Including Women on Board of Directors

A wake up call for a new world order to avoid another cataclysmic economic & social recession – The diversity balance for a better representation of Women in all spheres of life including management hierarchy and on Board of Directors

The international woman day was celebrated on the 8th March and the theme for the year 2020 is “EachforEqual”. We know very well the positive contribution of women and can now see with the downward spiral of events unfolding how our economic and social fate would have been definitely a different outcome had we involved more women in decision making processes and given them responsibilities they should have shouldered.  It is unfortunate that in 2020 we would still need to voice out the need for women to be treated equally and be given equal opportunities as for men based on merits, no preferential treatment.

Unfortunately women still have to strive for gender equality on many aspects but most importantly in leadership roles and a gender equal pay.

It is sad that we have to repeat that chorus every now and then as a reminder…

With the world on the brink of chaos and economic depression, surely we cannot take the same ingredients and start all over again, we have gone down that route before.  Gender equality is about the Yin and the Yang and how they work together and deliver synergies across the board.  This is the holistic picture, we will see in reality what happens on the ground.

Statistical figures

Though the theme for 2020 is “EachforEqual”, is this actually reflected in statistical figures around the world? Contrary to many beliefs, the answer would be that we are not quite there yet.

According to a survey conducted by the International Monetary Fund, only 18% of firms globally are led by women, and to many beliefs, only 22% on average of board members in Organisation for Economic Co-operational Development countries are women. As for emerging countries, there is a even lower representation with only 13% in India and 8% in Brazil.

So the simple question, yet complex, is actually “Where are the women? Why are there few women represented on board levels around the world?”.

Law enforcement

Despite the general low statistical figures around the world, lets have a look on how countries are enforcing new legislations or amending current ones to encourage companies to involve more women in directorships and/or at senior management levels.

The UK code on corporate governance was amended and came into force in 01 January 2019. The revised code now requires companies to actually report on how they have applied diversity in their companies (ranging from board level to across the workforce) and how this is linked to the progress of achieving the companies’ objectives.

There is also an increasing need for female representation on UK boards for FTSE 350 companies whereby, there is a voluntary target of 33% minimum of  women’s representation on FTSE 350 boards by 2020.

Norway took an even more drastic step to address the gender gap at board levels and has since 2008, obliged listed companies to have at least 40% of their director seats for women and failure to comply, the listed companies would be subject to forced dissolution by the authorities.

Following into Norway’s footsteps, other European countries,  such as France, Germany and Italy have adopted similar gender quotas, i.e 30 to 40 % of corporate boards must be made up of women.

As for Mauritius, with the new code of Corporate Governance (2016) which was launched in February 2017, companies are now encouraged companies to have at least one woman who sits on the board. But let’s not forget that the Code has apoted an “apply and explain” approach and should companies fail to abide by this measure, it would have to state in its annual report why the need for female directorship requirement was not fulfilled. There is also no administrative penalty for failure for applying the rule of “1 woman on board”.

Despite Mauritius enforcing the new code, should there not be more legislatures be put in place to encourage women on corporate boards? Should Mauritius take a step further and also implement the 40% quota on women as directors on listed companies just like Norway?

Why have women on in the management hierarchy and boards?

So why have more women in managerial posts and on boards? What are the real benefits?

A small story cut short…in the microfinance space arena it is well known that women are more focused on savings rather than lending as opposed to men.  They have a higher credit worthiness and can be better at managing money in general.  Women are natully more inclined to to take an investment decision whilst looking at other aspects apart from the profitability part and we are talking about social equality, environmental sustainability, and gender diversity. 

Is this what we want when we talk about inclusive and sustained development?  Do we get a sense of what is the missing ingredient was in our economic model?

Ms Tracy Vegro, Executive Director of Strategy and Resources at the Financial Reporting Council, UK, held that “To maintain a competitive edge and success over the long-term, UK companies need to consider how diversity and inclusion is relevant to the markets in which they operate, all their stakeholders and the communities they serve”.

Women now are definitely educated (in some countries have much higher grades up till university level than their male counterparts) and therefore are available in the workforce more than ever before. Having an increasing number of women as directors means having additional role models for other women in general as they are being looked up to. It also shows that companies recognize and value the contribution of women in the workforce and in decision-making.

Appointing women as directors is not just a matter of law enforcement but a global campaign, global education and public awareness and above all a valuable and sustainable contribution.