Susie Isaacson, Head of UAE ACCA (The Association of Chartered Certified Accountants) reviews its research study Women in Finance: a springboard to corporate board positions' and highlights reasons for the gaps in boardroom diversity for women employed in the finance industry
Whilst there has been tremendous progress in encouraging women in the MENASA region to progress their careers, we remain a long way from true workplace diversity. Women remain seriously under-represented at senior levels in virtually all areas of economic activity, and particularly in finance.
Since the global crisis of 2008, profound questions have been asked about the efficacy of the governance mechanisms of large corporations. The board of directors through its mandated committees, provide the main mechanism of internal corporate governance and therefore when tackling the gender equality debate, the focus is largely dominated by measurement and analysis of the number of women at board level.
Until recent years, corporate boards were almost entirely composed of men, typically aged 55-70, from a well-educated background. We are starting to see a shift here in the Middle East, but that shift is tiny. For example, across in the UAE, the average percentage of female directors on corporate boards is just 1.2 per cent, in Kuwait, it is 1.7 per cent and in Oman it is 1.8 per cent (Catalyst). In Europe; it is slightly higher at 13.7 per cent (EU Commission 2012).
This gender imbalance persists despite a wealth of evidence highlighting the benefits of inclusiveness at board level. Research suggests that diversity facilitates better decision making, greater independence, better adherence to corporate governance, less insolvency, greater innovation and creativity, and less 'group-think', where members of similar backgrounds can tend to ignore alternative views or concerns, leading to flawed decision making. Indeed, the Deloitte study; 'Corporate Performance and Women's Representation on Boards' found that 66 per cent of companies with the highest proportion of female board directors outperformed those with the least.
In order to take advantage of the opportunity that the economic recovery presents, steps must be taken to address gender imbalance. To do this, we need to explore ways to strengthen the pipeline of women progressing through the highest executive levels. Perhaps the first step in this process is to understand the opportunities and constraints on career progression that women face.
With this in mind, ACCA (the Association of Chartered Certified Accountants) the leading global accountancy body, conducted an extensive research project to explore whether having a certain type of background or qualification affects the likelihood that senior women will obtain a board directorship. The resulting 'Women in Finance: a springboard to corporate board positions' report found that proportionally, women are more successful in attaining board positions where they have a financial background. For example, the research found that only 26 per cent of male executive directors are financially qualified and a total of 44 per cent have financial backgrounds. This is compared to 44 per cent of female Executive Directors who are financially qualified and 65 per cent who have financial backgrounds.
ACCA's report found that stereotypes remain despite the focus on increasing female board appointments among many global firms. As a result, focus must be placed on addressing these stereotypes and breaking them down to allow women to be judged on merit and achievement as opposed to gender. For example, evidence in this report suggests that companies may be more positively disposed to appointing women to board positions if they have a financial background due to the specific characteristics that finance skills denote.
For this reason, evidence showed that women with the skills to converse in the language of finance are able to break down some persistent stereotypes about female competence and emotional nature. Those interviewed believe that this is because finance is also seen as the language of the board and for women with a finance background it makes them a part of the conversation.
ACCA's study also examined the gender composition of companies listed on the FSTE 100, some of the largest and best known brands in the world. Of the 93 FTSE 100 companies for which data were available, there are a total of almost 5.5 million employees (Boardex.com 2012). These 93 companies have a total of just over 1,000 board positions i.e. only one board member for every 5,500 employees. Therefore, it stands to reason that those with the motivation and ambition to reach top-level management positions and, ultimately, board level are driven by a clear sense of direction and purpose, identification with others in top positions and a sense that they will fit. It was therefore found that motivation and ambition appear to be closely linked to identification with similar others in the hierarchy above them. To inspire those currently progressing through the ranks, companies would benefit by highlighting role models that the junior female employees can look up to and ask for advice.
Ultimately, to reach board level in the finance profession, the technical skills and experience have to be clearly demonstrated. It is the soft skills innate in women that set them apart in the board room. For example, women tend to influence decisions without 'directing' those they are speaking with, meaning that typically, women build credibility with male colleagues rather than force their ideas. This approach tends to have a positive effect on the wider team as women spend time engaging with their colleagues by focusing on what everyone needs to do for the greater good.
It is more important, and more effective, to concentrate on the delivery of your message to gain buy-in from colleagues. Studies show that women secure far greater influence when instead of being aggressive and domineering to gain approval, they focus on competence and delivery of results.
That said, perhaps the heart of the issue is the need to recognise the value of supporting diversity and inclusion within teams throughout the region by implementing flexible working options and HR policies conducive to this diversity.
Companies often lose high-performing women at mid-management levels as they leave to have children, feeling that they cannot combine work commitments with family commitments. Organisations in the region that manage to successfully retain and promote women do so by providing strong HR collaborative support at pivotal points in their careers, creating structured mentoring programmes, and developing networking opportunities. Therefore, to make a real stride towards equal opportunity in the workplace, a more flexible approach to working must be adopted to ensure that the number of women in leadership positions grow, rather than decline.
To facilitate far better levels of gender diversity at the higher levels of organisations globally, and here in the region, practical steps such as mentoring strategies, frequent networking to ensure women are truly plugged into the industry and research to highlight the gaps in the system could make a substantive difference that will lead to a positive impact on organisation's operational and financial efficiency, the wider economy and most importantly, the women themselves.
© Banker Middle East 2014
