Women on boards: Driving the change

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By Dr Ashraf Gamal El Din – Chief Executive Officer, Hawkamah, The Institute for Corporate Governance

 

 

Gender diversity is probably one of the most talked about subjects in the business world. Despite this subject emerging in the early 70’s, yet it’s a challenge handled so slowly that researchers and practitioners suggest it will take more than 100 years to properly resolve, if ever.

If we start from the top, it makes perfect sense for women to be on the board of any company, regardless of its activities. The Board, as a driver of strategy and oversight, needs diversity of backgrounds, experiences and personalities. Some research also indicated a significant impact on the company’s performance by having a gender diverse board that represents the customer base. So the most obvious reason is that women are direct clients or part of the market of these companies – whether it’s fashion, financial services, tourism and so on. The less obvious is that even when it comes to goods and services that are perceived to have a ‘male-dominated’ client base, such as cars, men’s fashion or real estate, women tend to strongly influence the buying decisions. It makes perfect sense, therefore, to have a proper female presence on corporate boards.

Regional differences

Most countries are not doing that great when it comes to gender diversity on boards. The Organisation for Economic Co-operation and Development’s (OECD) latest figures suggest that women occupy close to 20 per cent of board seats in OECD countries. Some countries are on a very low percentage, such as Korea and Japan, with less than five per cent, while other countries fare better, such as Iceland and Norway, with more than 40 per cent of board seats of listed companies taken by women.

Figures from the Arab countries indicate that the region still has a long way to go. In Jordan – the best Arab country for gender diversity on boards – only 27 per cent of listed companies have women on their boards, the percentage goes down to 19 per cent in both Oman and Egypt. Regarding the percentage of women on boards of listed companies, a study that we compiled on GCC countries in 2016 found that the average was two per cent.

“While there is clear recognition of the importance of having gender diversity both on boards and management, boards do not spend enough time trying to ensure that gender parity becomes a reality.”  

It is quite surprising that in a country, such as the UAE, where more than 35 per cent of ministers are women, that the percentage of women on boards is 1.9 per cent. This means that having women entrepreneurs or even ministers does not mean that women will be on corporate boards. Apparently, increasing the representation of women on boards faces unique challenges and hence requires some structural changes. Therefore, during 2017, Hawkamah, the Dubai-based institute for corporate governance, conducted a survey on listed companies in the UAE. The survey targeted both men and women on boards and top executive positions of listed companies. The objectives were to find out perceptions, challenges and possible solutions for the phenomenon of lack of women on boards in the UAE.

Survey results showed that there is common understanding of the correlation between gender diversity and company performance and that gender diversity is perceived to be very important. The perception is that the current number of female on boards does not reflect the importance of female board members. The survey also showed that women occupy less than 10 per cent of top management positions in listed companies. Moreover, the frequency of discussing gender diversity on boards and in leadership positions is significantly low. This indicates that while there is clear recognition of the importance of having gender diversity both on boards and management, boards do not spend enough time trying to ensure that gender parity becomes a reality.

The respondents identified three groups of factors preventing gender parity; culture, limitations that women place on themselves, and organisational barriers, in that sequence of significance. Among the top cultural barriers were lack of maternal support, missing work-home balance, traditional roles of women and the housewife stereotypes present in society. The survey discovered that culture is the strongest barrier to gender parity for listed companies in the UAE.

Interesting barriers that the survey also identified were the self-imposed ones. These included that women feel they lack experience for board seats and that they fear not being able to balance family and work commitments. Furthermore, women  tend to sacrifice their own career to support their husband‘s career or their families and that women tend to be more careful than men in not making mistakes, seriously undermining their willingness to take risky decisions. The organisational challenges expressed by the respondents show a good deal of work that need to be done by corporates in order to enable gender parity to happen. In general, women are less likely to advance to top management positions because they face greater barriers. In the organisational context, women need to work harder than men to prove themselves. The survey also showed that women lack the proper networks, initiatives and mentorships.

Finally, the respondents perceive that there is a lack of supporting HR policies. The Hawkamah study shows how serious the challenges facing gender parity are and how difficult it is to overcome them. The starting point is the culture. The society must be more supportive to the concept of gender parity. This starts at home and schools and not only in corporates. It is also about the support mechanisms available in the society that help women and men achieve the balance between their different commitments. The second area that requires work is the self-imposed barriers or glass ceiling effect. Mentorship programmes, awareness events, exposure and meeting female leaders and top executives can all help women to feel more confident and realise that they are well-qualified to be top executives and board members.

Parallel to the initiatives on culture and self-confidence, companies can do a lot to facilitate gender parity. Companies can create the mentorship and capacity-building programmes, they can facilitate networking events and can plan awareness campaigns for their employees, men and women alike, on the importance of gender parity. More important, however, is reforming HR systems in order to allow real gender parity to take place. This could include maternity/family leave for men, as well as women, flexible work systems, relaxed attendance policies for women and men, who have family obligations that require their presence at home. Performance appraisal systems should not penalise women, or men, who must take more time out with their babies or families. Structures must be in place to make sure that promotions are based on merit, not gender, with very transparent criteria and processes in order to prevent system abuses.

It is only when we have more women as top leaders, CEOs, CFOs, heads of strategy, etc, that we can expect to have more women on boards, for such positions are the main source of company directors. When women are given the chance to fill such positions, that they can then climb up to director level in their organisations and elsewhere.

If countries are serious about tackling the issue of gender parity, they need to work on those three groups of challenges. Additionally gender quotas could pave a way for a more diverse board. I fully support the notion of creating quotas for women on boards as a temporary solution and as a means to break the glass ceiling. But, in the long term, the fundamental challenges must be handled well if we are to create a more sustainable reality.

 

About the Author:

Dr. Ashraf Gamal El Din is the Chief Executive Officer of Hawkamah, the Institute for Corporate Governance. Prior to joining Hawkamah, Dr. Ashraf was the Executive Chairman of Egypt Post. Before that, he was the Deputy Executive Director of the Egyptian Banking Institute, the training arm of the Central Bank of Egypt. He was also the founder and Project Manager of the Egyptian Corporate Responsibility Center working on promoting the concepts and application of CSR in Egypt. Furthermore, he was the Executive Director of the Egyptian Institute of Directors (EIoD), the Institute of Corporate Governance in Egypt and the Arab Region Dr Ashraf served as a board member and head of the Audit Committee in a number of listed, non-listed, State Owned and family owned companies. He also served a member of the General Assembly of the Holding Company for Transportation.