Board Diversity More Important to Women
7 October 2015 at 11:15 am
Company board directors are less satisfied with their peers’ performance and women care more about board diversity than men, according to a new global report.
Global consulting firm, PwC has released its 2015 Annual Corporate Directors Survey, a report based on responses from 783 public company directors, which investigates the factors that influence boardroom decisions.
The report found that nearly 40 per cent of board directors now say someone on their board should be replaced – a jump from 31 per cent only three years ago.
Directors continue to cite diminished performance due to aging, unpreparedness for meetings and a lack of expertise as the top reasons for their dissatisfaction with peer performance.
The report found female directors were more critical of their peers’ performance than males.
Male and female directors disagreed about the importance of having gender and racial diversity on their boards. Female directors continued to be far more likely to consider board diversity important – with 63 per cent of female directors describing gender diversity as a “very important” attribute, compared to only 35 per cent of male directors.
Similarly, 46 per cent of female directors describe racial diversity as “very important,” compared to only 27 per cent of their male counterparts.
The vast majority of directors said they believed board diversity positively impacts both the board and the company. More than 80 per cent believed diversity at least “somewhat” enhanced board effectiveness and company performance, and more than one-third believed it does so “very much”.
Newer directors placed a much higher value on board diversity than long-serving directors.
The survey pointed to the pressure board members faced balancing long-term strategic planning and investment with the need to meet short-term investor expectations. Despite the growing influence of activist investors, board members continued to focus on initiatives aimed at enhancing long-term.
Other findings showed that board directors were taking action in anticipation of shareholder activism. Nearly 70 per cent said their board regularly communicated with the company’s largest investors over the past year.
There was an increase in the percentage of directors who said their board had interacted with activists. About one-third of directors said they had interacted with activists during the last year and held extensive board discussions about activism compared to 29 percent last year; 17 percent had extensively discussed the topic this year even though they have had no activist interaction – up from 14 per cent in 2014.
The report found that management could improve its communications. 55 per cent of directors wanted their dialogue with management to be less formal and more spontaneous. Nearly half of all directors at least “somewhat” wish these discussions were less scripted or controlled.
In June 2015 the Grant Thornton Financial Literacy Survey found that a majority of Australian Not for Profit board directors did not have the financial literacy skills to meet the changing challenges of the future, including the impact of new funding models.
The Financial Literacy Survey in collaboration with Pro Bono Australia set out to understand the state of play in the Not for Profit sector in terms of the impact of new funding models and the ability of senior managers and Board Directors to deal with emerging financial issues and future sustainability.
The survey found that only 59 per cent of Not for Profit Board members felt their Board had the right level of financial literacy skills to meet the needs of their organisation today and even less, 40 percent, believed they had the skills to handle financial challenges in the future.
The findings of the survey revealed that across all skills, there was room for Not for Profit Boards to improve and when asked to rate the strength of each Board’s skill level participants only assessed their strength as “moderate”.