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Men in Suits

Beyond Tokenism: Advancing Gender Diversity and Inclusion in Corporate Boardrooms

Gender diversity has become one of the most important topics to talk about when it comes to responsible leadership and good corporate governance. Though progress has been uneven across industries and regions, more and more people are realising how important it is to have a balance of men and women on boards. Many nations still lack a large number of people with different genders and sexual orientations in their boardrooms, despite policies and stakeholder expectations that demand greater diversity. According to Deloitte's 2022 report on women in the boardroom, women make up less than 20% of directors worldwide. Discussions and tracking of directors with different gender identities are scarce.


Tokenism, which is a shallow or symbolic strategy to include members of under-represented groups, is regrettably a prevalent problem. Although it may be legal to have one member of a minority gender on a board, this rarely results in actual inclusion or power. When diversity is viewed as a checkbox exercise rather than a cultural commitment, it hinders innovation, erodes trust, and makes long-term value creation more difficult.


This blog will examine how companies can create truly inclusive boardrooms that allow people of all gender identities to lead, contribute, and make decisions equally. We will discuss how our current world has changed as a result of global trends, governmental policies, structural issues, and our personal experiences. More importantly, we will discuss how to permanently integrate inclusivity into business operations. In this manner, we can guarantee that diversity is not only displayed but also valued, promoted, and maintained.

Diverse board members in a corporate meeting room discussing governance strategy with gender diversity and inclusion goals on the screen.
Building Inclusive Boardrooms: Empowering Gender Diversity Beyond Tokenism

Understanding Tokenism in Boardrooms

What Is Tokenism and Why Is It Harmful?

The practice of appointing individuals—usually women or professionals from under-represented groups—to corporate boards more to demonstrate that the company is meeting diversity requirements or to enhance the organization's public image than to truly involve them in decision-making is known as tokenism.


While having diverse members may seem progressive at first, tokenism often hides a lack of real inclusion and power-sharing.


This method can be particularly detrimental since it reduces people to symbols instead of recognising their knowledge, viewpoints, or potential for leadership. When someone is hired just to "check a box," their voice may be ignored and their contribution may go unappreciated. Frustration, low morale, and a sense of loneliness can result from such circumstances.


Being seen as a token at work can damage trust and prevent access to strategic conversations and unofficial networks, which can influence board decisions. Token members may feel pressure to perform well because they fear any mistake will be seen as a group failure rather than a human error.


Symptoms of Tokenism in Corporate Boards

The presence of only one, or at most two, members from under-represented groups—typically women or members of minority communities—in corporate boardrooms is one of the most obvious manifestations of tokenism. A vital question is brought up when diversity in corporate boardrooms manifests as a single voice amidst uniformity: is the appointment symbolic or meaningful?


The full weight of representation on a board is frequently placed on a single woman or minority director. This person is supposed to represent a wide range of people, contribute to all diversity-related topics, and still carry out all standard board duties. The result? They often feel isolated and under pressure to represent more than just their professional skill set.


Furthermore, tokenism is evident in the way choices are made. It conveys a message that diverse directors' presence is ornamental rather than useful if they are not given equal opportunity to voice their opinions or if their recommendations are frequently ignored. You can also see patterns like these persons being put on committees where they don't have much power or being passed over for board leadership roles like Chair or Lead Independent Director.


The Case for Gender Diversity in Corporate Boardrooms

Business Case: Performance, Profitability and  Innovation

A number of international studies have demonstrated a direct correlation between improved financial outcomes and boards with a mix of male and female directors. "Diversity Wins: How Inclusion Matters" was a well-known McKinsey study that found businesses with executive teams in the top quartile for gender diversity were 25% more likely to be more profitable than their rivals. Companies with at least one woman on the board outperformed those without any women on the board in terms of return on equity and share price performance, according to the Credit Suisse Gender 3000 study.


But it's not just about the figures. Decision-making is better when boards are made up of people from different backgrounds. They bring up the concerns of stakeholders, question groupthink, and are mindful of risks.


Ethical and Social Imperatives

Inclusion is both moral and good for business. Boardrooms show what a company stands for. A board with both men and women shows that a company cares about fairness, justice, and social responsibility, which draws in customers, employees, and investors.


Having leaders from different backgrounds makes the workplace more welcoming. Leadership by under-represented groups like women shows that progress is possible.


Gender diversity isn't just a nice-to-have; it's a sign of good leadership for investors and customers who are more and more interested in organisations that share environmental, social, and governance (ESG) objectives.


Global Benchmarks and Progress 

Leading Countries and Regulatory Action

Many countries have adopted rules to make corporate boards more gender-diverse. In 2003, Norway was the first country to demand that 40% of the board seats of public companies be held by women. This bold move inspired many nations to adopt binding regulations or strong voluntary frameworks.


Germany, France, and the Netherlands used quotas, while the UK used targets. The average global representation of women directors rose from 10.4% to 21.6% between 2004 and 2018, with the largest increases observed in nations that imposed strict goals and oversight procedures.


India’s Position and Ongoing Challenges

India has also responded to the paucity of women in top management roles. The Securities and Exchange Board of India (SEBI) made it mandatory for all listed companies to appoint at at least one woman director. While the rule led to a surge in appointments, the change is still largely cosmetic for most organisations.


As per a 2019 FICCI study, women accounted for only 16.9% (1,898) of the total 11,251 board directors across listed companies. Alarmingly, 73% of companies listed on the NSE have appointed only the minimum regulatory requirement of one woman director. Just 4.3% of firms (76 companies) have appointed three or more women directors, while 1.3% (24 companies)—including eight from the NSE 500—have no women directors at all.


This data illustrates a recurring issue: for some companies, compliance is treated as the ceiling, not the baseline. The intent behind the regulation—to genuinely promote diversity and inclusion—gets diluted when the mandate is treated merely as a check-box exercise.


Persistent Challenges Faced by Women Directors

A closer examination shows that many women directors still encounter structural obstacles that restrict their capacity to make significant contributions to corporate governance, even in spite of the apparent increase in the number of women serving on boards.


Women who attain high leadership positions are not exempt from workplace barriers, despite what the general public believes. Over 50% of women board members face significant regulatory pressure and disproportionate liabilities, according to multiple surveys and qualitative insights. Many women directors are subject to higher expectations, have less institutional support, and have less risk protection.


Lack of access to important business data and board meeting time constraints are two of the most frequently mentioned operational issues. Women directors frequently point out that meetings are too brief, which makes it challenging to go over reports or offer feedback on strategic choices. Some also claim that they are less effective as a result of being excluded from continuing conversations about important operational issues.


A quarter of the female directors who responded to the survey also mentioned that they had trouble taking part in strategic leadership decisions because they had limited access to the company's internal decision-making ecosystem. For crucial matters, board approval is sometimes not even asked for, which makes governance less accountable and gives independent directors, especially women, less power.


Weak and unclear decision-making processes could make it very hard for the board to protect the interests of shareholders. The directors' experiences show that women need trust and inclusion in the boardroom to do their jobs well. Without such a change in culture, token representation is still ineffective.


Barriers to True Inclusion in Corporate Boardrooms

To really include everyone in corporate boardrooms, it's not enough to just fill chairs. Additionally, you must remove the obstacles that prevent people from truly participating. Despite the advancements made by numerous organisations, a number of structural and cultural barriers continue to prevent gender diversity and inclusion from realising their full potential.


Structural and Cultural Barriers

One of the largest barriers is the "old boys' network," an informal system where men predominate in decision-making and rely on trustworthy contacts to occupy leadership roles. 

Under-represented groups, including talented women, are often excluded from this network due to their limited access to these circles. In addition, many organisations' leadership pipelines continue to be dominated by men, which feeds a vicious cycle in which the leaders of tomorrow resemble the ones of today.


These patterns are maintained through subtle but potent unconscious bias. Gender roles or abilities may unintentionally influence hiring and promotion decisions, even for well-meaning leaders. The pressure people experience when they worry that their group will be stereotyped frequently coexists with biases. Performance and confidence may suffer as a result, particularly for women in high-stakes positions.


Lack of Mentorship and Sponsorship

Mentoring, which offers direction, support, and insights to navigate challenging corporate environments, is widely acknowledged as a critical component of career advancement. Regretfully, unlike men, women hardly ever receive unofficial sponsorship and mentoring. These relationships frequently develop at social gatherings, one-on-one discussions, or casual networking gatherings where women might feel left out.


Beyond mentoring, sponsorship helps people progress or become involved in significant projects. Without sponsors, many capable women find it difficult to rise to senior leadership or board positions. Opportunities for career advancement are severely limited in the absence of these support networks.


Limited Access to P&L Roles

One significant barrier that affects board readiness is the pervasive preference for applicants with Profit & Loss (P&L) responsibility. Since P&L positions involve keeping an eye on a company's financial performance and strategic decisions, they are commonly regarded as a gauge of leadership proficiency. However, women are still under-represented in these crucial roles, partly because of systemic biases and conventional career paths.


The small number of women in these roles lowers the pool of "board-ready" applicants because boards frequently give preference to P&L experience. Gender inequality at the highest levels of corporate governance is reinforced by this cycle of fewer women being regarded as credible board candidates.


From Tokenism to True Inclusion: A Roadmap

Set Clear Diversity Targets and Accountability Metrics

Just meeting compliance requirements is not enough, even though regulatory mandates have surely encouraged more companies to appoint women directors. Many organisations continue to view these quotas as the upper limit rather than the beginning of true inclusion. In India, for example, women only make up 16.8% of board seats in publicly traded companies, and only 4% of companies have three or more female directors. This figure highlights a concerning discrepancy between compliance and true diversity commitment.


Therefore, boards must establish specific, challenging diversity goals that surpass the legal minimum. Transparency is promoted and leadership is held responsible by establishing yearly gender diversity scorecards and making progress publicly available. This motivates businesses to shift from token gestures to quantifiable, significant change.


Build Diverse Pipelines for Board-Ready Women

Organisations must make proactive investments in developing leadership pipelines in order to bridge the gap between token representation and true inclusion. This entails creating initiatives that give women access to the industry, mentorship, and chances to lead with genuine impact. The pool of qualified women prepared for board positions can be further expanded through cooperation with executive search firms that specialise in diversifying candidate pools.


Leadership training is essential for women to succeed in governance roles, along with finding them board seats. Our goal should be to create a steady stream of board-ready women with new ideas.


Reimagine Board Selection Criteria

Candidates with limited qualifications, such as former CEOs or those with substantial P&L experience, are frequently given preference in traditional board selection. However, encouraging true diversity requires rethinking these standards. A greater variety of professional backgrounds, such as those in HR, ESG, law, and technology—areas that are becoming more and more important to corporate strategy—should be valued by boards.


Companies can access a variety of experiences and skill sets that represent the complexity of the modern business environment by expanding the definition of board readiness. Additionally, this change makes it easier to dismantle established networks and opens doors for qualified women who might not otherwise be recognised.


Foster Inclusive Board Culture

Last but not least, fostering a boardroom atmosphere where each voice is respected and heard is essential to real inclusion. This begins with inclusive onboarding procedures that make sure new directors are aware of the board's culture and decision-making processes in addition to their roles.


Boards must promote candid communication and take proactive steps to lessen power disparities that can stifle the voices of minorities. Women directors run the risk of their presence becoming symbolic rather than useful when they are denied access to operational data or strategy discussions. For long-lasting change, reshaping board culture requires establishing trust and making diversity a core value rather than merely a policy.


The Role of Chairs, CEOs and Nominating Committees

To promote true gender inclusion in boardrooms, leadership commitment is essential. A key role is played by the board chair, who actively promotes diversity and integrates it into the board's procedures and culture. Chairs set the tone that diversity is more than just compliance—it's critical to the board's operation when they prioritise inclusive discourse, guarantee balanced participation in meetings, and confront biases. By making diversity a shared leadership priority and coordinating business strategies with inclusion objectives, CEOs further support this idea.


Nominating committees have a big say in who gets on the board, but conventional procedures frequently restrict diversity. More diverse candidates may become available if these committees' composition is expanded and they go beyond traditional qualifications. Crucially, diversity and inclusion ought to be official requirements rather than merely desirable outcomes in director evaluations. Holding directors responsible for fostering an inclusive culture encourages long-lasting change and improves the representation of stakeholders on boards.


Spotlight on Emerging Best Practices

By implementing board diversity charters, which explicitly outline their inclusion objectives and hold the board accountable to the public, some businesses are setting the standard. Boards' DEI subcommittees guarantee ongoing attention and advancement rather than considering diversity as a one-time endeavour.


Another important factor in assisting female directors is mentoring programmes. Reverse mentoring helps to break down barriers and build trust by having seasoned board members teach younger female directors. Initiatives like the Board Apprentice programme and the 30% Club offer crucial governance and development experience to support women's success on boards.


The Future of Inclusive Governance

Board operations are being altered by ESG requirements, as inclusion is now a crucial component of sustainability and governance reporting. Gender diversity is now a sign of corporate resilience and responsible leadership, not just a social good.


In the meantime, younger generations entering the workforce demand leadership that is genuine, diverse, and purposeful. Ignoring these demands puts businesses at risk of losing talent and damaging their reputation. Boards must embrace inclusion in order to secure long-term success and adapt to the demands of a changing world, not just to meet quotas.


Conclusion: The Time to Act Is Now

Tokenism is no longer enough in today's business environment. Boards must truly embrace inclusion and move beyond simple compliance to make sure that different viewpoints influence decisions at all levels. Not only is inclusivity a tactical advantage, but it is also a moral obligation that upholds governance and reflects societal values. Boards, regulators, and professionals must work together to achieve significant gender diversity. By collaborating, we can establish settings where inclusion flourishes organically, enabling organisations to reach their greatest potential and opening the door to a more just future. Now is the moment to take action.


References:

Our Directors’ Institute - World Council of Directors can help you accelerate your board journey by training you on your roles and responsibilities to be carried out efficiently, helping you make a significant contribution to the board and raise corporate governance standards within the organization.

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