Women Need To Be Given A Seat – And A Voice – In Boardrooms

The new UAE mandate for greater presence of women in boardrooms reinforces the country’s vision to enhance gender balance, empower women in the business sector, and increase the presence of women in leadership and decision-making roles.  

However, that initiative will have a greater impact if all firms engage with the spirit of the new rules, above and beyond minimum compliance, because representation in the boardroom isn’t the real goal – the actual objective is for women to have an impact in the boardroom.   

In the 21 years since Norway became the first country in the world to pass legislation requiring gender quotas on company boards in 2003, substantial progress has been made in the push to increase women’s representation on corporate boards across the globe. Gender diversity efforts have seen many European countries mandate that at least 40 percent of directors of publicly listed companies must be women. US states including California have passed targets for full 50/50 equality. Efforts in the UK have seen the number of women on the boards of Financial Times Stock Exchange (FTSE)-listed companies increase from 5 percent to 40 percent in the last 15 years.   

The UAE, with the GCC Board Gender Index Report 2024, shows significant change as well, with nearly 11 percent of publicly listed companies in the UAE having women in board positions – the highest percentage of women on boards in the GCC. Indeed, the UAE became the first country in the Middle East to launch a Women on Boards initiative in 2012, and the UAE Gender Balance Council was created in 2015 to help the country become one of the world's top 25 countries for gender equality by 2021.  

The UAE’s 2021 mandate for listed companies in the country to have at least one female director on their boards has seen real change. A study in 2022 conducted by Aurora50, a social enterprise working towards gender equality in GCC boardrooms, and the Mohammed bin Rashid School of Government showed significant strides have been made to improve access to positions of power for women within listed businesses. Women held 77 seats in the boardrooms of listed companies in 2022, up from 29 seats in 2020. As of June 2022, women made up 8.9 percent of the 868 board seats of the 115 listed companies on the Abu Dhabi Securities Exchange and the Dubai Financial Market, up from 3.5 percent in 2020, the report also showed. 

The UAE has also moved up rankings that report on efforts to reduce inequality between women and men. In March 2024, the UAE was ranked seventh – up four places from its previous ranking – on a global list of nations for efforts to promote gender equality on the Gender Inequality Index, part of a UN human development report. Plus, the new mandate that, from January 2025, private joint-stock companies in the UAE must allocate at least one seat on their boards of directors to women is another move to bolster the presence and representation of women in key leadership roles within the private sector. 

This is admirable, and the stated goal of increasing the representation of women on the board matters. However, it is not all that matters. Simply changing the composition of boards is not enough to ensure those women have any impact on how boards make decisions. Achieving greater impact for women on boards is important as groups with more diverse skills, knowledge, and experience bring greater perspectives. Having a greater range of perspectives generally leads to higher-quality decision-making – the bedrock of successful organizations.  

As the Board Diversity and Effectiveness in FTSE 350 Companies research report written by the London Business School Leadership Institute and UK-based consultancy SQW for the UK’s Financial Reporting Council (i.e., the regulator of listed boards) showed, almost all FTSE 350 companies have benefitted from increased gender diversity. The report also showed that greater representation of women in the boardroom reshapes board culture and dynamics, particularly when women’s ideas are taken seriously.  

There are two main benefits associated with moving beyond simple representation on a board. Firstly, boards that effectively integrate women benefit from a more collaborative decision-making process. Our research showed these boards tend to take the time to reach a common understanding of the problem when disagreements occur, resulting in more unified decisions. Secondly, this more inclusive, collaborative approach was shown to benefit company performance and shareholder relations. Companies whose boards had well-integrated female directors experienced 10 percent higher stock returns, and their shareholders were eight percent less likely to formally dissent to board decisions. 

These kinds of positive results are not guaranteed, however. In looking at the data from corporate responses to California’s gender mandate, we show that while government actions such as these make a significant difference in representation, they do not always impact a company’s performance. However, we found that the global orientation of a company made a big difference. When the leaders of a firm expressed cultural values that indicated the notion of being “global citizens,” those firms were more likely to meet and actually beat the quota and excel financially.  

The lesson here is that organizational culture matters. If the culture encourages its leaders to embrace these quotas and to do the right thing for the right reason (i.e. to get the perspective of its women), then women will be heard, and decision-making and firm performance should improve. But if the culture encourages its leaders to be skeptical, then they may resist the quotas, or only minimally comply with representation, and that will not be enough to change decision-making (confirming their skepticism about gender quotas).   

It is admirable that the UAE mandate is seeking to reinforce the UAE's vision to enhance gender balance, empower women in the business sector, and increase their presence in leadership and decision-making roles. My hope is that all firms will engage with the spirit of the new rules – working above and beyond the minimum, as representation isn’t enough to make meaningful progress alone.  

For women to truly flourish in the boardroom, there needs to be a safe, inclusive environment where their views will be heard. Above and beyond that, there needs to be an intersectional approach to diversity, one in which the old guard is willing to challenge assumptions around status and experience, and invest in building a culture of true inclusion. Dominance doesn’t lead to better decisions – diversity, well-managed, does.   

Author Bio

Randall S. Peterson is a Professor of Organizational Behavior and Academic Director of the Leadership Institute at London Business School.