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“Worrying” Findings but Some Positives in New Diversity in the Boardroom Report 2019

News

A new report published today by the Institute of Directors (IoD) in Ireland, entitled Diversity in the Boardroom 2019, has found increased support for gender targets over gender quotas – notably, more so amongst men – but a high level of unplanned succession planning in Ireland’s boardrooms, which ultimately undermines improving board diversity.

The report also compares the 2019 results with a similar IoD report on board diversity in 2017.

Maura Quinn, CEO of the Institute of Directors (IoD) in Ireland, the membership organisation which represents 3,000 directors and business leaders in Ireland, said: 

“Diversity in the Boardroom 2019 finds that there is an overwhelming recognition that board diversity in all its forms leads to enhanced board effectiveness and company performance. Yet, on closer examination, it finds significant movement in certain areas like gender targets, but a worrying finding when it comes to the appointment of board members, with almost half of respondents to our survey saying their board does not have a rotation system in place for board tenure. Resignation and retirement are still the main reasons for boardroom changes. This lack of planned processes around succession planning militates against effective board diversity for good governance.”

Some of the key findings of the report - which looks at various aspects of diversity (gender, age, educational background, geographical location, race) as well as board members’ skillsets and expertise, plus key aspects of governance like recruitment, tenure, and increased regulation – include:

  • 83% somewhat agree or strongly agree that board diversity leads to enhanced board effectiveness and 77% believe that board diversity leads to enhanced company performance.  
  • 47% of respondents say that they do not have a rotation system for board tenure.  
  • 53% of respondents say that they have been in their current role on the board for five or more years, 25% for ten or more years.
  • 50% of respondents were directly or indirectly approached by the board or a member of the board, while just 12% were appointed through an independent recruitment process.
  • Financial expertise (94%), industry expertise (92%), and corporate governance (87%) are the top three desirable attributes on boards. Interestingly, 45% of respondents believe there are deficits in skills and/or experience on their boards.
  • 54% of respondents say the increased regulation, scrutiny, and complexity of being a board director would not deter them personally from joining boards, but a slight majority (56%) say it might affect others’ willingness to serve
  • 39% of respondents believe that gender targets rather than mandatory quotas should be introduced to increase the number of women on boards, an increase of 7% on the 2017 survey. The results show that 6% more women and 8% more men are in favour of gender targets, compared with 2017.
  • Collectively, men and women (43%) see unconscious bias as still the main barrier that women face when being appointed to boards as directors in Ireland, but women alone (54%) cite lack of access to the same networks as men as the main barrier.

Maura Quinn added: 

“The call for gender targets for board appointments has increased, and we must heed this call to ensure there is real traction on this issue in the future. We need to ensure more transparent and more planned succession planning and recruitment processes at board level.  While half of all respondents were directly or indirectly approached by the board or a member of the board, just over one-in-10 were appointed through an independent recruitment process. This leads to reinforcement of the perception that board appointments are about ‘who you know’ and of accusations of it being a ‘boys' club’. An independent, transparent appointments process and best practice board tenure terms should negate such claims and, in turn, should lead to increased diversity.”