Viewpoint: Gender-Diverse Boards Drive Stronger Performance

For decades, businesses spanning multiple global sectors have been increasing female representation in their boardrooms. In fact, certain industry groups and governments have even set a goal of at least 30 percent female board representation by 2018.

Ferguson Partners, which consults closely with REITs worldwide, has witnessed the powerful benefits of gender-diverse boards of directors. According to Ferguson Partners research, both U.K. and U.S. REITs are slightly behind in gender-diverse boards compared with the broader S&P 500 index and FTSE 100 companies, while U.S. REITs are ahead in this area compared with the financial services sector.

Gender diversity on the boards of REITs can help drive performance and enhance a company’s competitive advantage by strengthening recruitment and retention efforts, creating a more positive and inclusive company culture and generating better decision making. For REITs interested in improving their female board representation, Ferguson Partners recommends focusing on a few important strategies:

  • Executive Focus: If a company is going to encourage diversity, it has to start at the board level and drive it through senior management. If a company’s customer base and employee population are diverse, it is counterintuitive not to have diversity on the board of directors. Since male representation on boards may outnumber female membership, it should be noted that men will need to take an active focus in increasing board gender diversity.
  • Expand Search Criteria: Previous board or CEO experience is a common criterion for a board search, making it difficult for women to find their first board assignment. If the pool of experienced female board members in the industry is insufficient, companies that want to achieve gender diversity need to adapt their board qualifications.
  • Look Beyond the Real Estate Industry: Real estate is a broad industry that touches many adjacent fields. REITs can benefit from gaining the perspective of individuals in related fields, such as consumer goods and services and technology.
  • Focus on Candidate Quality, Not Quotas: Aggressively hiring unqualified women into board roles in the name of diversity can have a negative impact on performance and limit future diversity hires. If the first female board member is well qualified and a good fit with the board, this serves efforts to improve gender diversity in the future.

Creating a more gender diverse board can enable REITs to appeal to a larger customer base, hire and retain the top women in the industry, form non-consensus opinions and improve culture. If the diversity trends across corporate America hold true in real estate, REITs with more female representation will position themselves to remain competitive and drive financial performance.

Serena Althaus is a senior managing director with Ferguson Partners. Gemma Burgess is a managing director with the firm.