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Gender Diversity: Good for Business

Johann Redelinghuys is previously founder and chairman of Heidrick & Struggles South Africa, now The Director of the Chairman's Institute and of Portfolio&Co

It’s a proven fact that women are under-represented on boards of companies. The reasons for this are obvious and not so obvious. But one thing is certain: those boards with better representation perform better, writes JOHANN REDELINGHUYS.

Boards of directors should not be appointing women to boards because the KING III report says we should strive for gender diversity. They should do so because diverse boards make better strategic decisions, manage risk more effectively and ensure better profit performance.

“Male-dominated boards will fall behind rivals” says a major report recently published and widely commented on in The Telegraph. Without women to ensure that they are attuned to their customers, men on boards, the report says, fall into “group-think” and end up making flawed decisions. Women provide challenge and are not afraid to ask the “dumb questions”. They are fearless and know how to combine a sensitive care for people with a tough, hard-nosed business approach, says the report.

Now the Equalities and Human Rights Commission in the UK has suggested that companies should appoint more women directors to help the economic recovery. The European Justice Commissioner has even suggested that quotas for women on boards should be considered. The British government wants to see 25% of women on FTSE 100 boards by 2015. The commission watchdog found that “head-hunting firms still too often short-list candidates who ‘fit in’ with the values of existing board members, who are largely men”.

In South Africa, an initiative by Business Unity South Africa found, in 2010, after surveying almost 300 companies that “women are grossly under-represented” on boards and in key leadership positions. Busa indicated that “representation of women on boards remains below 10% while they are 50% of the economically active population”.

Just to make sure we understand each other, there is no question that women make a substantial difference on a board and that diversity of thought and background does indeed improve decision-making on boards. Women bring a much-needed perspective, which is different to what seems to be the entrenched, male-dominated way of thinking. There is a proven correlation between gender diversity and good corporate performance.

But my question is, why, if they are able to make such a difference, which is now widely acknowledged, and can indeed add to the bottom line of a business, would they be so discriminated against? Why would the men, chairmen and CEOs of companies not recognise the very substantial added value brought by women?

An even more important question is why are women, who now have a much stronger voice, allowing this to happen? Women, after all, are famous for overcoming life’s most daunting challenges. They are versatile, adaptable, and have huge emotional and operational resources. So why is this happening?

The quick answer is that we have lived in a male-dominated society for millennia, and women have been subjugated by men until very recently. Even now, male prejudice undermines them. They are in a constant fight to break through a “glass ceiling”, but if the poor representation numbers are correct, then they are failing. And the question again is: “Why?”

The Business Women’s Association of South Africa, in their “Women in Leadership Census” lists 17 women who now chair listed company boards, including well-known personalities like Cheryl Carolus, Hixonia Nyasulu, Cynthia Carroll and Philisiwe Buthelezi. Clearly there has been progress. This would have been unthinkable just a few years ago. But the progress is slow, and in many cases it is evidence of “doing it because it is required” rather than because there is a conviction of its value for the business.

A study conducted by McKinsey in 2010, “Women Matter”, confirmed the findings of under-representation of women on boards and in the executive ranks of listed companies. The study describes a number of interesting personality traits and barriers for women who work full-time and who see themselves as being on “the CEO track”, heading upward in corporations toward the “C-suite”.

Three significant barriers where mentioned. The first is the “double burden” syndrome, where women have to manage their career aspirations as well as their domestic commitments. The second is called the “anytime anywhere” value system where men make themselves available, anywhere and at any time, but where women have difficulty with this. The third and very significant barrier is “the reticence of many women to advocate for themselves”. Women are more modest about their abilities and their achievements. They tend to underestimate themselves.

So much for women who work in executive jobs full-time. Board appointments, however, release women from most of these concerns. They don’t have to keep their eye on long-term career development and they don’t have to compete with men to be available all the time. They can balance their career and domestic issues more easily because of the greater time flexibility. This is obviously more applicable to the professional non-executive director, and applies less to women who have full-time jobs as well as serving on boards.

The study also indicates that, though there have been substantial strides in the right direction to have greater representation for women, this is a slow process and will probably take “two or three generations” more to make any significant difference. The options are either that we all wait, patiently, for this process to evolve, or we try to find some means of accelerating it.

The obvious option is that women take matters more into their own hands and don’t wait for men to ensure their greater leadership and governance representation.One particular option based on the research findings, suggests itself. If women could address the “reticence to advocate for themselves” they would be able to position themselves much more effectively.

Some women have said that the only way to get to the top is to model their behaviour on that of men because that is what men understand – or to use their feminine guile to influence male thinking. If this is true it would be a great pity.
Women need to find their own unique confidence and be willing to assert their special attributes in a more secure manner. If they could do this their contribution on a board would be more visible. Men would have to re-look at the models of male-dominated governance. The incentive, apart from it simply being the right thing to do, must surely be the fact of better corporate performance that is generated by gender diversity. DM

Read more:

Self-awareness and the glass ceiling on Daily Maverick


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