Should your board reflect the diversity of your customers?

The news that leading UK advertising and media company WPP last month appointed a Saudi businesswoman as a non-executive director to its board underlines a trend towards companies diversifying the make-up of their leadership. Ross Bentley reports

It’s not the first time that the new appointee Luban Olayan has broken new ground – she also became the first woman to sit on the board of a Saudi-listed company when she joined the Saudi Hollandi Bank last year. Perhaps the traditional idea that a UK company director has to be white, male and middle-aged is starting to change.

According to the Cranfield School of Management’s latest research there are now 96 women sitting on the boards of FTSE 100 companies. In 2004 17% of board appointments were women compared with 13% in 2003.

“A diverse board can generate a richness and quality of ideas that is lacking in an all-male board firmly locked into its own mindset,” said Val Singh, a senior research fellow at Cranfield.

“What is disappointing from this point of view is that we are not seeing more people joining the board from the HR and marketing functions where there are a lot of senior women,” she said.

At the global executive search company Boyden, partner Lisa Gerthardt said the penchant towards women board members is particularly prevalent in the retail and food and hospitality sectors where much of the customer base comprises women.

“Companies are not bringing women onto the board due to some sense of political correctness but because it makes good business sense” she said. “When looking to fill a non-executive position, firms are asking for a diverse shortlist – one that represents its full range of customers.”

Gerthardt feels women bring an emotional intelligence to the decision-making process that companies are now starting to value.

The commercial drivers behind this trend are made apparent in a recent Department of Trade and Industry document Brighter Boards for a Brighter Future. It states the projections show that in less than 10 years there will be 2 million more jobs in the economy – 80% of which will be filled by women.

This desire to have a board whose make-up reflects the market in which the company is trading also applies to firms looking to develop a presence in a foreign market.

Barry Dinan, managing director at executive search company Hanson Green, said companies keen to break into lucrative emerging markets are also hiring board members with experience of working in countries such as China and the Eastern European states.

“This know-how is invaluable when developing a strategy for expanding a company into new areas,” said Dinan.

So it seems WPP has pulled off a coup in appointing Olayan: not only does it get a woman’s point of view but a toe into the Middle East where the high rates of media growth and internet adoption create attractive markets for the likes of WPP to pursue.

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