The board of directors is the highest governing body that determines the medium and long-term direction of companies. It determines the vision of the company, creates its strategies and oversees the execution. As the highest decision maker; the mission of the board of directors is to lead the company proactively, to create continuous and lasting value for the society of which it is a part, as well as for its shareholders in the long run. The board of directors fulfills its authority to ‘manage the company’ given to it by law, through the CEO and senior management, and acts as a bridge between shareholders and senior management. It monitors the success of the top management in this work and is accountable to all stakeholders of the company, as well as to the people or organizations that have a right in this matter.
The experiences I have gained in the last 17 years during my term as the Head of the Human Capital Consulting Department at EY Turkey and, under the MY Executive umbrella- which I established with my team after EY decided to leave this field- show that the care shown in the correct formation of the boards of directors pays off with a multiplier effect. Because strong boards of directors leads to strong companies and strong companies mean a strong national economy. As a prerequisite, in order to be successful in this process, each company must determine its own criterias in accordence to its own needs. For this, the structure of the current board of directors needs to be carefully examined and a member profile has been outlined after considering the qualifications and competencies of the existing members in order to determine the neccessary profile needed within the other members. The extent and depth of the required competencies differ according to the needs of the companies. Creating the right combination that complements each other and works effectively is also very crucial along with ensuring competencies, expertise and experience as well as giving importance on diversity & comprehensiveness.
Diversity empowers the Boards
The number of women on boards of directors is on a rising trend all over the world in the recent years. This trend is also supported by the successful work of women business leaders and the added value they provide in the boards of directors. According to the some strudies; women’s participation in management have positive impact on company’s performances. Similar to gender equality, age distribution has been among the criteria taken into account for different reasons in the process of forming boards of directors in recent years. This is important both in terms of ensuring the continuity of the board of directors and, reflecting the perspectives of different generations in the decision making processes. In addition, the ratio of executive members can play a decisive role in maintaining the balance between auditing and reprenstation in the board of directors.
Women board members in family business are higher compared to publicly traded companies
To share some up-to-date data on the number of women on the board of directors I would like to give reference on our third publication “Independent Board Membership in Family Businesses – Is it time? What does he say, what do they think?”.
When we look at the developments in the world regarding the increase in the rate of women in the boards of directors; its shown that in United States 25.6% of the board seats are women within the 3,000 largest publicly traded companies. According to the survey conducted with the participation of 121 leading companies in Turkey**, women make up around 25.7% of the total board members. In addition, based on the research of TAIDER Family Business Association on April 2021*, women boards of directors of these companies reaches to 31%. Considering that the BIST average is 17% only, I attribute the high results of both our and the TAIDER survey to the fact that family members take part in the board of directors as shareholders in the companies participating in the survey. I find the leadership of family companies in this regard very valuable.
Article written by Müge Yalçın, CFR Global Executive Search Turkey
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