Richard Branson on Why We Need More Women in the Boardroom

I recently watched 12 Angry Men — that classic 1957 film about a jury struggling to decide the fate of an 18-year-old man who has been charged with murder. The movie gives you a sense of how the legal system worked in the United States back then, when juries were less diverse. By today's standards, we would find it unsettling if a jury were comprised of 12 middle-aged white men. So why have so many business leaders been slow to take notice when women are absent from the boards of their companies?

(Read more: Richard Branson on Finding a Work-Life Balance)

In most developed nations, the percentage of women in the labor force has increased dramatically since the 1950s. When 12 Angry Men was produced, less than a third of American workers were female, whereas today, the U.S. Department of Labor says that number now stands at 47 percent.

Despite this change, men are still much more likely than women to hold senior positions.

In particular, the ratio of female board members has lagged, with less than 14 percent of these positions at the largest companies filled by women, according to the European Commission. The numbers vary greatly from country to country across Europe: In Italy, only 6 percent of board members are women; in Spain and Belgium, 11 percent; in Germany, 16 percent; in France, 22 percent. The commission has been championing a planned EU law to impose sanctions on companies in the European Union if less than 40 percent of their board members are women.

Government and private industry

I am not usually a fan of government involvement in private industry, but on this issue it seems to be needed. Norway took the lead in 2003 when its legislature passed a law requiring that at publicly listed companies, at least 40 percent of board members should be women. They were successful at meeting the 2008 target date, and since then the proportion of women on boards at Norwegian companies has risen to an encouraging 44 percent.

A study the British government commissioned on this problem recommended that by 2015, 25 percent of board members at the largest British companies should be women. The Cranfield School of Management recently reported that 50 percent now have more than one woman on their boards, but British companies still have a long way to go. The situation requires more than just a recommendation — whatever happened to leading with a persuasive argument? Simply for pragmatic reasons, business leaders need to take action.

Women drive buying decisions

Seventy percent of household purchasing decisions are made by women, according to the Boston Consulting Group. Those decisions are not just about grocery lists or kids' clothes — women also choose big ticket items such as cars and vacations. So, if 50 percent of the staff at a company is female, and women drive 70 percent of the buying decisions for its products, what possible rationale can senior management have for leaving women out of the corporate decision-making process?

At Virgin, we have seen a number of women rise to senior positions over the years. At present, Virgin Money and Virgin Holidays are run by female CEOs and the person in the number two spot at Virgin Atlantic is a woman. There are many women in senior management at other Virgin companies, but we have much to do as an organization.

If you are looking to increase the number of women in leadership positions at your company, you might start by considering what opportunities female employees have for career advancement, and what barriers they may be encountering. Ask women from every area of your company about their experiences and for their advice.

Women often encounter gender-based stereotypes about who is qualified to do what kind of job, which can sometimes persist in subtle ways and must be challenged at every level. This may be addressed by offering female employees more flexible working conditions; in some cases, putting in place better policies for both maternity and paternity leaves may be a good start.

Fixing this injustice isn't just good for your team: it's good for business. Several studies have shown that gender equity in senior management and at the board level brings many tangible benefits. A report by the Credit Suisse Research Institute revealed that those firms dominated by men had recovered more slowly since the 2008 financial downturn than those with a more balanced male-female ratio.

So take a look at who's sitting around your boardroom table. If you see 12 angry men, it's time to write a new script!