Breaking into the boardroom
For a country that elected the world’s first woman prime minister, followed by other females in governing roles (like the president of Sri Lanka), women in leadership positions is not unheard of in Sri Lanka. However, this is, at times, not reflected in the business arena, with more women needed in boardrooms, perhaps the highest decision-making authority in the corporate world. A reason for this could be women having to juggle work with stereotypical responsibilities like motherhood and homemaker, and thereby giving up on their career goals. According to research conducted by the International Finance Corporation (IFC), a member of the World Bank Group, together with the Colombo Stock Exchange (CSE), the number of women in boardrooms in Sri Lanka is at a little over 8%, which is higher than in some developed countries like South Korea (4.1%) and Japan (3.5%).
Research also shows that companies with a higher percentage of women on their boards are known to be more empathetic, smarter in their operations, as well as more profitable, in certain cases. According to Credit Suisse’s “The CS Gender 3000: Women in Senior Management” report of September 2014, globally, companies that had strong female leadership generated a return on equity of 10.1% per year versus 7.4% for those without (on an equal-weighted basis). So why the step-motherly treatment?
In the region, Australia has the highest boardroom diversity and the Republic of Korea the lowest. As reported by Borderless’ “Asia: Gender diversity on boards doubled in companies with female leadership” (June 2017), the percentage of women occupying board seats in Asia (7.8%) is improving, but the pace of change is still slow compared to global statistics (14.5% in North America, 22.6% in Europe). Research also finds that the relatively low gender diversity found on many Asian corporate boards appears to be related to a limited supply of top-level candidates due to a lack of educational opportunities and other societal disadvantages suffered by women in the region.
Globally, the debate continues. Despite countries like Norway, Belgium, Germany and France mandating 30-40% female board representation, many others feel mandatory quotas are the wrong way to promote women in the work place. Rather, studies have also found that women prefer to climb up the corporate ladder based on merit, rather than their gender.
In Sri Lanka, IFC recently commenced a work programme focused on increasing women’s participation in the labour force and in boardrooms. The four-year Women in Work initiative funded by the Australian government aims to make a positive impact on companies’ bottom lines, by investing in women’s employment and business leadership.
In line with its thinking that board diversity is a good indication of a well-run company, IFC’s Program Manager of Women in Work Carmen Niethammer explains how the organisation is also walking its talk by setting its own targets for women representation on boards. Attitudes and behaviour trickle down from hierarchy, so when there is commitment to gender diversity at the top, this can result in real bottom line changes in companies, they believe.
Excerpts from the interview are as follows:
Can you interpret this data for us? Where are the bottlenecks for women climbing the corporate ladder?
In partnership with the Colombo Stock Exchange we conducted research on all the companies listed on the CSE and confirmed that the presence of women on boards is at a little over 8% in Sri Lanka. What’s more, it’s a number that Sri Lanka doesn’t have to shy away from as it is higher than the Asian average. We need to have conversations about women and how they contribute to business. When the numbers first came out, we had some push back (including from men) who claimed the women at the top were there because of their family connections. But the other side of the coin is that men also are often sitting at the boardroom table because of their family name and connections, but nobody ever questions that. We have to be fair.
To promote more women in boardrooms, we have just produced a film to start a conversation, and showcase the women behind these numbers and paint a fuller picture of what these women are doing. A problem we faced was getting them to agree to being on film, as many were humble and claimed to have “not done much”. This reluctance is something we encountered among top women business leaders, where even though they have accomplished so much, they would not necessarily embrace that themselves. That’s something we have to look into.
The women who did participate supported the initiative as they felt it was something Sri Lanka needs at this time. The film features women of all ages and sectors varying from finance to tourism.
In line with your research, where is the opportunity, where do we go from here? How can we advance the agenda for women?
There are a few things we can do in terms of advancing the agenda for women. One is by highlighting their success and how they are contributing to businesses. Second, IFC is hoping to do this research with the stock exchange next year as well, to highlight the correlation between the number of women on boards and company performance. This is something that will foster the conversation. Third is creating a women on boards network, and seeing how they themselves can contribute to increasing women’s labour force participation. Another way women (and men) sitting on boards can make a change is by ensuring women’s well-being by accommodating facilities like child care centres and lactation rooms, monitoring women being promoted vs. men being promoted, and ensuring employees’ safety. They can even ask companies to get gender certified at the firm level.
IFC has partnered with an organisation called EDGEStrategy, which promotes companies conducting gender assessments and benchmarking themselves. This way, companies can get certified and measure their own progress. The tool is built around a business case perspective.
From IFC’s perspective, we also look inward. We knew we wanted to increase the number of women in middle-management. Accordingly, we were getting really good at hiring more women at that level. Measurements helped us better understand that we also had to focus on retention, an area where we made good progress.
How is IFC performing against its own targets?
Often, it’s not just having women who are capable, but going the extra mile to make sure these women are confident enough to take on leadership roles. Among IFC client companies in Sri Lanka, women constitute 18% of all board seats – the highest in the region. In parallel, IFC is also looking inward and actively reaches out to qualified women to fill board positions in the companies we invest in. We are around 30% in terms of women’s representation as IFC nominee directors globally. This has been a big push from 15% only five years ago. So we’ve come a long way.
In your experience, what is the business case for women in leadership, or even in middle management? Like you said, it seems to be an issue for many companies.
Bringing different perspectives to decision making is always useful. The other is in terms of human resource management. If you are bringing in people 50:50 and losing women, it means you are losing the investment you made in that talent. Another insightful business case is that, according to a 19-year study of 215 Fortune 500 firms done by Network of Executive Women (“Changing the Game: Strategies for Harnessing the Power of Female Talent” – 2012), companies with the highest record for promoting women outperformed industry revenue averages by 46%. There’s something to say about this.
In your experience in emerging markets, Sri Lanka is not doing so badly. What do you think are reasons for that and should we be complacent about it?
No, I think you are lucky as a country to have a highly educated workforce, but you have continuous demand for labour. The other side is the supply. In low-income countries, there often is higher female labour force participation, as women don’t necessarily have an option to not work, as they have to make the additional income. Sri Lanka, being a middle-income country, has double-income households. So women may have more of an option of working or staying at home as caregivers.
There’s an interesting story from Iceland, which had a female prime minister for many years, and a six-year-old boy had asked his mother if it was possible for a man to become prime minister because he had no other reference point. What you see is what you get. If you don’t see women in industries and in leadership positions, you may not aspire to get there yourself. This is where we need to make a difference.
Sri Lanka’s challenge is also that so many women who are in the workforce are either in agriculture, tea or apparel. If you exclude them for statistical interest, where are the rest of the women? Is this unique to Sri Lanka?
No, you have it in other countries too. It’s interesting that 80% of Sri Lankan women work as domestic workers, and make a tremendous contribution to the development of the economy and country. Therefore, it’s important to get women into other sectors as well, or risk missing out on talent.
Child care provisioning has a huge potential here, and we want to help tackle it. While there is a business case for employer-supported childcare, the current structure relies heavily on the employer to fully pay for it. In many other countries that are trying to increase women’s participation in the private sector, those benefits are often subsidised by the government. For example, World Bank Group’s Women, Business and the Law research shows that more women receive wages where governments provide or support childcare, and more women work in the labour force in economies with fully paid maternity and parental leave.
I think there is a huge opportunity, as the government has been working on crèche standards and certifications for care providers. Now, we also need to encourage employers to see the business case for investing in employer-supported childcare.