Latest Egon Zehnder Global Board Diversity Analysis Illustrates Slow but Positive Progress, Highlights Regional Distinctions and Outlines Requirements to Effect Positive Change

News provided by

Egon Zehnder

08 Feb, 2017, 05:01 GMT

Study Points to Weak Pipeline for Future Board Gender Diversity;

Unveils Broader Initiatives to Stimulate Progress

ZURICH and LONDON and NEW YORK, Feb. 8, 2017 /PRNewswire/ -- Egon Zehnder, the world's leadership advisory firm, today released its 2016 Global Board Diversity Analysis, with data suggesting that although gender diversity progress is positive overall, the composition of the boardroom does not reflect the versatility of thought, gender, age, nationality or perspective reflective of the global stakeholders that businesses serve. The firm's bi-annual study, which examines board data for 1,491 of the world's largest companies across 44 countries globally with market capitalization exceeding EUR 6 billion, has been produced since 2004, making the 2016 analysis its most extensive to date.

"A modern organization is only as successful as its leadership's ability to navigate a near-constant state of change, and the momentum for achieving gender parity is simply not occurring at the pace of progress required," said Rajeev Vasudeva, Chief Executive Officer, Egon Zehnder. "The Global Board Diversity Analysis reinforces that we must continue to accelerate efforts to broaden opportunities at the highest levels of leadership for women, requiring we rethink what great leadership entails. Leaders today must pave the way for diversity to become the next disruptive force in business, embracing diversity as a fundamental and reimagining it for the long-term benefit of organizations."

Key Findings

The data from the 2016 Global Board Diversity Analysis explores why some countries are able to transform their boards to better represent the society around them, and reveals continuing challenges in gaining parity in the boardroom. Key findings from the report include:

Gender parity in the boardroom continues on an upward trajectory globally, with slow but positive progress.

  • Nearly 19 percent of seats on the boards of the largest companies globally were held by women, up from about 14 percent in 2012.
  • The global total of companies with at least one woman on the board reached 84 percent in 2016, up front 76 percent in 2012.
  • In 2016, the average board size globally was 11.5, with an average of 2.1 female members.
  • If progress continues at the same global rate as the last two years, 1.6 percent per annum, the average number of women per board will reach the critical mass of three, which is the number of women per board needed for transformative and sustainable change, by 2021, while gender parity remains 20 years away.

Pipeline progress for increasing female presence in the boardroom is weak.

  • The overall global ratio of male to female directors for new appointments remained on average at three males to one female for board appointments.
  • Specific country performance varies: For example, in Russia the rate is nearly 8 to one, and in China it is 18 to one.

Global progress varies, with countries and regions advancing diversity to achieve the critical mass of three female directors per board on average, while many others are still slow to progress or stagnated.

  • Diversity champions: Of the 44 countries studied, there are 16 diversity champion countries worldwide that have achieved the critical mass of three female board directors on average:
    • Italy, France, Belgium, Sweden, Germany, Austria, Spain, United Kingdom, Netherlands, Republic of Ireland, Canada, Denmark, Poland, Finland, Norway, and South Africa.
    • Nine of the top 10 countries in terms of board diversity progress over a four-year period ending in 2016 were in Western Europe.
  • U.S. remains stagnant: From 2012 to 2014, the U.S. experienced just 1 percent growth in board diversity, going from 19 percent in 2012 to 20 percent in 2016. The country has also fallen short of the three-female member tipping point with 2.1 women per board.
  • Countries slow to progress: Of the 44 countries studied, there are 11 countries slow to progress on board diversity, where at least half of the boards do not have a single female representative:
    • Czech Republic, Argentina, Taiwan, Saudi Arabia, Brazil, Russia, Colombia, Hungary, Japan, South Korea, and United Arab Emirates.

Transforming board gender composition is possible globally, but it will require long-held beliefs to be challenged and emerging best practices to be implemented more consistently and broadly.

  • Increase female leadership roles on boards: Men held 95 percent of board chair roles in 2016, down slightly from 96 percent in 2014.
  • Rethink the definition of optimal board composition: Current and former CEOs and CFOs represent the highest share of new board appointments, but women hold just 4 percent of CEO roles and 11 percent of CFO roles globally.
  • Reconsider prior board experience as a prerequisite for new hires: The female pool for board directors falls short of the male pool, putting women who meet the criteria in great demand – 13 percent of women versus 10 percent of men hold multiple board positions globally.
  • Create a strong and sustainable pipeline for women in C-suite positions: Not one of the countries progressing well in terms of board diversity is part of the group where women held more than 10 percent of CEO roles.

Boards must reflect the perspectives of the commercial context of business and how and where they operate, broadening the lens on diversity to incorporate age and nationality.

  • Age diversity: Nearly 9 percent of all new board members appointed since 2015 are under 45; new female board members are more likely than males to be under 45 – 11 percent and 8 percent, respectively. 
  • Diversity of nationality: International representation is less common globally than gender diversity – 70 percent of companies studied have at least one non-national director, versus 84 percent with one female director.

"Our research from the 2016 Global Board Diversity Analysis suggests that we need to embrace and celebrate difference not just in gender, but in experiences, cultures and perspectives," said Karoline Vinsrygg, Global Co-leader, Diversity Council, Egon Zehnder. "Leaders must cast an eye to the future, investing in improving the executive pipeline while re-considering the leadership requirements needed to be successful going forward. The world needs inclusive leaders who will serve as role models, embracing and leveraging the power of difference and inspiring sustained diversity progress." 

For an interactive experience with the data, explore the Global Board Diversity Analysis Data Visualizer and Report Builder http://www.egonzehnder.com/GBDA.

To explore the complete findings, including Egon Zehnder's Constructive Roadmap for Building Diverse Boards, please download the Global Board Diversity Analysis Report PDF http://www.gbda.online/assets/2016_GBDA_DIGITAL_FINAL.pdf.      

To learn more about Egon Zehnder's Diversity and Inclusion activities, please go to http://www.egonzehnder.com/our-services/client-services/diversity-and-inclusion.html.

About the Egon Zehnder Global Board Diversity Analysis

The 2016 Egon Zehnder Global Board Diversity Analysis examined the boards of the largest companies across 44 countries globally – Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, China, Colombia, Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Republic of Ireland, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Turkey, United Kingdom, United Arab Emirates, and United States. This is the seventh report of its kind since the initial study findings were reported in 2004. Data was sourced in May 2016, and the total analysis considered data from 1,491 companies worldwide, most of which have market caps exceeding EUR 6 billion, with exceptions granted to ensure the study examined the boards of at least six of the largest companies in each country. The 2016 Global Board Diversity Analysis reveals the firm's findings and concludes with a list of recommendations for boards to consider regarding the issues.

About Egon Zehnder 
Since 1964, Egon Zehnder has been at the forefront of defining great leadership in the face of changing economic conditions, emerging opportunities and evolving business goals. With more than 425 consultants in 69 offices and 41 countries around the globe, we work closely with public and private corporations, family-owned enterprises and nonprofit and government agencies to provide board advisory services, CEO and leadership succession planning, executive search and assessment, and leadership development. For more information visit www.egonzehnder.com and follow us on LinkedIn and Twitter.

Related Links

http://www.egonzehnder.com

SOURCE Egon Zehnder