Improving gender equality in non-profit boardrooms
The article has been authored by Neera Nundy, co-founder and partner, of the NGO Dasra and Aarti Madhusudan, founder, of the NGO Governance Counts.
Achieving gender equality and empowering all women and girls is the 5th of the UN’s Sustainable Development Goals (SDGs). One of the specific targets for this goal is to ensure “women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life”. Among other metrics, one indicator of progress on this goal is the number of women in managerial positions. Despite accounting for 39% of the global labour force in 2019, women only account for 28.2% of managerial positions. Given that this is a mere 3% increase from 2000, it is clear that there is still considerable work left to improve gender equality. Given the SDGs’ focus on leadership, it makes sense to first focus on boardrooms - as they are in the position to set the direction of organisations.
According to a 2021 report by Deloitte, the number of women in boardrooms in India was 17.1%, nearly 3% lower than the global average of 19.7%. The numbers are even more distressing for the number of boards that are chaired by women, not just in India. There is a clear need to address these disparities - not just for the power that women board members could wield, but for the example that is set by promoting diversity at the top of organisations. It is this ability to set an example that requires a particular emphasis to be placed on boardrooms for nonprofit and non-governmental organisations. Given the social impact these organisations have, they are often viewed as the vanguard of social change. As such, improving gender equality for nonprofit boardrooms will help set an example for the rest of society to follow. Unfortunately, there is a paucity of data on the extent to which nonprofit boardrooms secure gender equality, but data from the corporate sector and anecdotal evidence suggest that the levels are far from ideal. Correcting this deficiency should be an immediate priority as it will help direct reformative efforts. However, there is no such lack of evidence for the benefits of gender diversity to boardrooms. Studies have shown that including women on boards can lead to better decisions on mergers and acquisitions, and reduces the likelihood of excessively aggressive risk-taking among other benefits. However, though the advantages of female representation in boardrooms are well established, the picture is a little more complex. A meta-analysis of 140 studies found that though gender equality led to more effective monitoring and strategy development by boards, there was no significant relationship with market performance. This may largely be attributed to the fact that it is the structure, culture and processes of boards that ensure that gender diversity is not a token effort.
It is, therefore, necessary to establish clear principles and priorities for the functioning of boardrooms. Establishing the goals and purposes of a board would not only set the stage for true gender diversity, but maximise the effectiveness of the board as well. Clarity of purpose helps align all hierarchies of an organisation to reduce friction and improve performance. This is especially true for non-profit boards where the goals for board members are much more complex than their corporate counterparts. Instead of a relatively straightforward metric of increasing profits and dividends, nonprofit boards have a variety of objectives that vary depending on sector, geography, and can evolve over time.
This is only made more complex by the various ways in which nonprofits are created - whether as a Section 8 Companies under the 2013 Companies Act, a trust, partnership or otherwise. Each of these have their own structures and obligations placed upon leadership. These are just a few of the reasons why goals for non-profit boards need to be clarified to remove ambiguity. Once the goals and purposes of a board are clearly established it is easier to measure the performance of both boards and board members. With these clear metrics, non-profits can identify areas of improvement - which may include replacing non-performing board members or bringing in new board members with relevant experience. While it may seem an obvious step to increasing overall performance of an organisation, this is a step that some nonprofits are reluctant to take. But the most important step is the change in the work culture of boardrooms and organisations. Efforts need to move beyond the compliance efforts of legal boards to the putting in governance structures to enable more effective leadership. The evidence indicates that reaping the full benefits of diversity requires a more egalitarian culture that prizes collaboration, encourages contrasting opinions and is amenable to honest conversations about diversity.
A key part of this equation is the relationship between boards and senior management as unclear expectations with CEOs can hinder the effectiveness of boards. CEOs have to be consulted when the purposes and goals of boards are being outlined, especially with professional CEOs who have been hired at a later stage for their leadership experience. Open channels with leadership give boards the freedom, clarity and purpose to be most effective. These steps help set the stage for women board members to excel. This will, of course, not be easy. Many women will have to suffer overt discrimination and less obvious examples of bias that are still worryingly rampant in society in general, not just in organisations. They will also have to do this with additional responsibilities at home given that women in most cultures are expected to do the brunt of domestic and familial chores regardless of whether they are working or not. On an average day, women spend twice as much time as men doing unpaid domestic chores and care work.
Creating a large cohort of women board members who are not just competent but extremely effective will help show the possibility of a different future. One where diversity and equality are the norms and gender is not a barrier to growth and success. By being high performing board members that provide value, they will earn their place at the table – imbuing this with the confidence to be vocal about the direction of the organisation on issues like diversity and strategic growth. It is critical to increase the access of women to opportunities to be on non-profit boards. One possible route to achieve this could be through legislative mandates as was done in countries like France, Norway and Italy. But it is debatable how effective statutory laws are in achieving diversity without less enforceable changes in the culture of organisations. It is therefore important to recognise that a true change in diversity in boardrooms will need to be accompanied by changes in society. That being said, reforms need to start somewhere, and there is enough evidence to suggest that women board members will demonstrate the benefits of diversity to non-profits. not just through the lens of gender, but in other areas as well. This will eventually impact corporate boardrooms that may be less susceptible to dramatic change and eventually spill over into society at large.
The article has been authored by Neera Nundy, co-founder and partner, of the NGO Dasra and Aarti Madhusudan, founder, of the NGO Governance Counts.