By: Arif Zaman
Countries continue to respond to the global economic crisis with increased engagement in corporate governance reform. An area in which the momentum for change has increased is the composition of boards. A significant shift in achieving the changes to the way boards perform lies in the appointment of women in senior leadership roles. The increased spotlight on women’s participation at the senior levels steers economic and political activity and acknowledges the importance of gender diversity on boards. Women constitute half the potential talent base globally. Thus, their economic participation is probably the most efficient way of reducing the gender gap in individual countries, leading to increased competitiveness and GDP growth. The correlation between gender equality and higher levels of competitiveness is consistent with increasing evidence that employing women is an efficient use of national human talent.
As the Commonwealth Secretariat has noted, “Persistent inequalities in gender undermine overall economic growth and the productivity of member countries.” As this argument applies to the corporate market, there is compelling research to demonstrate that organisations with more gender-diverse boards outperform their male-dominated counterparts.
Within the Commonwealth there is a disparity between different regions, underpinned by various factors. Countries demonstrate different levels of investment in female education, but examining the female economic contribution reveals a consistent lack of return on investment. The underemployment of highly qualified women impedes the growth potential of economies across the Commonwealth. The Global Gender Rankings prepared for the World Economic Forum in 2012 present only one Commonwealth country in the top 10 (New Zealand) and three more in the top 20 (Lesotho, UK and South Africa). To present a review on the status of women in senior leadership positions across the Commonwealth is challenging. The regional disparity in the numbers of women in senior leadership reflects different attitudes and levels of support for promoting this talent.
The well-rehearsed arguments presenting barriers to progression range from insufficient visibility to a lack of opportunities, networks and a recruitment system that does not have enough credibility to support female candidates. These barriers can be surmounted by an infrastructure identifying talent for senior roles.
A major ACCA report on the global drivers of change emphasises the wider context noting that ‘the business landscape is being reshaped by a combination of market volatility, globalisation and transformational innovation. The impact of these challenges is compounded by rapid advances in science and technology, demographic shifts and disruptive new business models. Collectively, these forces of change are driving new societal values, needs and expectations’. Set against this the report argues, ‘there is a growing recognition in business of the need to develop a rigorous understanding of these and other emerging drivers of change and to prepare for a range of possible future scenarios’. One way to capitalise on the opportunities from such change is through more diverse boards.
As economies across the Commonwealth comprise different business structures, there are various routes for women to navigate to board positions. Diversity on boards is broader than the corporate world and this means extending searches to women from the public sector and those in entrepreneurial and family firms. There are, however, still significant challenges in consistently recruiting highly-skilled women.
The 30 percent rule has been widely accepted as the baseline level for the proportion of women on boards to be sufficient to have an impact. This requires a substantial increase in supply. Recruitment of women in senior leadership positions requires a dedicated plan to ensure there is steady supply of highly skilled and aspiring women for the future.
Disjointed methods adversely affect confidence in business performance. The trajectory of female progress through the labour market is well documented, with approximately equal numbers of men and women at the graduate level dwindling to single figures for women in middle and senior management. This is also replicated in other areas, such as the public sector and political spheres.
The data on global gender trends demonstrates that investing in education is a means of eradicating poverty and addressing the social and cultural barriers impeding female economic engagement.
Industrialised economies demonstrate clear benefits from investment in female education and the trend now is to enable greater female participation across the whole range of leadership paths in businesses. This requires girls to have a much better understanding of how their education choices affect career opportunities and to understand which skills are most effective for boardroom appointments. Alongside these developments are increasing opportunities for flexible working and parental leave rights. A challenge on the horizon for industrialised economies facing an ageing population will be how women, who are still primary carers for their ageing relatives, will combine work and domestics responsibilities at the other end of their careers.
Recruitment of women to board positions has been significantly successful in countries offering a range of comprehensive support for women, including leadership positions with increased visibility; building leadership capacity; encouraging organisations to support talent proactively and having a strong educational base. All these factors create the ideal environment for enabling access to senior leadership and board positions.
Challenging business and social norms requires comprehensive reviews of key interventions and ensuring that the changes are implemented systematically. This requires firms to reconsider how they do business and how they present themselves as employers of choice to the brightest graduates. The financial impact of more women in decision-making roles will become evident over the longer term. Countries that have achieved a higher proportion of women in senior leadership positions have given women much greater visibility. The presence of successful women not only helps to raise aspirations, but also starts the process of presenting diverse boardrooms as the norm rather than exception.
The writer is an adviser to the Commonwealth Business Council.