The Sunday Mail
Allen Choruma
There is a general misconception that diversity on corporate boards is a gender issue and merely speaks to having more women on boards.
Board diversity goes beyond gender composition and includes variables such as age, race, ethnicity, language, education, skills, experience, culture and so on.
Board diversity is often construed as a gender issue because of the pressure that has been coming from governments, regulators, women and gender activists for more inclusion of women on boards.
While it is an important aspect, gender diversity has therefore tended to overshadow other forms of diversity that are required to make boards more effective and enhance their performance.
Having more women on boards matters, but that is only concentrating on one form of board diversity.
Gender diversity
Gender diversity is about levelling the playing field between men and women in the boardroom and having balanced corporate boards in terms of gender composition.
Corporate boards globally are predominantly male-dominated, with women taking minority seats.
The United Nations’ “2030 Agenda for Sustainable Development”, African Union Gender Protocols (AU Strategy for Gender Equality and Women’s Empowerment) and pressure from governments, regulators and international gender groups such as “#Me Too” and “Times Up Initiative” have all catalysed the call for gender diversity on corporate boards across the world.
Section 17 of the Constitution of Zimbabwe provides for gender balance at all levels of Zimbabwean society.
Section 17 (1) (a) clearly provides that the State must promote full gender balance and, in particular, full participation of women in all spheres of Zimbabwean society on the basis of equality with men.
However, gender diversity is still elusive at all levels of the Zimbabwean society and, in particular, in corporate boards.
Getting more women on corporate boards has been moving at a snail’s pace despite overwhelming empirical evidence showing the positive contributions that women bring to the table.
Women presence on corporate boards can be increased through affirmative action to ensure diversity, shareholder activism to push for gender balance, harmonisation and alignment of company laws, capital markets rules and corporate governance codes with the Constitution.
Additionally, organisations such as the Institute of Directors Zimbabwe (IODZ) and women business associations should lead the charge for gender diversity on corporate boards through inclusive gender initiatives and programmes.
While more focus is on gender diversity on corporate boards, other forms of diversity necessary to making boards more effective are not receiving the attention they deserve.
Other forms of diversity
A board should be diverse in other facets as well.
Diversity on boards is broader and includes all aspects of diversity, be it gender, race, age, language, social, educational, professional and cultural diversity.
Social diversity is very broad and can be broken into the following: race, ethnicity, culture, language, nationality, age, and so on.
Professional diversity can be broken into the following: qualifications, trade, experience, skills and expertise.
Social and professional diversity are equally important on company boards as directors from diverse backgrounds can add value by bringing in diversity in thought, opinion and decision-making.
Diversity and Performance
There is growing debate on whether board diversity leads to better performance.
The link between having more female representation on corporate boards and performance, for example, has been the subject of intense debate.
Some research carried out overwhelmingly shows a positive correlation between having more women on boards and enhanced company performance.
Sir Peter Gregson, Vice Chancellor at UK-based Cranfield University (Cranfield Female FTSE Report, 2017), aptly concluded: “Organisations that embrace diversity thrive. They reap the benefits from creating an environment where the best talent is recruited and rewarded, regardless of gender. Creating this environment requires more than one-off initiatives, it requires a system-wide change where everyone across the organisation understands the importance of removing gender barriers.”
Sustainable development
In the absence of overwhelming and conclusive empirical evidence linking diversity to board and company performance, what then is driving diversity on corporate boards?
Calls for diversity at all levels of society have been coming from a broader spectrum of society.
Governments, international organisations such as the United Nations, civil society activism, shareholder activism across the globe have been pushing for diversity in all spheres of society.
Sustainable development has a social component and part of that calls for diversity in all spheres of society as a way of inclusion and avoiding discrimination.
Social cohesion requires inclusion, that is to say equal involvement of all people regardless of gender, age, race, colour, creed, religion, disability, language and so on.
The call for diversity on corporate boards is a reflection or simply mirrors what is happening in the broader society in which companies operate.
Diversity at all levels and spheres of society, including corporate boardrooms, is necessary in sustainable development to achieve social cohesion, inclusion and develop- ment.
Corporate governance best practices
According to the renowned King IV Report on Corporate Governance, the board should be diverse in its membership across a variety of attributes such as field of knowledge, skills and experience, as well as age, culture, race and gender.
Board diversity is relevant for promoting better decision-making and effective governance.
Corporate governance has also metamorphosed to become “inclusive corporate governance” since corporations are an integral part of society; that is to say, corporate citizens.
Sustainable development is now an integral part of good corporate governance.
Although there is no overwhelming empirical evidence, it is an established corporate governance principle that a governing board should be diverse across a variety of attributes in order to invigorate its capabilities.
Board members with varied expertise, knowledge, experience, background and perspectives add value to the board and this enhances both board and company performance.
Allen Choruma can be contacted on e-mail: [email protected]
