Boardrooms have the innate power to change the future not only of companies but the overall economy. When it comes to fully utilising their power, diversity of opinion is the cornerstone of a successful, powerful board. For a board to have a holistic viewpoint, it is vital that under-represented parties are heard. In fact, the configuration of the board of directors has been a vital research topic in the corporate governance realm for many decades now. During the last few years, the literature in the corporate governance field explicitly stresses the importance of gender diversity in the boardroom.
Several jurisdictions have enacted gender quota legislations to mandate the appointment of female directors on corporate boards. Gender legislation endeavours to address the ethical aspect that female directors have been significantly under-represented despite equal competence. Indeed, the Norwegian government was a pioneer in this field since it was the first to establish a 40 percent female quota in 2003. There now seems to be a widespread recognition among both company boards and stakeholders in relation to the benefits that derive from diversity, especially with respect to gender.
Shockingly, in 1983, based on the 10-year growth rate of the ranks of women directors, Elgart forecast that it could take about 200 years for women to attain equal representation in top corporate boardrooms. While the corporate world grapples with the imperative of fostering gender diversity, one bank emerges as a beacon of progress: the Bank of Cyprus. At our bank, the balanced participation of women and men in the decision-making process is imperative to the fundamental principles of democracy and human rights. Its advanced initiatives in championing board gender diversity set a laudable benchmark in the corporate governance sphere. A closer examination reveals the nuanced strategies and deep-rooted ethos that make the bank a trailblazer.
The historical foundations of the Bank of Cyprus provide a lens though which one can comprehend its unwavering commitment to gender diversity. Founded in 1899, the bank has not just been a silent spectator but an active participant in the socio-economic metamorphoses unfolding within and beyond the borders of the jurisdiction. In tandem with the societal changes, the bank illustrated a proactive consciousness toward the changing dynamics of gender roles. As women in Cyprus and abroad began to carve out spaces in the corporate world gaining visibility and prominence, the Bank of Cyprus acknowledged the imperative to reflect these changes within its organisational structure and leadership. To this end, the bank adopted policies and practices with the aim of promoting gender inclusivity at board level. This was not merely a symbolic nod to the trends of the time but a robust commitment to cultivating an organisation where, not only do women participate, they also lead.
Real data: An exceptional record
Quantitative data provides compelling evidence of the pioneering spirit of the Bank of Cyprus in the field of gender diversity at board level. In fact, official data – released in the 2022 Corporate Governance Report of the Bank of Cyprus – demonstrate that the board is comprised of 40 percent female representation. This progress is a culmination of years of meticulously planned strategies, manifesting the genuine commitment of the bank to gender equality. The empirical data of Bank of Cyprus provided in terms of gender equality tells a tale of unwavering, sustained commitment that has been nurtured and strengthened over time. The 40 percent female representation stands even stronger against the background of official data released on the subject; according to the 2020 OECD Analytical Databases on Individual Multinationals and their Affiliates (ADIMA) women are severely under-represented. Indeed, women in accordance with the ADIMA make up only 16 percent of board members in the top 500 MNEs.
The triumph of the Bank of Cyprus is not coincidental; it is the result of a gamut of calibrated strategies. Through meticulously crafted policies, recruitment strategies, and professional development programmes tailored for women, the bank has actively sought not only to accommodate, but also actively promote and celebrate female leadership within its ranks. In fact the bank sets explicit diversity goals, which strictly adhere to quantifiable targets with the aim to provide clear direction for its diversity mission. Additionally, in the process of candidate selection for board position nominations, the bank official considers in their suitability processes the impact of a nomination of a board member on gender diversity.
Behind the business rationale
The rationale behind the gender diversity commitment of the Bank of Cyprus is supported by a plethora of research and evidence that detail the correlation between gender diversity and business performance. In the aftermath of the financial crisis, one of the key issues of the board composition debate has been board diversity. Extensive research has indicated that gender diversity in the boardroom will lead to innovative ideas, increased competitiveness and performance, as well as better decision-making. Indeed, diverse teams contribute to a richer brainstorming ecosystem, crucial for banking in the current age of constant innovation.
The balanced participation of women and men in the decision-making process is imperative
Board quality and board diversity are interconnected since a diverse board are less prone to ‘groupthink,’ which has been defined as a mode of thinking that people engage in when they are deeply involved in a cohesive in-group, when the members’ striving for unanimity override their motivation to realistically appraise alternative courses of action.
It has also been suggested by bulk literature on the subject that the presence of female directors on corporate boards significantly contributes to the efficiency of corporate governance and increased corporate reputation.
Further to the link between gender diversity at board level and increased governance performance as well as innovation galore, there is evidence to suggest boosted financial returns are linked to gender diversity on the board. The McKinsey research showed that “companies in the top quartile representation of women in executive committees perform significantly better than companies with no women at the top.” In fact, in a 2013 report issued by Ernst and Young it was underlined how gender diversity can aid the improvement in company results in terms of better average growth and a higher return on equity.
The diversity journey
The path of gender diversity on the board is a perpetual one as societal change does not remain stagnant and societal dynamics are fluid. Plans on the horizon include intensified mentorship drives, partnerships with academic entities to sculpt the next generation of female financial leaders, and rigorous training sessions to eliminate unconscious biases in hiring and promotions.
While statistics provide a compelling story, the path of the bank in the journey to gender diversity is more profound. This is just a start. At Bank of Cyprus, we believe that financial institutions should continually search for new ways to use their expertise to further empower investors and promote gender diversity at all levels of leadership around the world.
The 40 percent board gender diversity of the Bank of Cyprus is a testament to the institution’s ability to introspect, evolve, and lead. Gender diversity is not regarded by the bank as a mere box-ticking exercise. On the contrary, it is an intrinsic part of its ethos, a commitment to reflecting the society it serves, and a strategic imperative to ensure sustainable growth.
In the vast landscape of global banking, where institutions grapple with the challenge of genuine gender inclusion, the bank shines brilliantly, offering lessons, inspirations, and a roadmap for others to emulate. As the world continues to champion gender equality, it is institutions like the Bank of Cyprus that will be remembered not just for their business acumen but for their role in reshaping gender inequalities.