PWC’s annual survey of almost 800 public company directors reveals that only 39% of directors surveyed viewed board gender diversity as “very important.” Moreover, men and women seem to have distinctly different views about the value of having women on boards: 63% of female board members said that gender diversity was “very important”; only 35% of male directors agreed. According to this Bloomberg QuickTake, women make up less than 20% of directors of S&P 500 companies, and growth in female representation has slowed.
Soapbox: Only 63% of female directors viewed gender diversity to be very important? That might be the most interesting statistic.
Only 30% of directors surveyed viewed racial diversity to be “very important.” The survey also registered a gender split, albeit a smaller one, on the value of racial diversity: 46% of female directors said that racial diversity was very important compared to only 27% of male directors. According to ISS Governance, only 13% of directors of S&P 500 companies in 2014 were racially or ethnically diverse.
For all directors polled, 46% “very much” agreed that board diversity leads to enhanced board effectiveness and 37% “very much” agreed that it leads to enhanced company performance. Of the female directors polled, 80% “very much” believed that board diversity leads to enhanced board effectiveness and 74% “very much” believed it would enhance company performance, compared to only 40% and 31% of male directors for those respective metrics.
Soapbox: Of course, the research data show that these women are right. See this PubCo post.
Assessing the difficulty of improving diversity, fewer than one quarter of directors in the PWC survey “very much” believed there were a sufficient number of qualified diverse candidates; 46% of female directors thought there were plenty of qualified diverse candidates, while only 18% of male directors thought so. Similarly, 33% of women believed that there were no significant impediments to increasing board diversity, while 28% of men shared that view. Newer directors placed more value on diversity: 62% of directors with less than one year of board service “very much” agreed that board diversity was important, compared to only 39% of directors who had been on the job for more than 10 years.
The survey also compared results from 2015 to 2012 with regard to the level of director satisfaction with peer performance. Nearly 40% of those surveyed in 2015 believed that a director on their boards should be removed, compared to just over 30% in 2012. Of female directors, 42% believed someone on their board should be replaced, compared to 39% of male directors. The most significant issue cited was aging: 19% believed that aging of a director had led to diminished performance, compared to 15% in 2012. Other reasons cited for dissatisfaction were unpreparedness for meetings, lack of expertise, overstepping the boundaries of the board’s oversight role and overboarding.