“In Pakistan, women are joining the workforce but very few are making it to the top. Boards benefit from diversity in terms of experience, knowledge, perspectives and exposure. Men and women who make it to the board are those who have a comprehensive experience and knowledge of the business, of various sectors, and have exposure to various organisational cultures. Women are at a disadvantage as they usually do not have a hands-on approach to work, they generally are reluctant to go to the factory floor and have issues with travelling. Women’s family responsibilities hinder their commitments. Recruitment and promotion systems are based on the assumption that career paths for leaders will be unbroken and women who take maternity leave or part-time work, or who relocate several times due to husband’s career moves, would be at a disadvantage. Making it to the top means putting in long hours at times and managing the professional and personal commitments. At most blue chip companies, there is a level-playing field but women, like men, have to fight it out and play the game.” — Executive director of a multinational, listed company
The role of a board of directors is to set strategic direction through collective decision-making. When decisions are collectively made, the robustness of the discussions and the suitability of the decisions benefit greatly from the skills, knowledge, perspectives and experience of both men and women. A gender diverse set of perspectives confers a greater ability to foresee and manage risks, and better strategic decision-making and planning.
In a business world where women increasingly play an active role as entrepreneurs, managers and consumers, women’s insights on market segmentation are particularly important. Board diversity sends a strong message of business commitment to the creation of a culture that celebrates diversity and women’s advancement. This in turn supports an organisation’s gender diversity recruitment and retention efforts. It also enhances its image among stakeholders for controlling reputational risk.
International sneak peek
Historically, boards have been dominated by men. As per the latest Catalyst Census: Fortune 500 Women Board Directors report, 85% of Fortune 500 company board seats are being occupied by males. 15.28% of all directors are women in the Fortune 500. To compel businesses to consider gender diversity on boards as a strategic priority, a number of European market regulators are considering imposing quotas of women on the boards of publicly-traded companies as a requirement in their new Codes of Corporate Governance. Norway has introduced a quota system, which requires the boards of public companies to have at least 40% women directors. France has introduced legislation in parliament requiring that women comprise 50% of the boards of directors of publicly-listed companies by 2015. Spain has also introduced a regulatory requirement that any private company that is awarded a public contract must have a board of directors of whom 40% are women.
Looking ahead, there are indicators for an increased representation of qualified and professional women on boards which include the changing demographic profile of the workforce in Europe, Asia and the America, the recognition that gender diversity in corporate leadership can potentially enhance good corporate governance practices and support the effectiveness of board decisions, processes and practices. Other factors that may play a role are organisations stating; business case reasons for gender diverse boards; the resolve of women to ‘break the glass ceiling’; and enactment of legislation in various developed countries, to create quotas for women on boards.
The Code of Corporate Governance of Pakistan (indirectly) promotes diversity on boards by recommending representation of non-executive directors representing minority interests, lenders and institutional investors. In view of the international trends and developments in diversity, including gender diversity on boards, it may be useful in the context of Pakistan, to discuss and deliberate on the potential benefits and challenges of diversity (including gender) on boards in Pakistan.
Gender diverse boards – Pakistan’s current state
An IFC-sponsored ACCA discussion paper Gender Diversity on Boards in Pakistan states that although in the last decade women are entering the workforce in large numbers, evidence of their ascent to the board is limited. The survey indicates that even though 94 of the 303 surveyed companies had women on boards, as 72% of these companies were family-owned, the main criterion for appointment/nomination of a woman to be board was being a relation. Of the KSE-100 listed companies, 22% had women on boards, of which the majority were family-owned. Economies like Pakistan where family-owned businesses are a norm, apprehension is that women who are appointed to boards solely on the basis of kinship are contravening the spirit of gender diversity, which entails providing equal opportunities for women to bring in their ‘different’ experiences and perspective to board deliberations, ensuring inclusive, balanced decisions. The survey identified lack of business acumen in terms of business knowledge and awareness of business dynamics (44%) and failure to manage the balance between professional and personal commitments, i.e. work–life balance (41%) as the major challenges to having qualified and experienced women on the boards.
Gender diverse boards – Pakistan’s future outlook
Discussion forums held to deliberate the discussion paper findings attended by policy makers, business leaders and civil society representatives agreed that more ambitious, educated, professionally-qualified and career-focused women enter the work force. Women with the right skills, knowledge and expertise may, through persistence and assertiveness, overcome the challenges that may at times reflect stereotypes and/or preconceived notions. As the expectation is that women should reach the boards on their own merit by exhibiting the required attitude and aptitude, the mindset and behavioural changes would facilitate the progression of women from middle management to senior and executive roles. Their advancement would be facilitated by an enabling work environment, supporting family and respectful society. As 78% of the top 100 listed companies of Pakistan do not have a single woman, gender diversity on boards in Pakistan will develop when the leading companies of Pakistan acknowledge gender diversity as a company practice, tapping into the wider pool of skills, creativity, talent and experience available, and having women with the appropriate skills, knowledge and experience on their boards. This may also influence family-owned businesses to open up their boards to independent professional experience and judgement, paving the way for qualifications and experience, rather than kinship, to become the main criteria for nomination/appointment to their boards.
Advancement to boards requires transparent and fair recruitment and promotion policies and systems, as these would encourage professional and competent women to reach for the top. For gender diversity to become a norm, effective coaching and mentoring may support women to become successful hierarchy climbers. As women do not promote themselves, this leads to a managerial assumption that women are happy to continue with their present position, while male peers indicate their ambition, their career successes and their readiness for the next step much more strongly to the promotion gatekeepers, Hence, women may self-limit their advancement unless top management are aware of gender differences and take steps, such as offering mentoring and advocacy, to address the situation.
The business case for gender diversity on boards in Pakistan would have to be developed on the premise that having women directors would mean recruiting from the population’s overall pool of talent, knowledge, experience, creativity and skills, which would result in mixed boards. Mixed boards make better decisions, not because men and women are fundamentally different or because women directors are more intelligent, more empathetic or have better morals than male directors – but because they bring different kinds of experience and perspectives to the boardroom. Men and women have different social roles and work in different social areas and positions, and therefore have different experiences and values that benefit the decision-making process. Diverse teams are more responsive to customers’ aspirations and needs.
The ACCA discussion paper on Gender Diversity on Boards can by viewed at: http://www.accaglobal.com/pubs/pakistan/general/technical/IFC/gender_diversity.pdf