An increasing number of industries are recognizing the business benefits of diversity, and while many are taking steps to diversify their boardrooms, others are trailing behind. Which sectors are leading the way? You might be surprised.
A new report from PwC titled “A Look at Board Composition” finds that boards in the banking and capital markets industry -- a field traditionally considered to be dominated by men -- actually have one of the highest percentages of women at 26%.
The report compares board demographics across select companies in nine industries: banking and capital markets, communications, entertainment and media, industrial products, insurance, pharmaceutical and life sciences, power and utilities, retail, and technology.
Why did PwC decide to examine board composition? Because it’s one of the top issues for investors this year. PwC reports that 61% of directors who responded to their 2016 Annual Corporate Directors Survey said that they have added a director with a specific skillset as a result of investor pressure, while nearly half of those surveyed said they added a diverse director.
“Companies in every industry are feeling investor pressure to refresh their boards, and many are focusing on diversity and adding more women directors,” Paula Loop, Leader of PwC’s Governance Insights Center, explained in a press release about the findings.
“But diversity is more than a gender issue – it’s about race, ethnicity, skills, experience, age and even geography, in addition to diversity of thought and perspective,” Loop continued. “The picture of what a particular industry looks like today may not be the same in a few years as industry lines have started to blur, making a diverse boardroom even more important. In fact, experts we’ve interviewed prioritize skills like technology expertise for new directors.”
PwC decided to explore gender diversity on boards because this is representative of some of the initiatives boards are implementing to become more generally diverse. Though most industries didn’t stray much from the S&P 500 averages for most benchmarking categories (including percentage of women on boards, female directors added in the latest proxy, mandatory retirement age, and term limits), a few set themselves apart.
In addition to banking and capital markets, the retail industry is leading the way in terms of board diversity -- and it also has the lowest average age (60). Both the entertainment and media and the communications sectors also came out ahead; they had the highest and second-highest percentages, respectively, of new female directors. Retail tied with communications for second-highest.
In an article published on LinkedIn, Loop explains why she thinks some industries seem to be making more progress than others. “The banking and capital markets industry [BCM] is facing a whirlwind of challenges due to economic and political uncertainty,” she writes, “so BCM companies need to be strategic when adding new board members. One example of this is gender diversity on boards. An industry that is considered to be highly dominated by men actually had one of the highest percentage of women on their boards -- at 26 percent.”
Loop suggests that industries and companies that haven’t made as much progress in the realm of diversity turn to others for inspiration. “One way to fill holes is to look at other industries to see how they approach this challenge,” she explains. “As industry lines blur, other perspectives could actually help your company.”
PwC’s report serves as a helpful reminder that more diverse teams are better for business -- and we’re glad to see increased transparency on the issue. We hope these findings encourage industry and company leaders to prioritize diversifying not only their boards, but their teams in general.
As Loop puts it, “taking a look at your board refreshment efforts more often will help ensure that directors are coming to the table with diversified skill sets, opinions and experience. And this will benefit both the company and all of its stakeholders.”
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