In our second installment of the topic ‘Women in Finance’, Joyce Njeri speaks to women in senior positions in accountancy and finance industry, to assess their views on gender-representation on corporate boards…
IN TODAY’s global marketplace, corporations play a significant role in the structure of the economy.
It is due to recognition of this fact that recently, in an effort to combat some of the issues preventing women from reaching senior leadership positions, the Prime Minister and Vice President of the UAE His Highness Sheikh Mohammed bin Rashid Al Maktoum issued a decree to make representation of women in companies’ boards compulsory.
Various research studies have shown that although women are making inroads in lower- and middle-management positions, they are significantly under-represented in the C-suite level for many of the most successful companies.
Would having gender diversity in company management make any difference in the financial characteristics of companies?
A recent analysis by Credit Suisse revealed that having women on corporate boards helped to enhance companies’ bottom line and further expand profits. In testing the performance of 2,360 companies globally over the last six years, the report shows that it would on average have been better to have invested in corporates with women on their management boards than in those without.
Although the proportion of women at board level generally remains very low, the study observes that that is changing, as governments intervention in this area has increased, particularly in the past five years. Besides the UAE, seven countries have passed legislation mandating female board representation and eight have set non-mandatory targets.
So what factors are impeding women’s advancement to senior finance leadership positions?
Accountant Middle East set out to find the encumbrances that deter the female gender from breaking through the corporate glass ceiling.
Career path for women
For Susie Isaacson, the ACCA Middle East Head of UAE, lack of a finance background strongly daunts chances of climbing to the top echelons of power.
“We recently released a study that shows there is strong evidence that it is definitely an advantage having a financial background or qualification, in getting onto a board,” she says, adding “to get there, you have to have the knowledge, and confidence to show it, to be able to be a part of the boardroom conversations and help shape the company.”
Titled ‘Women in finance: a springboard to corporate board positions?’ the ACCA study shows that proportionally, women appear more successful in attaining executive roles when they have a financial background.
Bringing together new findings, plus existing research into the differences between men and women when it comes to access to the boardroom, the report reveals that finance offers a clear career path for women, especially within professional services firms.
Deepa Chandrashekar says having a financial background would only add weight to the boardroom conversation.
“What every boardroom really needs are talented individuals who have a thorough understanding of reporting responsibility and an ethical tone that creates a culture of compliance and ethical behaviour in the organisation,” she says, adding that “knowledge of financials and how they operate is only a tool that aids in making better decisions. It perhaps allows women to more easily interact with their male counterparts in what is a predominantly male dominated financial market.”
Deepa works for Qatar Petroleum, a state owned oil and gas firm in a senior management accounting role. In addition, she is also a member of the Qatar Advisory Committee of ACCA.
Breaking down stereotypes
The ACCA research also reveals that women appear to have been more successful in reaching the most senior jobs through the function of finance and this may have implications for other functions when looking to encourage the progression of female talent.
“A certain level of financial acumen is necessary for all board directors,” says Dr Ruth Sealy, Deputy Director of the Cranfield International Centre for Women Leaders and co-author of the ACCA report.
“For women, having a finance qualification or functional background helps to break down some persistent stereotypes about their competence, giving them credibility, legitimacy and a common language that allows them to join the conversation of the boards,” she adds.
One issue though that elicited cynical reaction is the setting aside of quotas to increase women numbers on corporate boards.
According to Susie, ACCA believes that the solution to increase women’s participation is not necessarily through legislation, quotas and targets, “but through practical steps that could make a substantive difference.”
“So the decision by His Highness was clearly a practical solution which has been introduced to bring about change. Such practical steps can only be welcomed,” she added.
Deepa was categorical that “the quota system is probably a small step taken towards the right direction. However, so long as women have to fight for equal rights, none of the models will be effective.”
“I am actually saddened by the fact that women need to lobby to claim a right that is theirs to begin with. What should really matter to shareholders are a member’s skills, experience, education and knowledge and not the gender. This is what will drive a gender-equity in the board rooms,” she added.
Elena Fedorova, the Finance Manager for Brewer Smith Brewer Gulf Chartered Architects, supports the quota system, as “Countries that have adopted successful measures aimed at ensuring gender diversity in the boardroom have done it through gender quotas.”
“Whether gender quotas are the best solution to solve the issue of the lack of gender equality in the boardroom remains an open question. In my opinion, quotas should not be the first intervention of choice. It may result in inappropriate appointments,” she says.
Elena is Chartered Accountant from New Zealand, and has an extensive experience in the field of finance.
She says that implementing a quota solution “is the most effective method for boards to open their doors to gender diversity.”
Gender diversity has been on the corporate agenda for many years now, and yet we still see only a small percentage of women on today’s corporate boards. According to Susie, there are a lot of academic studies as to why this is the case, “indeed our report about women in finance goes into this is some detail and event suggests that this is down to recruitment practices, perceptions and biases.”
“ACCA supports greater diversity in the composition of company boards not only in terms of gender, but also in background and experience. There is now a considerable body of evidence which suggests that the presence of women on company boards actively promotes the cause of good governance and sound management and possibly also enhanced business performance,” the UAE head says.
Providing equal opportunity
While hailing Sheikh Mohammed’s pronouncement to make the representation of women in companies’ boards compulsory, Susie said; “The Ruler’s decision was widely welcomed by business. Similarly, ACCA is dedicated to providing equal opportunity to all and so is pleased to have the highest proportion of female members (41%) of all the UK-based accountancy bodies.”
“ACCA can also boast the first woman member of any professional accountancy body – Ethel Ayres Purdie, who became a member in 1909. Professional accountancy is a credible and proven route to give women (as well as men) the skills and competence to succeed in business.”
Zainab Fakhruddin says Sheikh Mohammed’s decree, although a welcome move, “was long overdue.”
“Women represent 50% of the population and a significant force in consumer decision making across all spheres of life, therefore, it was only a question of time before this [pronouncement] became inevitable. I welcome Sheikh Mohammed’s decision and admire his vision and execution in making Dubai what it is today.”
“While I feel this is a step in the right direction, I believe companies should be encouraged to appoint female board members and actively groom females with a view to board and senior management appointments in the future. I think this decree will go some way to an open debate and encourage organisations to actively pursue an agenda of diversity within companies as well as boards,” says Zainab.
Development of people
Zainab has served as board member for two years, an experience she says she gladly enjoys.
Fakhruddin Holdings is one of the top conglomerates in the Middle East with a diverse portfolio of successful businesses that include trading, plastics, beauty and personal care, property development and joint ventures. The Group is a diversified family business with a 50 year history if successful business in the UAE.
“We implemented a Holdings structure two years ago with the appointment of an external Board Advisor. It was after a review of the business and working with and evaluating my background, skills and experience that the Board Advisor recommended my appointment,” she proudly says.
And why do the executives feel that gender diversity in the boardroom matter?
“Women often look at work differently and in many instances can see a different perspective to men with very good insights into the needs of consumers as well as development of people and business,” Zainab quips.
“Similarly, we must realise that 50% of the global population is female and since organisations produce goods and services that meet the needs to different consumers, a woman’s perspective is key and often brings a fresh, alternative perspective and insights,” she adds.
Broader talent pools
According to Susie, ACCA believes that being diverse, embracing diversity in all aspects, enhances business performance and the operation of a modern finance and accounting function.
“While gender diversity is not enough, women [and men] need to acquire the insights, education and operating experience to contribute value to a board. According to our recently released ACCA report, anecdotal evidence suggests that companies may be more positively disposed to appointing women to board positions “if they have a financial background or financial qualification,” she adds.
Deepa is of the view that boardroom gender diversity should be non-negotiable.
“We know for a fact that it adds value relevance to a firm. Recent researches indicate that firms that promote equality appear to benefit more from boardroom gender diversity. Further on average, shareholders seem to value additions of female directors more than they value additions of male directors,” the finance manager says.
For Elena, “boards could enhance their effectiveness by using broader talent pools for their directors.”
“The board diversity is about combining alternative views that lead to the better board decisions. I believe that companies with a strong female representation at board and top management level perform better that those without,” she says.
At the same time, what can female candidates who are interested in serving on a corporate board do to increase their visibility?
Increasing visibility is all about credibility, strong leadership skills and being a decision-maker, Susie affirms.
“It is also important to play a part in the boardroom dynamics and be part of the team, so the ability to work with peers in this process, for the same goal, is essential. Someone with a boardroom position often has to take the ‘helicopter view’ and look to the wider issues, to enable a business to grow and develop,” she adds.
The same sentiments were echoed by Zainab, who said that women need to make themselves more visible and take opportunity for speaking at events, conferences and networking within the business community.
“Keeping abreast of latest knowledge and trends is also key, as business education is evolving very fast and its important women are aware of best practices when it comes to areas such as finance, leadership, people management as well operational effectiveness,” she added.
Deepa on the other hand thinks it is important for women to understand and exhibit their talent and be more assertive.
“They need to first appreciate themselves, recognise their talent and grab every promotion opportunity that comes their way. They need to network and get close attention from senior management,” she says.
Serving on the boards of organisations can sometime be hectic, owing to characteristics such as excessive travel, working beyond contract hours. So do these factors intimidate women from taking up demanding board roles?
“Family commitments can be a barrier to travel. Policy makers in countries such as Sweden and Denmark have been very mindful of work life balance issues and have introduced policies to try and make the balance a little more easier,” Susie says.
According to Deepa, the biggest barrier is the so-called ‘double burden’ responsibility undertaken by women, that is, managing a highly demanding job and equally running a household and family.
“For a woman, starting a family means taking a break from the workplace. More than just a perception, women themselves opt to withdraw due to the demands of a high profile leadership position. Besides, maternity leave and reduced mobility are also seen as obstructions to taking on responsible positions.”
Right kind of background
Most of the women interviewed were of the opinion that companies should adapt mentoring, training and development guidelines to prepare high-achieving women in their companies for senior roles and board positions.
“While all these things should be done for all members of staff regardless of their gender, a senior position can only be achieved with the right kind of background, qualifications and experience,” Susie says.
Deepa feels it is imperative that companies examine the structural issues that are still preventing women from advancing at work.
“Top executives need to put emphasis on skills, capabilities, performance and results and not on time contributed. Besides policies that offer better tax breaks, maternity and paternity rights, equal pay structure need to be put in place to provide the required support to both men and women.”
On giving advice to women who want to advance in leadership positions, Deepa was straightforward in her response.
“Leaders are made through hard work,” quipped Deepa.
“There are lots of opportunities available today. One needs to be smart, keep their eyes open and grab those opportunities. Do not stop until you have achieved your goal, no matter how many hurdles and risks you may need to cross and face,” she advices.