The Sunday Mail
As corporate boards shift from being male dominated towards gender parity, there is growing debate on whether the inclusion of more women on corporate boards is a compliance, performance or social cohesion-driven trend?
Zimbabwe’s Vision 2030 cannot be achieved if women are not given equal opportunity to participate fully in all spheres of society on the basis of equality with men.
This includes participation in corporate boards, which is the focus of this article.
The Constitution — the supreme law in the land — under Article 17, mandates the State to promote full gender balance in Zimbabwe, including full participation of women in all spheres of society on the basis of equality with men.
However, the Constitution does not stop there: it also mandates the State to take all reasonable measures, including legislative measures, to ensure that both genders are equally represented in all institutions and agencies of Government, at every level.
The Constitution made a declaration — there shall be equal representation between men and women in all spheres of society; the issue is settled, it is not contestable — period!
In view of this, what we can debate on is this: does inclusion of women on boards improve performance or it is a necessity to achieve social cohesion in society?
In the corporate boardroom, gender diversity is about levelling the field of play and creating equal representation between men and women.
It is about having balanced boards — 50-50 parity — in terms of gender composition.
Corporate boards globally are predominantly male dominated, with women taking minority seats on boards.
From an evolutionary perspective, all male boards are fast disappearing across the globe.
The UK June 2018 Cranfield FTSE Female Report shows that all-male boards have now disappeared from the top FTSE 100 companies by revenue.
FTSE 100 boards have 305 female-held directorships (2017: 294), representing 29 percent of all directorships (2017: 27,7 percent).
UK FTSE companies with at least 33 percent female directors are 32 (32 percent), (2017: 28 percent) and those with female chairpersons are 7 (7 percent) (2017: 6 percent).
The number of female CEOs on FTSE 100 is 7 (7 percent), (2017:7 percent).
Thirty-two percent of FTSE 100 companies have already reached the target of having a minimum 33 percent female directorships, meaning that it is possible to reach the UK’s 33 percent target for all FTSE companies by 2020.
Southern Africa statistics show that corporate boards are still lagging behind in gender diversity and are not close to a 50-50 gender parity ratio.
In the Southern Africa Development Community (Sadc) women occupy an average of 20 percent of all publicly listed company board seats.
The average statistics are as follows: Botswana: 21 percent, Malawi: 21 percent, Zambia: 24 percent, South Africa: 19,1 percent, Zimbabwe: 18 percent.
According to the Business Women’s Association of South Africa (BWASA) 2017 report, in South Africa — the biggest economy in the region — 19,1 percent of JSE-listed companies’ directors were female and only 4,7 percent of CEOs were female.
In Zimbabwe, for example, statistics as of August 1 2019 from publicly traded companies listed on the Zimbabwe Stock Exchange (ZSE) show that out of 56 listed companies, there is only one female CEO.
Apparently, the only female CEO (Roseline Chisveto) is from Turnall Holdings Limited.
According to TechZim report, out of 403 ZSE directors, only 72, or 18 percent, were women. The regional trend in Southern Africa almost mirrors that in Zimbabwe.
Drivers for diversity
“The 2030 Agenda for Sustainable Development” of the United Nations and African Union (AU) Gender Protocols (AU Strategy for Gender Equality and Women’s Empowerment) call for gender balance in all decision-making bodies.
Additionally, governments, regulatory authorities, civic organisations and pressure groups are also calling for gender parity in all spheres of society across the globe.
Lobby groups such as “#Me Too” and “Times Up Initiative” have also added their voices to gender issues, especially the call for gender diversity on corporate boards and other decision-making bodies.
Some European countries have gone to an extent of introducing legislation to increase women on boards.
For example, Norway (40 percent), France (20 percent) and Italy (20 percent).
The European Union (EU) in 2012 proposed a directive mandating 40 percent female quota on corporate boards by 2020.
The link between having more women on boards and company performance has been opened for debate and is proving to be highly contestable.
In other words, there is no scientifically proven positive correlation between the two.
However, there is a widely held belief that gender balance will improve board performance, financial sustainability of companies and minimises incidences of corruption.
But this belief is not supported by conclusive empirical evidence.
Research on whether the inclusion of more women in corporate governance equates to enhanced performance of boards has produced mixed results.
Some researches have shown a positive correlation between having more women on boards and improved performance, while others have shown inconclusive results.
African research-based literature on this subject has been very sparse, leaving one to rely mainly on European and other researches.
A research entitled “Women on Boards and Financial Performance: Evidence from European Emerging Market” by M. Lonascu, I. Ionascu, M. Sacarin and M. Minu from the department of accounting & audit (Bucharest University of Economic Studies, Romania) — which was published in May 2018 — makes very interesting reading and its findings are applicable to emerging economies in Africa.
This research concludes that while there is no conclusive empirical evidence linking gender diversity on corporate boards to performance, nonetheless in Romania, which lags behind other developed European Union member states in terms of both corporate governance standards and social cohesion indicators, the impact on performance through having more women on boards was established (found to exist) in small to medium-sized companies (SMEs), where corporate governance systems, practices and standards are immature and weaker. In bigger companies with established (sound) corporate governance systems, the research found that having more women on boards did not necessarily lead to improved performance.
Some women in the US have voiced anger to what they view as a “tick-box” approach to gender diversity on company boards.
In a Boards Research article entitled “When and Why Diversity Improves Your Board’s Performance” by S.J. Creary, M.H. McDonnel, S Ghai and J. Scrugs, (Havard Business Review (Boards), March 27 2019), some women in US are against women being considered as “token persons on boards” for the sake of board diversity.
One woman interviewee in the above-quoted article remarked: “I can understand what it means to be a token person. I do not like that…I said, ‘If you think my only value is the fact that I am a female, I cannot add value to your board’.”
Another interviewee added: “I think that there is so much conversation right now about adding more females to boards and everyone feels like, ‘Okay, if we have ten board members, we should recruit three women. But I think we need to make sure they (women) have the right skills’.”
Women also argue that while it is progressive to have more women on boards, the call should not end there.
There is need to address gender diversity simultaneously with other equally important issues such as ending pay gap between men and women, having more women assume chair positions at both board and board committee levels and having more women assume CEO and senior management positions in corporates.
In the absence of overwhelming and conclusive empirical evidence linking gender diversity to board and company performance, what else would motivate companies to have more women on corporate boards, apart from compliance with laws?
Some argue that in a situation where there is no conclusive empirical evidence linking having more women on boards to performance, gender balance on boards is being driven by need to comply with laws and regulations and corporate governance codes.
Others, however, argue that having gender-balanced boards is the right thing to do to achieve social cohesion in society.
Perhaps what is overwhelmingly driving gender diversity on corporate boards are calls for social cohesion requiring equal involvement between men and women at all levels of decision-making processes and spheres of society.
Sustainable development involves a social inclusion component, and this, by extension, mandates gender balance in corporate boardrooms.
While we focus on bringing in more women on boards, we should not also lose focus that there are other aspects of board diversity that should not be ignored.
A board should be diverse not only in gender, but in all other social (race, culture, language, nationality, age and ethnicity) and professional aspects (qualifications, trade, experience, skills and expertise).
In conclusion, it would appear that attainment of gender balance on corporate boards in Zimbabwe is not a performance-driven issue, but it is primarily mandated by the Constitution and additionally by mounting pressure to comply with UN sustainable development goals, which advocate for gender parity in all spheres of society, including corporate boards, to achieve social cohesion.
Allen Choruma can be contacted on e-mail: [email protected]