number of woman directors from 1 to 3 or more than three. This is due to the fact that 3 or more than 3 women change the company dynamics. The firm needs to ensure that the appointed women directors are not appointed to comply with rules and regulations, but would take an active interest in the company matters. The company also needs to incorporate the suggestions given by these directors into their company strategy. References aicd.companydirectors.com.au (2015). Women on ASX 200 Boards on the Rise. Available at https://aicd.companydirectors.com.au/advocacy/board-diversity/women-on-asx-200-boards-on-the-rise Catalyst. (2017).Women on Corporate Boards Globally. [online] Available at: https://www.catalyst.org/knowledge/women-corporate-boards-globally#footnote3_clwctpn [Accessed 8 Sep. 2017]. Eagly, A. H. (2016). When Passionate Advocates Meet Research on Diversity, Does the Honest Broker Stand a Chance?Journal of business Issues,72(1), 199-222. doi:10.1111/josi.12163 Lee, L., Marshall, R., Rallis, D. and Moscardi, M. (2015).WOMEN ON BOARDS GLOBAL TRENDS IN GENDER DIVERSITY ON CORPORATE BOARDS - Cite This For Me. [online] Msci.com. Available at: https://www.msci.com/documents/10199/04b6f646-d638-4878-9c61-4eb91748a82b [Accessed 8 Sep. 2017]. Pathan, S., Faff, R. (2013). Does board structure in banks really affect their performance?Journal of Banking Finance,37(5), 1573-1589. doi:10.1016/j.jbankfin.2012.12.016 Pletzer, J. L., Nikolova, R., Kedzior, K. K., Voelpel, S. C. (2015). Does Gender Matter? Female Representation on Corporate Boards and Firm Financial Performance - A Meta-Analysis.Plos One,10(6). doi:10.1371/journal.pone.0130005 Post, C., Byron, K. (2014). Women on Boards and Firm Financial Performance: A Meta-Analysis.Academy of Management Journal,58(5), 1546-1571. doi:10.5465/amj.2013.0319 Shambaugh, R. (2013, pp. 65).Make room for her. New York: McGraw-Hill Press. Strm, R., DEspallier, B., Mersland, R. (2014). Female leadership, performance, and governance in microfinance institutions.Journal of Banking Finance,42, 60-75. doi:10.1016/j.jbankfin.2014.01.014 Terjesen, S., Sealy, R., Singh, V. (2009). Women Directors on Corporate Boards: A Review and Research Agenda. Corporate accounting Governance: An International Review,17(3), 320-337. doi:10.1111/j.1467-8683.2009.00742.x