For all the talk today about gender diversity and inclusion, the fact remains that the global representation of women in economic sectors that contribute to national GDPs, and specifically in leadership roles, remains abysmally low. Any progress is incremental and slow and we are likely to see some reverse trends due to COVID-19.
With the growing focus on good corporate governance and the call for greater diversity on boards to encourage multilateral perspectives that are considered a business imperative to enhance decision-making and innovation – crucial attributes in steering post-pandemic recovery efforts – the under-representation of women on boards is increasingly becoming a sticking point.
Having a more gender-diverse board is a starting point for greater growth – bringing in new voices, experiences, ideas and approaches to the decision-making process while adding depth to the existing competencies and skills around the boardroom table – and ultimately, ensuring a higher return on investment.
Sadly, despite the clear evidence suggesting that we will be in a stronger place with equal representation, studies indicate that at the current rate of change, it will take 200 years to close the gender gap.
The GCC region reports a significant lag when it comes to gender diversity on boards. ACCA, the global body for professional accountants, reported in 2017 that only 2 percent of all board positions in the region were held by women. The report also revealed that across the region only 13 percent of CEOs are women (compared to an average of 21 percent in emerging markets and developing countries) and only 7 percent of GCC board chairs are female.
Little seems to have changed in the interim years. The UAE appears to be faring better than many of its counterparts in the region, with the country’s Securities and Commodities Authority (SCA) considering the value of mandating that all listed companies appoint at least one female director on their boards, according to Bloomberg. The media giant went on to add that the five biggest companies listed on Dubai and Abu Dhabi’s stock exchanges had 84 board members, only three of which were women.
To overcome these challenges, the UAE Cabinet has lately ruled that all state-owned corporations should have at least one female board member. Much work lies ahead for the private sector to march in step and ensure women are offered more career paths to the upper echelons of power in organizations that are traditionally male-dominated.
Boards thinking of a quick fix to preempt criticism by appointing a token woman should, however, think twice. This can be a self-defeating exercise when all the research points out that only through ensuring at least 30 percent women representation can companies and boards reap the benefits of genuine diversity and improved outcomes for shareholders and stakeholders. The empirical theory of the ‘power of three’ considers one woman as a token, two as a presence and three as a voice. To achieve this magic minimum though is still a daunting prospect in a region where gender biases are heavily skewed against women.
Why does it matter after all to have more women represented on boards across the region? In addition to the human rights aspect, there is a clear economic angle that has been repeatedly emphasized by management consultancies and research entities. A study by McKinsey Global Institute in 2015 showed that advancing women’s equality will ensure an additional contribution of $12 trillion in annual GDP by 2025. The report also provided a full-potential scenario whereby women playing an identical role in labor markets as men can add $28 trillion or 26 percent to the global annual GDP by 2025.
One solution for the GCC region is to follow the example of several Western countries to introduce quotas. Norway was the first to do this in 2008 by stipulating a minimum of 40 percent participation of women on boards. They were called the golden skirts because there were so few of them! Several European countries followed with a 30 percent quota. Being an intensively rules-driven environment, change can only take place in this region if it is enforced by regulation.
Quotas are only a temporary solution to drive long-term change and can mark a well-intentioned step in shaping inclusive boards for the future. Transparency in appointing directors, and addressing unconscious and subliminal biases in bringing on board the right candidates is key. Likewise, we need to develop a pipeline of female C-suite executives that are capable of taking on future board positions.
Published gender diversity indexes will encourage organizations to come forward and reveal rather than downplay their gender statistics – how many women on the board and how many women at senior levels, among other inputs.
Awareness and greater recognition of the issues at hand, rather than denial of the situation, is a positive beginning. Through stimulating greater dialogue and engagement and embedding diversity and inclusion into corporate governance best practices, we can at the very least shine a proverbial beacon at the end of the tunnel in achieving parity sooner rather than later.
By : Jane Valls
Jane is the Executive Director of GCC BDI and has over 15 years of international experience in corporate governance and working with boards of directors. She is an accredited corporate governance trainer with the International Finance Corporation (IFC), part of the World Bank Group, and is an accredited trainer with the Ethics Institute, as well as being a Certified Ethics Officer. From 2010 to 2015, Jane was the CEO of the Mauritius Institute of Directors (MIOD), one of the leading institutes in Africa. She was the first Chairperson of the African Corporate Governance Network from 2013-2015, a network which she helped to found, bringing together 17 Institutes of Directors from across the African continent. Before joining the MIOD, Jane held senior positions and directorships in a wide range of business sectors with leading companies including British Airways, Air Mauritius, Sun International and The Rogers Group, among others, as well as running her own management and training consultancy. Jane holds a BA Hons in French and Italian from Birmingham University, UK. She was awarded an Honorary Doctorate Degree by the University of Middlesex for services to business, women’s empowerment and social justice and she was decorated by the Republic of Mauritius as a Commander of the Order of the Star and Key of the Indian Ocean (CSK) for services to corporate governance.