The Challenges and Benefits of Diversifying Boards - Building Gender Balanced Business

• The Financial Times reacted to the latest cries for greater numbers of women on UK boards from Labour politicians with an analysis of the difficulties of having effective non-executive board members.

• (The newspaper automatically associates more women on boards with non-executive directors, or Neds. But it also implicitly endorses the proved finding that greater board diversity is healthy for a company.)

• Average pay for Neds rose more than 6% in 2008, and even more impressively, the gain was 15% at companies that did not have a pay freeze for directorships. “Rising pay for non-executives reflects the increasing seriousness of the role, and the sense that stronger candidates are already being sought.”

• But despite companies’ (lip service?) declaration of interest in more women on boards, the FT sees two problems: “It is not just finding the right people that is hard. Providing the right sort of induction and ongoing support for them is difficult too.”

• What to do? Balance the advantage of independent outlook with the skill that comes of learning how a company is run to generate greater effect from Neds. Accomplishing that is difficult — “no easy answers at all to the question of boosting the quality and effectiveness of Neds” — but critical: The companies that introduce better governance fast will win a huge competitive advantage.”

The FT report