Corporate Governance and Gender Diversity. One of the key concerns

Term Paper, 2013

8 Pages, Grade: A


Table of Contents

Executive Summary

Corporate Governance

Key issues in Corporate Governance

The Boardroom diversity and Corporate Governance

Progress on female representation

Gender Diversity in UK based companies

Academic Evidence – Board Diversity

Cost – Benefit Analysis of Gender Diversity

Best Practices for the Board



Executive Summary

This report gives the brief overview of the concept of corporate governance, its evolution and its significance in the corporate sector. The report highlights various key issues and concerns that are faced by the organizations while effectively implementing and promoting Corporate Governance.

Gender Diversity has been considered a key issue in the Corporate Governance and the details about how the organizations have worked on improving the women’s representation in the Boardroom composition has also been discussed. Several examples have been given about the board room composition of various companies and the number of female professionals in it.

The report also highlights the implementation of gender diversity in various S&P Companies, Fortune 500 Companies and the patterns followed in various UK-based companies. Several academic findings have been also included to provide information about the trends that are likely to be developed in coming years. The cost-benefit analysis has also been included to identify the concerns that the organizations have to address. Lastly, the report highlights the various steps that the management and the leadership can take towards efficient and effective corporate governance.

Corporate Governance

Corporate governance implies governing a company/organization by a set of rules, principles, systems and processes. It guides the company about how to achieve its vision in a way that benefits the company and provides long-term benefits to its stakeholders. In the corporate business context, stake-holders comprise board of directors, management, employees and with the rising awareness about Corporate Social Responsibility; it includes shareholders and society as well. The principles which are the backbone of corporate governance are: integrity and ethical approach, transparency, equitable treatment of shareholders, disclosure and openness and guarding the interests of the stake-holders.

Significance: It brings a fair amount of confidence in all the stake-holders which are associated with an organization that is handled by good corporate governance. From an organization’s point of view, it makes it easy for the companies to lure foreign investors and source capital on their own terms. Thus, management aided with strong corporate governance stays in the markets, with the investors and the shareholders for long.

(Thomson, 2009)

Key issues in Corporate Governance

Companies/ Operators: Role of the management, getting adequate and relevant information, being open to change: culture and practices, providing minority shareholder protection, getting competent people on board with required skills and competencies.

Stakeholders: Level of knowledge of corporate governance, availability and scope of information to be provided to them, unawareness and ignorance towards company practices, and most challenging: aligning the business interests with the interests of the shareholders in the Corporate Governance Framework.

(International Conference HHL Leipzig Graduate School of Management, 2012)

New initiatives and approaches: Boards need to identify the areas of development and the areas where the changes are needed. Corporate governance also needs to adopt the right structure for the organization that suits the motives of the company. Create a regime that depends upon the behavior rather than processes.

Diversity in the boardroom: The concept of Boardroom diversity has gained a lot of attention in past few years and companies are working pro-actively in bringing diversity in the boardroom and considering opinions regardless of the gender, the age, etc.

The Boardroom diversity and Corporate Governance

Boardroom diversity has been gaining focus as the concept of Corporate Governance is gaining strength. There are many facets of boardroom diversity but, Gender Diversity in particular is catching the attention of various companies. Ideally board composition should match the company’s strategic needs, which change as the business environment changes and the companies evolve. Moreover, the shareholders and the key people also attach importance to the value that diverse perspectives bring, including those related to racial diversity and gender diversity.

Inspite of such importance given to the concept: 9% of S&P 500 boards do not have women directors and 12% of S&P boards do not have minority directors according to Spencer Stuart. This indicates that there is a lot of deviation in what is being termed important and what is being implemented? Boards should be sensitive to boardroom composition and diversity needs and concerns. They should consider whether their boardroom culture and processes will complement the change. They should assess individual capacities and contributions annually along with ensuring that company’s strategic direction needs are met while evaluating the board composition. If undue preference is given on term and age, it might lead to premature termination of high performing professionals; also it might send the vibes across the organization that the directors would be ruling the board irrespective of their contribution.

(Gregory, 2012)

Progress on female representation

According to the recent findings made by U.S. Technology Board Index about the emerging trends and issues in corporate governance practices, boardroom composition and compensation for the director for top 200 companies (technology), the news about the gender diversity was prominent among the others. It stated that there is a growth in female representation in the boards of the technology companies, where 66% of the companies have one female director, which is a much better figure than what it was in 2012 (60% of the female representation).

(U.S. Technology Board Index 2013, 2013)

Despite a significant improvement over the previous year these technology boards still lag behind the S&P 500 companies which have 93% of them having one or more female director constituting their board. The Silicon Valley has also shown improvements in increasing the female representation in their board composition by 67% (of them have one female director) than 63% in 2012.

There also is a slight increase in the total number of female directors on the technology boards from 11% in 2012 to 12% in 2013. But the S&P 500 companies are still leading with 18% of women representation in their boards.

Among technology companies whose revenue exceeds 1$ billion or more, atleast 70% of the companies have one or more female directors whereas 38% of the companies which earn less than $500 million revenue have female representation in their boards


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Corporate Governance and Gender Diversity. One of the key concerns
University of Canterbury
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ISBN (Book)
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corporate, governance, gender, diversity
Quote paper
Aldridge Menzel (Author), 2013, Corporate Governance and Gender Diversity. One of the key concerns, Munich, GRIN Verlag,


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