By Rachel Garretson
We all know that board numbers are critical to success in basketball (ok, maybe not all of us), but what about numbers on different types of boards? Say…corporate boards? What numbers matter there?
Bear, Rahman, and Post used data from the Fortune 2009 World’s Most Admired Companies List and the Mergent database of annual reports (as well as various other public sources) to conduct a study on how how diverse members on a corporate advisory board affect a company’s corporate social responsibility (CSR) score.
Spoiler alert: diversity matters.
For those who might need a crash course in CSR ratings (I know I did), they’re a big deal. Good scores attract more job applicants, obviously, since none of us want to work for a company with a bad reputation, and they’re linked with high job satisfaction for current employees—because hey, if all your buddies think the place you work at is awesome, you’re going to feel better about your job and be less likely to start seeking work elsewhere.
Beyond providing benefits to employees, good CSR ratings enhance corporate image itself, helping organizations grow. It also positively affects ~minor~ things like financial performance, institutional investment, and share price. And further, companies can accumulate it like capital. If companies have a lot of them, they can be used to offset a some of the consequences of any nasty little publicity crises that may happen along. We’re more likely to forgive a mistake by a company we like than a company we already hate.
So CSR ratings are a big deal for the companies, but why did these researchers care? The bottom line is that they found gender diversity on a company’s board helps increase CSR ratings. For example, women bring different ideas to the table and differing decision-making styles to the table. This benefits the company in general, as almost all successful corporations pride themselves on innovation. Another way women helped out is just that they tend to be more aware of and sensitive to CSR. Since women are more aware of the company’s reputation and how that can affect it, they make more conscientious decisions that take those factors into consideration. In fact, women just being present is a big factor. Not just one token woman too. What our fearless researchers found was that as the percentage of women on the board increased, corporate reputation increased as well.
Need another reason to expand diversity efforts within your organization, especially by including more women? Now you have it. When boss ladies join the table, everyone else benefits, too.