When it comes to reaching the upper echelons of business, women in the new Egypt continue to face some of the same old problems. But a substantive body of research and European success stories suggest that the country needs women on corporate boards now more than ever.
During this time of historic change, the status of women in the executive offices and boardrooms of Egypt appears to be stagnant at best, with longstanding social and cultural obstacles continuing to block their career paths. The plight of women is particularly stark against the backdrop of an economy that desperately needs a boost and several studies that link higher female boardroom representation with healthier bottom lines.
Organizations such as the International Finance Corporation (IFC) actively support women's board representation in Egypt. "A growing body of research shows a broad set of business benefits associated with gender diversity on corporate boards: improved financial performance and shareholder value, increased customer and employee satisfaction, rising investor confidence, and greater market knowledge and reputation," according to an IFC statement in September.
Nonetheless, in the past year the percentage of women in top positions has actually declined. Corporate research company GovernanceMetrics Inter-national found that the percentage of women on boards of directors in Egypt fell to 6.7 percent this year compared to 7.6 percent in 2010. The data is worse for EGX 30 companies: 7.5 percent a year ago and 6 percent today. While 40 percent of EGX 30 companies have at least one woman board member, only one has a female No. 1: Mona Zulficar, non-executive chairperson of the Arab World's largest investment bank, EFG Hermes.
For Zulficar, being alone at the top is nothing new. "Throughout my professional career, I have always been the only woman," she says, citing her six years on the board of the Central Bank of Egypt as an example. "This is the story of my life."
Bottom line
For the past decade, research has shown that if a company wants to boost its bottom line, it should have more women on the board, not fewer. Pepperdine University business administration professor Roy Adler studied 215 Fortune 500 companies from 1980 to 2008. Adler's team identified companies that were most aggressive in promoting women to senior positions and compared them to the median performance of Fortune 500 companies in the same industries.
"The results were astonishing," Adler reported. The 25 firms with the best record of promoting women outperformed the median in all evaluations of profitability - profits as a percent of assets, revenues and stockholder's equity averaged 18 percent, 34 percent and 69 percent higher, respectively.
While correlation does not prove causation, Adler calculated the odds of all 18 measures favoring women randomly at 262,114 to 1. "When three measures per year for six different years all show the same positive results... something other than coincidence seems to be in play," he said.
Independent research organization Catalyst reviewed Fortune 500 companies with similar results: Those with the highest representation of women enjoyed advantages in return on equity, sales and invested capital. From 2001 to 2004, researchers compiled and examined financial data from the Standard & Poor's Compustat database, with the top quartile composed of the 132 companies with the highest average percentage of women on their boards.
The Catalyst study also found that "stronger-than-average results prevail at companies where at least three women serve" on boards. Average return on equity, sales and invested capital for all companies were 11.5 percent, 11.5 percent and 6.2 percent, respectively. For companies with three or more women directors, those measures were 16.7 percent, 16.8 percent and 10 percent, respectively. Further, Catalyst noted that the "link between women board directors and corporate performance holds across industries."
Consulting firm McKinsey concurs. "Companies with a higher ratio of women in top positions experienced better financial performance," according to McKinsey's 2007 report "Women Matter," which goes on to say that "companies with more than two women present on the board outperform others in their sector on their return on equity, stock price growth and operating results."
In 2002, the Conference Board of Canada's report on women on boards concludes: "Companies with the best record of promoting women to high positions are more profitable than their peers in terms of returns on assets and investment."
UC Davis surveyed the 200 largest publicly traded companies in California and found that having more women in top corporate positions yields "stronger relationships with customers and shareholders and a more diverse and profitable business," while the University of Delaware found positive stock price reactions for companies that engaged in public diversity promotion initiatives.
Similarly, England's Cranfield University studied FTSE 100 companies, the largest ones in the UK, and found that those with more women in the highest leadership positions commanded share price movements that outperformed the average. Cranfield researchers concluded that their results could be explained by women's better identification with consumers, diversity of thought and approach, or simply the result of a company's ability to access a broader pool of executive talent.
A 2009 study by Renee Adams and Daniel Ferreira, "Women in the Boardroom and their Impact on Governance and Performance," supports this reasoning, concluding that "strong board diversity is shown to lead to more objective and active boards, greater participation in decision-making and stronger management oversight."
Leading Egyptian businesswomen offer their own opinions for why more women on boards correlate to higher profitability. "Women are more sensitive to risk and have a better vision of future risk compared to men," says Pacinte Fahmy, who has worked at Chase, Egyptian American Bank (now American Express Bank), Misr International Bank (now NSGB) and Al Baraka Bank, and served on several boards. And Loula Zaklama, president of public relations firm Rada Research and a founding AmCham board member, says that increasing the share of women will increase productivity because women have "more stamina and endurance."
An IFC survey released this year revealed that many of their male colleagues share an appreciation of the value of women on boards. "The boards on which I sat that had women members did in general seem to be more interactive and more dynamic than all-male boards," says Ashraf Gamal, head of the Egyptian Corporate Responsibility Center and former executive director of the Egyptian Institute of Directors. He believes that gender diversity at the board level creates good governance, saying, "Women at that level are very willing to participate in the give and take and bring a critical eye to the proceedings."
Glass ceiling
Even in industries known for having many women, such as banking, females are underrepresented on boards of directors. Neveen El Tahri, chair of Delta Financial Investments, says that only a small percentage of the vast number of professional women bankers make it to the board level. Relatively speaking, banking is also an underrepresented sector, reasons El Tahri, who from 1997 to 2003 was the first woman on the board of the Egyptian Stock Exchange.
The number of women directors among Egypt's big businesses can be counted on one hand, says Sahar El Sallab, board member of Naeem Holding Company and Nile Financial Leasing Company. El Sallab also has been on the boards of Commercial International Bank, where she worked for 30 years, and AmCham. In 2008, she was sixth on Forbes' list of the top 50 Arab businesswomen.
Egypt consistently scores near the bottom in the World Economic Forum's Global Gender Gap Report, ranking 125th of 134 countries last year. At the senior managerial level, the male-to-female ratio is nine to one, compared to the international average of four to one.
Social mores concerning gender roles are seen as a significant factor in the lack of women in the upper echelons of business. Nehad Abu El Komsan, chair of the Egyptian Center for Women's Rights (ECWR), says women are frequently seen as fragile, weak under stress, untrustworthy and disloyal. Bearing and raising children is another obstacle to advancement, "because the social responsibility of raising children is not shared," she says.
Says Fahmy: "To pass through the glass ceiling, you have to be 20 times more qualified than a man."
Quotas, laws
If the problems are clear, so are potential solutions. Advocates need look no further than Europe, a proven success story in increasing the representation of women on corporate boards.
In 2003, Norway passed a law that mandated 40 percent representation of each gender on the boards of nearly 500 public companies, including 175 listed on the Oslo stock exchange. Those who failed to comply would face closure. Today, Norway has the highest proportion of women on boards in the world at 44.2 percent; in 2001 it was 6 percent.
Norway, where 80 percent of women are employed outside the home, attributes its success to "a long tradition of equality in work life," says Morten Huse, a professor at BI Norwegian Business School and an influential broker of the 2003 legislation. "The law required gender balance and publicly traded companies did not have any choice but to follow."
Spain legislated gender quotas in 2007, with Italy and France in tow. Spain requires 40 percent representation and Italy 30 percent. Quotas of at least 33 percent are being discussed in Belgium and the Netherlands. In July, the French adopted a staggered increase, requiring boards to reach 20 percent female representation by 2014 and 40 percent by 2017. Women currently hold 10.5 percent of board positions on the CAC 40, the index representing France's largest publicly traded companies. In the United States, women's board representation stands at 15.7 percent, much better than Egypt but well below European levels.
European advocates describe challenges that sound similar to those in Egypt. "If France didn't impose a quota, nothing would have changed," says Muriel de Saint-Sauveur, diversity director at French accountancy firm Mazars Group. This view echoes that of hundreds of men and women she interviewed for her just-published book, "A Women's World, A Better World?"
Quotas for Europe apply to both genders: A 40 percent quota requires at least 40 percent representation for men and women. Hala El Barkouky, chair of AmCham's Women in Business Committee, believes this is the way to promote quotas in Egypt. "There will be no constitutional problem because we will not favor one sex over another," she says, suggesting a phased-in 30 percent quota. She says the committee's key objective for next year is to push gender quotas through the new parliament.
El Sallab agrees. "As a rule of thumb, 30 percent of the board should be women," she says. "They did it in Norway, why don't we advance, too? They started at 40 percent, why can't we start at 10 or 20 percent?"
Not only is Egypt ready for a quota, it is past due, says Zulficar, adding that a gradually implemented 50-50 target would be best.
However, gender quotas on boards are not without critics, who see them as a kind of reverse discrimination that gives women an unfair advantage. "It is wrong to positively discriminate," says Anna Pehar, former director of executive education at Rotterdam School of Management, who believes that women could be stigmatized if they are seen as becoming board members because of quotas rather than merit. She confesses, however, that she sees no better solution.
Among senior Egyptian businesswoman, quotas elicit a range of responses. "Women should be directors if they are efficient and qualified enough for the job," says Fahmy. And while El Tahri thinks there should be more women on boards, she does not favor quotas.
Others insist that any quotas should exist only long enough to level the playing field. Ultimately, "women need to earn it," Zaklama says. "Quotas are temporary by definition, tools to help reach the objective of change," says Zulficar, who advises reassessing 10 years after implementation.
Caution surrounding the use of quotas in Egypt is understandable given the result of a recent attempt to increase the number of women in the People's Assembly. Law 38 of 1972 was amended to add 64 seats - 12.5 percent of the total - earmarked for women. Barely a year later, the quota was omitted from a new election law by the ruling military council.
As for corporate boards, Fahmy and El Tahri opposed quotas for women in parliament. "You cannot have 64 women in parliament without knowledge about politics," says El Tahri, who asserts that many of the women were handpicked.
Others, like El Barkouky, believe it was a major setback to reverse the first positive step toward legislating women's empowerment in Egypt.
Various legislative alternatives to quotas have been floated. Zulficar, a lawyer for more than 30 years, says Article 4 of the 1979 UN Convention on the Elimination of All Forms of Discrimination against Women supports adopting "temporary special measures aimed at accelerating de facto equality between men and women." Egypt is a signatory to the convention.
"I provided the solution five years ago when I proposed a new law on equal opportunity," says Zulficar. The proposed legislation was adopted by the National Council for Human Rights, but eventually watered down to what amounts to a slap on the wrist for offenders.
On October 15, the Supreme Council of the Armed Forces issued a decree outlawing discrimination based on "gender, origin, language, religion or beliefs" with an LE 30,000 minimum fine for violations, but few believe it will make a difference. "How can you prove discrimination? You go for an interview and they choose the man and not the women," remarks Fahmy.
Advocacy, grassroots
Others wary of quotas argue that non-legislative options should be the priority for improving opportunities for women. Altering societal views toward women would be a paradigm shift that can only be tackled through a long-term campaign ranging from high-level advocacy to grassroots initiatives, says Fahmy.
Yomna El Sheridy, president of Business Women of Egypt 21 (BWE 21), recently returned from September's OECD-MENA Women's Business Forum. The concluding report said: "Women's advocacy groups, such as businesswomen's associations, have a crucial role to play in ensuring that constitutional, legislative and regulatory reforms take into account their impact on women's ability to freely engage in economic activities."
BWE 21 is an independent NGO formed in 1998 composed of 120 women ranging from entrepreneurs to members of corporate boards. Among its seven committees is one tasked with improving the image and role of businesswomen at the local level, which in turn promotes raising gender equity on boards. "No society can reach a steady sustainable development without the highest possible participation of all its members," a BWE 21 publication says.
High-profile efforts have been made in the past. Jihan Sadat and Suzanne Mubarak tried to promote women in leadership, but there was a lack of continuity, says Fahmy, who served in the economic group of the National Council for Women headed by Mubarak. That and similar bodies were "built for the fame of the head," she says, urging a shift from an individual to institutional focus.
State statistics agency CAPMAS released a 2009 report titled "The Status of Man and Woman," which said women were largely unaware of their constitutional right to gender equality and that disseminating information on gender equality issues would empower and motivate women to be active participants in the labor force. In addition, the report suggests that teaching the values and duties of citizenship should be compulsory, focusing on the civic role women can play by aspiring to corporate leadership positions.
Revolutionary shifts
Next year may see even fewer directorships held by women, according to El Sallab, who believes that women have been undermined since the revolution. She argues that the first step is to get women back into the political arena, which will have a multiplier effect in the business sector.
"Women are not proving themselves," El Sheridy of BWE 21 says. "The mindset of the traditional role of a woman needs to change." Training and capacity building is the way to achieve that goal, in her view. El Sheridy believes the need to be proactive is urgent, because upcoming elections could be a setback for the cause.
El Sheridy opposes mixing business and religion, echoing concerns among female executives about the status of businesswomen under an Islamist government. Zaklama is more positive about the role of religion, citing success stories from Malaysia and Indonesia, where women serve on boards and in other leadership positions. Zulficar holds a "great belief that Islam provides equality for men and women."
Clearly, the window for change is open. With Egyptian delegates in attendance, September's OECD-MENA Women's Business Forum and October's Deauville Women's Forum highlighted the issue of women on boards. And the awarding of this year's Nobel Peace Prize to three women for advancing gender rights is another testament to shifting sands.
For those who are hopeful about the future of women in business, Erik Paulsen, acting head of mission at the Norwegian Embassy in Egypt, says it best: The percentage of women on the boards of companies in Norway a decade ago was almost exactly what it is in Egypt today.
© Business Monthly 2011
