Companies wishing to perform better and cut their risk of bankruptcy should have more female directors on their board of directors because women’s abilities to make fair decisions when competing interests are at stake make them better corporate leaders, researchers have found.

A survey of more than 600 board directors showed that women are more likely to consider the rights of others and take a cooperative approach to decision-making. This approach translates into better performance for their companies.

When it comes to business, female corporate board directors make better decisions than men. The study, published fourth week of March by the International Journal of Business Governance and Ethics, also found that male directors prefer to make decisions using rules, regulations and traditional ways of doing business.

Female directors, on the other hand, are less constrained by these parameters and more prepared to use initiative than male colleagues.

In addition, female directors – who, globally, make up around nine per cent of corporate boards – are significantly more inclined to make decisions by taking the interests of multiple stakeholders into account in order to arrive at a fair decision.

They also tend to use cooperation, collaboration and consensus-building more often – and more effectively – in order to make sound decisions.

If you want your company to perform better and have a lower risk of bankruptcy, perhaps consider appointing more female board directors, according to new research.

The study was conducted by Chris Bart, professor of strategic management at the DeGroote School of Business at Canada’s McMaster University, and Gregory McQueen, a McMaster graduate and senior executive associate dean at A.T. Still University’s School of Osteopathic Medicine in Arizona.

Bart said: ‘We’ve known for some time that companies that have more women on their boards have better results. ‘Our findings show that having women on the board is no longer just the right thing but also the smart thing to do. Companies with few female directors may actually be short changing their investors.’

McQueen said: ‘Women seem to be predisposed to be more inquisitive and to see more possible solutions.

‘At the board level where directors are compelled to act in the best interest of the corporation while taking the viewpoints of multiple stakeholders into account, this quality makes them more effective corporate directors’.

Arguments for gender equality, quotas and legislation have done little to increase female representation in the boardroom, despite evidence showing that their presence has been linked to better organizational performance, higher rates of return, more effective risk management and even lower rates of bankruptcy.

Tags: