Business practices must be updated to make senior management a more welcoming environment for women. And general attitudes towards working mothers will have to undergo a major change, writes Elissa Jobson
A growing body of evidence suggests that appointing women to corporate boards isn’t just good common sense, it also makes good business sense. According to a study from Leeds University Business School, the presence of at least one female director appears to lessen the chance of bankruptcy by 20 percent and that having two or three women in the boardroom reduces the possibility even further. Goldman Sachs has estimated that the gross domestic product of the eurozone could be increased by up to 13 percent if the gender gap was closed. And McKinsey has found, in its ‘Women Matter’ report for 2010, that the operational profit of companies with the greatest number of women on the board was 56 percent more than those with only men at the highest level.
Yet, despite the fact that increasingly there are more female than male university graduates and that men and women enter the workplace in roughly equal numbers, the proportion of women in senior management positions has fallen over the past two years. Recent research produced by Grant Thornton, an international accountancy and consultancy firm, reveals that women now hold only 20 percent of senior roles worldwide, down from 24 percent in 2009. “It is disappointing to see that the global proportion of women in senior management has shown no sign of growth,” said April Mackenzie, Grant Thornton’s global head of public affairs and external relations. “Female executives appear to be bearing the brunt of the global economic downturn.”
Why do so few women make it to the top in the corporate world? Dr Shima Barakat, a fellow with the Judge Business School at Cambridge University, identifi es two main barriers to women. First is the diffi culty of balancing work and domestic responsibilities. “Women take time out to have children and slow down, or don’t come back at all, or choose a different career,” she said. Secondly, the fact that there are so few women in senior positions means that they are subject to more scrutiny and are even judged to a higher standard than their male counterparts. “As a woman moves up the corporate ladder there seems to be a certain vulnerability attached to her. You’re moving up, you’re being championed, you make a mistake and ‘poof!’, you’ve fallen off the ladder,” Barakat explained. This prevents women from even considering putting themselves forward for promotion. The McKinsey report, too, has recognized that many women are reticent about advocating for themselves.
The number of women in the boardroom is not, however, consistently low across the world – some countries and some regions have surged ahead. Grant Thornton’s ‘International Business Report 2011’ states that Thailand has the highest level of gender-diversity with 45 percent of women occupying senior managerial positions, followed by Georgia (40 percent) and Russia (36 percent). At the regional level ASEAN and BRIC countries are performing well, with 35 percent and 27 percent female representation, respectively. At the other extreme, Japan and the United Arab Emirates have a very poor record, with only 8 percent of board members in these countries being female. India is also low at 9 percent. Among regional groupings, the G7 (16 percent) and North America (13 percent) do not do well.
Mackenzie believes that these variations can be explained through cultural differences, both in business practice and more widely in society. “I think in Japan what we can see is a reflection of the traditional male-dominated culture of the business world and what is considered an acceptable role for women in Japanese culture,” she said. In Thailand, where there is a much stronger family infrastructure and where grandparents provide childcare and other household support, women are freer to climb the corporate ladder.
She also pointed to the need for companies to make it easier for women to slip in and out of the workforce when they have children. “In Russia, they have very good parental leave benefits and this results in a fairly high number of women in senior management positions,” Mackenzie said. In the G7 countries and North America, by contrast, there simply isn’t the structure, support or flexibility in the work environment to allow women to return to the workforce. Establishing programmes that enable women on maternity leave to continue training and networking would be one way of keeping them connected to the workplace, as would more flexible working hours and fast-track schemes allowing returnees to quickly make up the time and experience they have missed.
One sure-fire, if controversial, way of ensuring more female representation on company boards would be statutory quotas. When Norway introduced a 40 percent quota in 2003, the number of women occupying board seats rose dramatically from 6.8 percent to 44.2 percent. In 2008, France followed suit – in January this year the government passed legislation requiring a minimum of 40 percent female members on executive boards – and Germany and Austria are also considering this action. Mackenzie supports quotas. “We’ve observed in other walks of life that often society needs some added incentive to create change,” she said. “I think they are a positive move because otherwise things will not change rapidly enough and the world be all the poorer for it.”
But not everyone agrees. Shima Barakat is opposed to quotas: “I think it most certainly would work but whether it’s a good thing is an entirely different matter, ”she said. It could lay female board members open to criticism and risk giving the impression that the women don’t deserve to be there, that they are only there to make up the numbers. This, she believes, would be detrimental to the entire women’s agenda and would possibly undo some of the improvements and progress achieved over the last few decades.
There is another course, a middle ground between those who advocate quotas and those who reject them outright. In the UK, former Trade Minister Lord Davies issued a review of women on boards at the end of February. He fell short of calling for mandatory quotas, recommending instead that companies listed in the FTSE 100, which currently have only 12.5 percent of their boardroom seats occupied by women, should be aiming, at a minimum, to double female representation by 2015. His report says that companies should set targets and fully disclose the number of women working in their organisations at all levels which, in turn, will help drive up the numbers of women with top jobs in business.
“Currently 18 FTSE 100 companies have no female directors at all and nearly half of all FTSE 250 companies do not have a woman in the boardroom. Radical change is need in the mindset of the business community if we are to implement the scale of change that is needed,” said Lord Davies. “This is not about aiming for a specific figure and is not just about promoting equal opportunities but it is about improving business performance.”
It’s also about ensuring that company boardrooms reflect the gender balance of the workforce and customers. Mackenzie agrees with this. “Businesses would be all the richer for bringing a different perspective to the board, to reflect the population as a whole and more of the demographic of their client base. It allows a different insight and a different way of problem solving,” she said. But market forces alone are unlikely to lead to greater diversity at the top. Unless business practices change and corporate and societal attitudes towards working mothers shift, the boardroom will continue to be a hostile environment for women.
