Although South African women are making great strides in the boardroom, corporate South Africa still has more work to do particularly when it comes to leadership positions, says PwC. Women currently hold less than four percent of CEO positions in JSE listed companies. “Companies that are actively promoting and advancing women to the highest levels of management and leadership tend to have more engaged boards with a greater diversity of talent and wealth,” says Carmen Le Grange, PwC Partner in Advisory Services.
Recent research has found that companies with the highest percentage of women on boards also tend to outperform those with lower percentages of women on boards. This includes higher returns in sales, a greater return on invested capital, and a higher return on equity. “It is important to bear in mind that women’s advancement in business is not just a ‘gender’ issue,” says Le Grange. “It is an economic and business issue. For South Africa to have a competitive workforce, as well as a robust and healthy economy, we need to realise the full value of all our talent – men and women.”
Le Grange says: “The business case for developing the female talent pipeline is clear-cut”. It allows companies to: improve performance at all levels including the board; attract and retain a wide pool of talent; improve the organisation’s productivity and bottom line; and achieve better corporate governance.
PwC’s 2014 Executive Directors’ Remuneration report shows that at board level the gap between male and female executive directors widens and according to industry type. For instance, there are only 13% of women operating in executive roles in the basic resources sector, compared to 87% of men operating in executive positions. The financial services sector is also largely dominated by men at board level (85%), with a minority of women (15%).
The report also shows that more work needs to be done to achieve better representation of women on boards. Gender equality at management level has tended to remain flat at about 24% since 2009. According to the report, without proactive support at board level, in another five years, organisations that do not mainstream women may find that there are even fewer female leaders in decision-making positions.
It is also interesting to note that 23% of male senior executives and senior managers were paid in the upper quartile of the market while, only 2.3% of females were paid at the same level, according to research carried out by PwC’s REMchannel® on-line survey. And 2013 Tax Statistics issued by National Treasury and the South African Revenue Service show that women accounted for 43.6% of the assessed individual taxpayers, had an average taxable income of R167 489 and were liable for tax of R27 980 at an effective rate of 16.7%. On the other hand, men had an average taxable income of R225 919 and were liable for tax of R50 100 at an effective rate of 22.2%.
The matter of boardroom diversity in the context of increasing the number of women sitting on boards is a global phenomenon and not unique to South Africa. In November 2013, the European Parliament voted for a draft law mandating a 40% female quota for non-executive board posts. It is highly likely that the majority of EU states will vote for the proposal to become law, given that France, Spain, Holland, many of the Scandinavian nations, as well as Germany, supports quotas.
Those against the quota system contend that Norway’s introduction of similar laws in 2003 worked only at the level implemented. Not one of the 25 companies on the Oslo bourse has a female CEO and the gender pay gap is still estimated to be within the region of 15%.
Norway, Sweden and Finland continue to lead the developed world in their percentage of women directors on the boards of listed companies, with 36.1%, 27% and 26.8, respectively. Italy and France are also seeing significant increases in women’s representation following the passage of recent laws on board diversity. The percentage of women on UK boards has risen 4% since 2009, possibly in reaction to the threat of EU-level regulation on the matter and now stands at 12.6%. In the US women hold only 11% of board seats at the world’s largest and most well-known companies, with little progress being made on gender diversity for more than a decade.
Diversity and inclusion should be a boardroom imperative, says René Richter, PwC Partner responsible for managing the Research Division of Human Resources Services. The underrepresentation of women is not a new issue; it is a matter which has not been fully addressed in the business world. There are those who say that women “unintentionally hold themselves back” in their careers, meaning they don’t allow their voices to be heard in the business world. Others contend that women’s lifestyles change the outcome of their professional careers. PwC’s ‘Women in Work’ index shows that in countries where there is a more equal proportion of women to men in executive positions, both mothers and fathers share the workload of raising a family and promote a healthier work/life balance for both genders.
“Whichever way you look at the issue, more needs to be done by leaders and the business world to address this matter – there is no quick fix,” says Richter. “And quotas are not necessarily the best answer to change the culture of building a diverse workforce,’ she adds. Businesses and policymakers have a vital role to play in addressing the needs of female employees in areas such as flexible working hours, childcare policies, and diversity goals. Although family-friendly work practices are often aimed at women, there needs to be a mind change away from the notion that women alone are responsible for family responsibilities, adds Richter. Work policies should be favourable to both male and female employees in terms of work and family commitments.
“Businesses need to empower more women to step up and be counted and included for their talent and skills and what they can bring to the business when they are placed in high-level positions,” says Richter.
Tumi Seaketso, PwC Associate Director in Human Resources Services, says there are a number of initiatives to promote, develop and retain female talent. Companies must provide opportunities to ensure women get the experience they require to be appointed to senior positions on boards. These include training, executive coaching, mentoring and sponsorship programmes. “Although traditional mentors can assist in lending advice and guidance to mentees, sponsors are critically important,” adds Seaketso. “A sponsor is someone at a high-level within the organisation who has influence over the decision-making, in particular where it relates to employees who have demonstrated performance and have the potential and aspiration to lead,” explains Seaketso.
Gerald Seegers, PwC Head of Human Resource Services for Southern Africa, concludes: “Thirty-four percent of PwC’s partner admissions as at 1 July 2014 were female, demonstrating our commitment to developing the succession of future leaders. Diversity and inclusion remain a priority focus for PwC.”
