Why Placing Women In Corporate Leadership Roles Matters
It is well known that diverse teams make better decisions. The link between diversity and revenue derived from innovation is particularly compelling in the current business environment. We, therefore, need our corporate boardrooms to be better representative of the country as a whole, and specifically of the shifting stakeholder profile for business. Gender parity in South African boardrooms makes business sense.
According to the University of Stellenbosch Business School’s report, Women on South African Boards – facts, fiction and forward thinking, women represent 45 per cent of the working population, yet only 20.7 per cent of the board members on JSE-listed companies. A significant number of JSE-listed companies do not even have a single female director. When it comes to executive teams, according to a PwC Executive Directors’ report, the statistics are less impressive: only 14 per cent of CEOs, CFOs and executive directors of JSE-listed companies are female.
State-owned enterprises fare better than the private sector, with 42 per cent of all directors being female.
The ongoing under-representation of women on boards and executive teams is curious given that gender diversity is now a requirement in terms of JSE regulations, a King IV recommendation, and is widely accepted as leading to better business outcomes. Laws relating to broad-based black empowerment and employment equity have stringent requirements relating to gender ratios at various levels in the workplace.
One could argue that corporates still do not fully buy into the business value of greater female participation at the highest levels. But, we must also recognise that women are sometimes still relegated to subservient roles in society – to an extent, corporates reflect the society in which they exist – and that certain misconceptions hamper the move towards better female representation.
One view is that the same faces continue cropping up, meaning that efforts to improve gender representation tend to benefit a small pool of people. There is also the perception that only a small pool of directorial talent on which companies can draw exists. This is not true: there is a plethora of qualified women and the number of female graduates is rising steeply. By July 2019, 38 per cent of all chartered accountants in the country were female, and female candidate attorneys outnumbered males between 2010 and 2017.
The need for specialist skills
The Institute of Directors in South Africa has been advocating the need for a professional class of directors and we created two formal designations – chartered director and certified director. This provides the framework for would-be directors to acquire essential specialist skills and a professional code of conduct, and keep their skills updated via a formal programme of continuous education. Growing numbers of females are being awarded these director designations.
A key issue is the nominations process where nomination committees tend to draw on the same pool of talent. They must develop new networks to tap into the existing abundant female directorial talent. A more proactive stance in creating succession plans and pipelines is needed – perhaps by sponsoring younger women to embark on programmes to acquire directorial skills.
Companies must recognise that none of this will happen “naturally”, and the process needs to be managed. Setting targets and reporting on them is a crucial part of ensuring change. Another is creating an environment that both provides for specific female needs and is open to alternate ways of thinking and doing.
In the final analysis, the drive to achieve better gender representation is unstoppable, especially once the business case becomes widely accepted. Companies that recognise this will steal a march on competitors.