Women bring value to the boardroom
Women not only bring different perspectives to male-dominated boardrooms. Research shows they also improve their company’s bottom line and operational performance.
“Much has been said in recent years about the need to increase women’s participation at board level, but progress remains slow,” says Sandra Burmeister, CEO of executive search firm Amrop Landelahni.
“I am convinced that there is a vast pool of talented women in South Africa and throughout the continent who, with very little investment, will become the directors of tomorrow.”
Credit Suisse Research Institute research on gender diversity and corporate performance globally shows that companies with one or more women on the board have delivered higher average returns on equity, lower gearing and better average growth over the past six years. Its report states: “Net income growth for companies with women on the board has averaged 14% over the past six years compared to 10% for those with no female board representation.”
“Interestingly, says Burmeister, “companies with women on boards performed well particularly after the 2008 financial crisis, with their companies showing less volatility in earnings and achieving lower gearing ratios. Women tend to manage risk more effectively, thereby reining in board initiatives in tough times and providing more balance through business cycles.”
McKinsey & Company’s Women Matter research in European countries supports these findings. It shows that companies benefit by accessing the different and complementary perspectives and leadership styles that women bring. Companies with women in leadership positions have achieved superior organisational and financial performance, such as above-average operating margins and higher share price valuations.
In South Africa 17.1% of board seats are held by women, compared with the UK at 17.3% and the US at 16.6%. However, the progress of women in key board roles remains limited with 5.5% of chair roles held by women in South Africa and less than 2% in Europe. Similarly, women are less likely than men to be appointed to head powerful sub-committee positions.
“South Africa’s legislative framework in terms of black economic empowerment and the advancement of women has had a significant impact in addressing structural issues and influencing corporates to be more gender and equity sensitive,” says Burmeister.
“Differences in government involvement, legislative and regulatory regimes, socio-economic factors and cultural norms affect representation of women in the workplace. Increasingly, corporate governance codes are also playing a part.
“There is a high correlation between government policies and support and women’s position in the work environment. Successful women thrive in a supportive community and ecosystem.
“However, the debate has moved beyond a question of regulation and governance to the realisation that gender equity delivers superior performance.”
Why then does progress remain slow in the corporate environment?
“There has been a lack of corporate initiatives and investment over a long period of time,” says Burmeister. “This will not change unless there is a clear strategic focus on integrating women’s experiences and viewpoints into the culture of the organisation.
“What continues to be of concern is that women are increasingly outnumbered as they rise through the ranks. This means that the pipeline of women available to move onto the executive committee and the board is jeopardised.”
According to McKinsey, men were twice as likely as women to reach middle management, and once they had won a seat on the executive committee, they were five times as likely as women to become CEO.
“The challenge of grooming the next generation of women remains critical,” says Burmeister. “It demands greater efforts to bring women into senior management roles. Moreover, it is time we stopped judging men on potential, and women only on past performance.
“Across the globe, industry associations, business schools and women’s groups are leading the charge. They are moving away from a purely advocacy role. Instead they are hosting seminars and events and providing networking and mentoring opportunities. And, of course, companies themselves can play an important role by intensifying their commitment to – and support for – gender diversity.
“Boosting the pipeline at all levels and facilitating the progress of women through the executive ranks is crucial. This includes targeting talented women for promotion and building a board that reflects market and customer demographics.”
Sources:
· Credit Suisse Research Institute, Gender Diversity and Corporate Performance, 2012
· McKinsey & Company, Women Matter, Making the Breakthrough, 2012.
