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More women, more money. It has been proven around the world, and this week it was our continent’s turn as groundbreaking research revealed that companies with more women on their boards and in the C-suites made a better profit.
How much more? The McKinsey & Company report says between 14% and 20% more than the industry average on earnings before interest and tax. The figure is significant. How can we trust it? Information was collected from 210 listed companies on 14 stock exchanges across our continent.
The stock exchanges represent more than 50% of the continent’s population, more than 50% of the continent and more than 60% of its gross domestic product, say the authors. It turns out that women in business manage risk better, relate to their customers more authentically and understand the female consumer more instinctively.
The report reminds readers that, “with respect to consumer goods, for example, women directly influence 70% to 80% of global spending”.
“Of course, a correlation between the proportion of women in senior positions and financial performance does not necessarily imply a causation. However, female leaders with whom we have spoken emphasise how the benefits of diversity extend to areas such as risk management, decision-making and board dynamics – all of which can have an impact on financial performance.”
The leaders consulted in the course of the research are a cumulative powerhouse of talent. Among the South Africans are JSE CEO Nicky Newton-King, entrepreneurs Wendy Appelbaum and Jenna Clifford, and executives Penny Tlhabi and Pulane Kingston. Added to these are political leaders Geraldine Fraser-Moleketi (now with the African Development Bank) and the speaker of the National Assembly, Baleka Mbete, who, when she is not squabbling with the Economic Freedom Fighters, is a renowned thinker on gender power.
And the good news is that, stacked up against the rest of the world, Africa is doing well when it comes to women in key and powerful roles on boards, and in executive decision-making roles. For executives, the global average is 20%, whereas Africa’s is 23%.
The report finds: “Today’s female leaders have succeeded, it seems, largely through a combination of opportunity and drive, rather than through a coordinated corporate effort to promote gender diversity.”
Only one in three companies saw gender diversity in leadership as a business imperative, despite the clear link to better earnings.
Sixteen years into the 21st century, women still work double shifts: at work and at home as primary caregivers and homemakers.
And, in detailed interviews with women in business, the following finding gives pause for thought: “...the most important barrier is attitudes in the workplace that result in women being treated differently from men”.
Former Rand Merchant Bank CEO Sizwe Nxasana attended the report’s launch this week and explained this phenomenon using the example of “the office pizza at 11pm”.
He explained that progression and being placed on the radar for promotion often required presence at odd hours and participation in an intense work culture that meant if you were seen on deadline when the 11pm pizza was delivered, your stakes rose.
Working mothers often cannot do the late-pizza shift, long drinking sessions or extended golf outings, and are thus penalised.
So men in the surveyed companies were far more likely to get promotions than women were – 64% of the total, to be precise.
This leads to significant “leakage” – the term used to describe how the pipeline of female managers got smaller and smaller the further up the organisational hierarchy you go.
Where lies hope?
A woman’s progress needs to be tied to an executive’s performance and therefore pay. The report’s authors suggest that gender advancement forms part of the executive key performance measures and that ambassadors in a company own the accountability for this. And because attitudes and bias still play such a large role, best practice at global companies is to go for blind recruiting, where you can’t see the race or gender of who is being interviewed.
The report concludes that: “Africa has made considerable strides in ensuring women are better represented at senior levels in business and government.
“Yet, if things are to change – really change – organisations in both the private and government spheres need to commit to transforming the way they think and act.”
A project in partnership with the IDC
Access to finance in South Africa is not equitable across race or gender, and African women remain at the bottom of the pile.
The 2016 Global Entrepreneurship Monitor Report makes the discouraging finding that the gender gap is widening for female entrepreneurs.
In 2014, eight women were engaged in early-stage entrepreneurship for every 10 male entrepreneurs – a figure that by 2015 had been reduced to six women for every 10 men.
Many studies have found that women face greater difficulties in becoming entrepreneurs because they have more responsibility at home, are less educated and have few female business role models and fewer business-orientated networks in their communities.
They are also short of capital and assets, have lower status in society and suffer from a culturally induced lack of assertiveness and confidence in their abilities.
This hurts everybody.
The UN’s World Economic and Social Outlook Report of 2015, undertaken by the International Labour Organisation, found that economies with larger female labour forces are more resilient and have fewer economic growth slowdowns.
Labour force participation by women is a powerful anti-poverty device: a two-income household is far less at risk than those reliant on one salary.
In 2008, the Industrial Development Corporation (IDC) set up a fund dedicated to addressing the gap in financing for female entrepreneurs.
It came to an end in March 2016. During this time, a significant number of women-owned businesses across various sectors were assisted.
Close on 80% of the businesses were owned by black women, and all were majority-owned by women who were operationally involved in the company.
Apart from direct funding, the IDC also committed a noteworthy amount to the Women Private Equity Fund, which aims to address problems that female entrepreneurs face in accessing finance.
The IDC introduced targets for funding women in 2015/16, which showed an immediate effect with about R2.65 billion approved against a target of R600 million – a significant improvement compared with the R756 million of the previous financial year.
Entrepreneurs who lack collateral – most black entrepreneurs and women – could boost their chances of accessing and repaying loans if they had the right business development support such as training, focused advice and mentoring.
But few institutions recognise this and they offer little support.
Despite the BEE Act and related codes being clear about the need for women to benefit equally from BEE, prevailing evidence shows that BEE has benefited mainly men.
For long-term change, women need role models, mentoring, access to a variety of business networks and entrepreneurial aspiration.
They also need to challenge the notion that only men can become entrepreneurs.
