WOMEN are under-represented in leadership positions in many countries around the globe. The GMI Women on Boards survey revealed that South Africa ranked fifth globally in 2013. Despite this ranking, females only held approximately a fifth of all local directorship in 2015. The average female board membership for the 200 largest companies globally was also less than 20% at the time.
These relatively low levels of female board representation could be ascribed to, amongst others, gender stereotyping, the so-called glass ceiling and biased nomination processes. Nomination committees still rely heavily on the “Old boys’ club” to identify board candidates. Family responsibilities might also hinder some women’s progress to the top of the corporate ladder.
When contemplating work-life balance, some women experience conflict in deciding which career goals to pursue. Females typically feel more anxious about the sacrifices required to be effective leaders than their male counterparts. As a result, some women make a conscious decision not to pursue directorship positions. Others are obstructed from reaching the top by fellow women who exhibit the “queen bee syndrome”. These women are unwilling to share their hard-earned positions with other females.
Arguments for enhanced board gender diversity range from a moral imperative (it is the right thing to do) to the business case (it is the bright thing to do). Not only do women bring fresh perspectives to the board, but they also offer innovative solutions.
Research shows that women directors have a more collaborative leadership style, are more open to diverse opinions and show a greater commitment to addressing social and environmental challenges than their male counterparts. Although ‘group think’ might decrease when diverse candidates are appointed to a board, conflict and slower decision-making could occur, especially when such directors make their voices heard.
Norway takes the lead
Several mechanisms exist to promote greater board gender diversity. The most controversial is mandatory gender quotas. Given that Norway had less than 10% female directors in 2003, they took the lead by introducing a mandatory quota of 40% female board representation. Not all women welcomed this legislation, arguing that they want to be appointed on merit, not gender.
Following the success in Norway, several other European countries introduced similar quotas. Failure to comply could result in a company being fined or suspended from the stock exchange. A directive to improve board gender diversity across Europe was proposed, but has not yet been accepted by the European Council.
Instead of prescribing a mandatory gender quota, the British government followed a less prescriptive approach by introducing voluntary gender targets. As FTSE 100 companies achieved the initial target of 25% by 2015, a new target of 33% was set for FTSE 350 companies by 2020.
In 2014, an attempt was made to legislate the progressive appointment of at least 50% females in top decision-making structures in South Africa. The proposed National Women Empowerment and Gender Equity bill was widely criticised and subsequently withdrawn for further consultation. Critics warned that the bill might result in tokenism and overboardedness, given the limited pool of eligible female candidates in the country.
Although there is no prescribed percentage for female board representation at this stage, it is clear that South African companies are increasingly under pressure to promote board diversity. For example, the 2013 Broad-Based Black Economic Empowerment Codes of Good Practice and King IV make pertinent reference to race and gender diversity at board level.
As from January 1 2017, JSE-listed companies should have a formal policy on the promotion of board gender diversity and disclose progress in this regard. Although a board race diversity disclosure item was added to the JSE Listing Requirements in 2016, the effective implementation date has not yet been announced.
Shareholders also have a role to play as they are the ones who elect board members. Our research on public and private activism, however, shows that institutional shareholders are not concerned about board gender diversity, but rather focus on race diversity. Interviews with local institutional investors revealed that they are not in favour of mandatory diversity quotas.
Closer analysis of the JSE Top 40 shows that companies with more diverse directorates (both in terms of race and gender) are more likely to have diverse nomination committees. As nomination committees become more diverse, they tend to appoint significantly more black directors.
Many companies have initiatives to grow the pool of eligible board candidates. For females to be in running for these positions, they should utilise these opportunities, obtain the required qualifications, develop the necessary capabilities and find suitable coaches and mentors.
*Dr Nadia Mans-Kemp and Prof Suzette Viviers are academics in the Department of Business Management at Stellenbosch University. Their research centres on board-related aspects of corporate governance.