The business case for gender balance in South Africa - Building Gender Balanced Business

1. Women make up only 13.3% of directors in South Africa
2. A recent study has shown that companies with more than 25% of their director and executive management positions held by women increased from 10 in 2004 to 31 in 2007
3. Of the 385 directorships held by women, according to the last annual BWA South African Women in Corporate Leadership Census (May 2008), 140 are in executive roles and 243 are non-executive
4. Most progress in the advancement of women to top management positions in South Africa has occurred in state-owned or public sector companies
5. Only 11% of companies listed on the Johannesburg Securities Exchange have 25% or more of their director positions occupied by women

“To be on the board during those days you needed to know a white executive who believed in you. That is, unless you were part of a family business, like the Oppenheimers.”

Most boards are defined by the “Boys Club Culture” which is quite subliminal but very effective at sub-optimal engagement with diversity. So I decided to retire from the boards of private sector companies while retaining my position on the boards of public sector organisations where I felt there was more of an opportunity to make an impact.

In one major food company I proposed that we shift our business strategy to more of a marketing focus. I argued for this approach for six years before it was finally accepted. When they eventually understood the importance of marketing in order to build a brand presence I decided to retire from the board. I didn’t have the patience to wait for another six years for them to respond to other proposals from me which should have seemed obvious in the first place.

“I still prefer the Chairman or CEO of the company to call me for a chat, introduce me to their company, take me through their challenges to allow me to check whether the chemistry is compatible and to confirm whether I would be able to add value to their business.”

So in the 90’s and beyond, the preferred route for appointing directors has been to use executive recruitment companies. I find this approach impersonal. I still prefer the Chairman or CEO of the company to call me for a chat, introduce me to their company, take me through their challenges to allow me to check whether the chemistry is compatible and to confirm whether I would be able to add value to their business. One should be able to determine these two qualities from interacting with either the CEO or Chairman of the board.

STUDY ON THE IMPACT OF WOMEN
After a decade of democracy in South Africa, the Businesswomen’s Association in South Africa (BWA) began conducting an annual study to determine the impact of women’s representation on the country’s corporate boards – the BWA South African Women in Corporate Leadership Census. It also aims to understand whether women bring something different to the table. Do they experience specific challenges? Are boards that include women directors more effective? What are the strategies companies are undertaking to improve the representation of women on boards? These were some of the questions we wanted to have answered.

“Where women feel valued, their contribution enhances both the company’s competitiveness and productivity. Their insights enable companies to measure a broad set of key performance areas and ensure that emotional and social intelligence are integral to the practice of business.”

Women make up only 13.3% of directors in the country, so they are a minority. But things are starting to improve, as proved by our study which has tracked the number of companies that promote the most women to senior management positions across a number of years.

The Census measured 335 South African companies, and of these, 318 were listed on the Johannesburg Securities Exchange with the remaining 17 being state-owned enterprises (SOEs).

It identified Top Performing Companies, which have 25% or more of their director positions and 25% or more of their executive manager positions held by women.

In 2004, there were 10 Top Performing Companies on the list. By 2007, this number had increased to 31. This threefold increase in three years shows that there has been steady improvement, and that the number of women occupying leadership positions has continued to improve.

DO WOMEN BRING SOMETHING DIFFERENT TO BOARDS?
The Census confirmed that boards which have embraced women have been enriched by the perspectives and forthrightness that women bring. Where women feel valued, their contribution enhances both the company’s competitiveness and productivity. Their insights enable companies to measure a broad set of key performance areas and ensure that emotional and social intelligence are integral to the practice of business. It is a proven fact that women think differently about issues, and therefore improve the quality of discussions and decision making. Women raise the quality of board effectiveness.

WHAT SPECIFIC CHALLENGES DO WOMEN FACE ON BOARDS?
Due to the fact that women are relatively new in executive leadership positions, we are few in number and our level of experience with respect to corporate governance and to fiduciary responsibilities is still quite limited. The culture of most boards is patriarchal and tends to be patronising towards women. Most boards have a social structure that has a bias against women e.g. playing golf. In general, we are expected to adapt to entrenched patterns of behaviour, with very little consideration towards opening up the culture to accommodate diversity, unless of course the woman chairs the board in which case she can set a different tone.

ARE BOARDS THAT HAVE EMBRACED DIVERSITY MORE EFFECTIVE?
The recent corporate collapses and scandals make a compelling case for director independence and director diversity in order to enforce best practice in Corporate Governance. In addition, where there has been proper induction of less experienced board members and a conducive climate for everyone to contribute, boards that have traditionally been homogeneous quickly recognise their limitations of viewing the world from the same perspective.

WHAT SHOULD BE DONE TO IMPROVE THE REPRESENTATION OF WOMEN ON BOARDS?
There should be a limited term of service to allow for the rotation of directors and the introduction of new blood every 8 to 10 years. There should also be a limit to the number of boards that directors can sit on, particularly when they hold an executive responsibility. Thirdly, women should participate in director development programs and identify women with board experience to mentor them. Fourthly, all women who serve on boards should mentor a younger woman. Finally, there should be enough women in the senior management pipeline.

“Given that directors play a critical role in decision making and as such contribute to the competitiveness of a country and its economy, it is both an imperative and a moral responsibility for women to be part of this equation.”

In South Africa, there are fewer than 15 Chairwomen and fewer than 10 women CEOs. However, the more encouraging fact is that the number of women holding more than one directorship continues to improve.

At the last Census published in May 2008 there were 298 women directors holding 385 directorships among them. Of the 385 directorships held by women, 140 were in executive roles, and 243 were non-executive.

Overall, women had a much higher representation on the boards of state-owned or public sector companies (76.5%). The representation of women on the boards of companies listed on the Stock Exchange was less impressive. It has remained at 10.3% since 2006. Fifty-one of South Africa’s top companies — mostly dominated by state-owned companies — have 25% or more of their director positions held by women.

In contrast, only 35 out of 318, or 11%, of companies listed on the Johannesburg Securities Exchange have 25% or more of their director positions occupied by women.

Given that directors play a critical role in decision making and as such contribute to the competitiveness of a country and its economy, it is both an imperative and a moral responsibility for women to be part of this equation.

Click here for further information on the Businesswomen’s Association (BWA), an association of business and professional women in South Africa.

Wendy Luhabe is a social entrepreneur and chairman and director of several companies. She qualified with a B.Comm in 1981 and acquired 10 years corporate experience with Vanda Cosmetics and the BMW Group in Marketing Management both in South Africa and internationally.

She left corporate life in 1991 to become a social entrepreneur and founded Bridging the Gap – a consulting firm that worked to prepare young black South Africans to enter the world of work – as her first business which she has now sold, although her ventures continue to bridge the gap.

In 1994, she pioneered the founding of Women Investment Portfolio Holdings which listed in 1999 on the Johannesburg Securities Exchange in the Investment Trust section (de-listed March 2003), an initiative that revolutionised the participation of women in the economic landscape of South Africa.

In 1997 she was involved in establishing the presence of Alliance Capital in South Africa, an asset/fund management business. She also recently raised R120 million for South Africa’s first Private Equity Fund for women owned enterprises with a two to three year track record.

She is the former chairman of Alliance Capital and the Vodacom Group and current chairman of Vendome Distributors, and the Industrial Development Corporation (IDC). She also chairs the International Marketing Council to cultivate an infectious sense of pride about who South African people are as a nation and what they are capable of, to showcase their remarkable attributes.

She is married to Mbhazima Shilowa, a former Premier of Gauteng Province and currently one of the conveners of a new political party called Congress of the People. They have two sons, aged 28 and 18. Wendy has interests in writing, conversations, culture and metaphysics. She has lived overseas, has travelled extensively and recently published a book called “Defining Moments”, to reflect on the experiences of black professionals over the past three decades. For more information on her Defining Moments initiative click here.