Archives For Women in Business

When persuasion is not enough

aksaroya —  8 May 2013 — Leave a comment

The contentious issue of how to ensure enough women are appointed to boards of companies is dividing opinion, with some insisting that mandatory quotas are the only way to effect real change, says Errol Oh

diversity

It has been almost two years since the Malaysian Government set the target of having at least 30 per cent women at the decision-making level in the corporate sector by 2016. This is part of the country’s Economic Transformation Programme (ETP). Leveraging women’s talent to raise productivity is a policy measure under human capital development, one of the ETP’s six Strategic Reform Initiatives.

`The decision-making level in the corporate sector’, although not officially defined, is widely understood to mean directors, CEOs and other C-suite positions, particularly those of large corporations and the influential government-linked investment companies.

Most people agree the immediate and more realistic goal is to raise the proportion of women directors of listed companies to 30 per cent. However, the pursuit of this target is not driven by a mandate; the Government prefers to rely on persuasion instead of legislation. It is perhaps time to reconsider this. Malaysia is not alone in rejecting the use of compulsory quotas as a way to get more women into boardrooms.

For example, in the United States, there has been no serious discussion on the subject, although board diversity is a hot topic there, as it is elsewhere in the world. Nevertheless, countries such as Norway, France, Spain, Italy and Belgium have made it a must for their listed companies to have certain ratios of women directors.

Last November, the European Commission proposed that by 2020, 40 per cent of the non-executives on the boards of companies listed on member states’ stock exchanges are to be women. The imposition of quotas for women directors is open to debate. The worry is that they will lead to tokenism – women will be made directors more to satisfy the quotas than because they are qualified and can add value. This may undermine the argument that companies with more women directors tend to perform better. Some who oppose the idea regard quotas as patronising to women.

One of them is Mai-Lill Ibsen, who once had almost 200 boardroom seats in Norwegian companies. In an interview with The Guardian in January, she said: ‘I’ve never seen the glass ceiling, I’m against quotas, they are discriminatory in a way. I feel we [women] are so strong we don’t need that.’

On the other side of the divide are those who have a similar view as that of Viviane Reding, the EU Commissioner for Justice, Fundamental Rights and Citizenship. More than once, she has said she is not a fan of quotas but likes what they do. That is an important point.

Mandatory quotas for women directors force decision makers – in Malaysia, these are almost always men – to include women as candidates. This is likely to make a difference, especially in the selection of independent directors. Often, boards of directors are seen as thinly veiled old boys’ clubs, where even independent directors are associates of the controlling shareholders.

It is not the best setting for good stewardship that protects minority shareholders’ interests. However, there is little incentive for change if the ratio requirement is voluntary. Having women directors will not automatically improve a company’s governance, but if male dominance is no longer acceptable in just about every sphere of life, why should it persist in the corporate boardroom?

Errol Oh is executive editor of The Star

This article first appeared in Accounting and Business, China edition, April 2013

In ACCA, Women in Business ,
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Where next for the women on boards debate?

accapr —  16 January 2013 — 1 Comment

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By Rosana Mirkovic, head of SME policy, ACCA

With such unprecedented focus on this topic throughout 2012, it’s difficult to imagine how such a high level of interest and activity can be sustained. Will the record increase in female NED appointments continue?

A voluntary target of 25 per cent of directors to be female by 2015 has been set in the Lord Davies report and it seems that companies are heading in the right direction towards achieving it – women now account for 17.4 per cent of the FTSE 100 board directors.

And what will happen with the European Commission proposals? In November the EC published its much awaited proposal for there to be at least 40 per cent women non-executive directors on the boards of big-listed companies by 2020. There is still debate on what this means in practice and to what extent will this translate into quotas for companies. It would appear the proposals deliberately avoid the term ‘quotas’ and instead refer to a 40 per cent ’objective’, with unspecified sanctions against companies flouting the rules.

It is clear that over the past two years the gender equality debate has by and large been dominated by the women on board debate. It certainly has some high profile ambassadors. What we must ensure now is that we use this momentum to broaden the discussions.

We know that women are under-represented at senior levels in virtually all areas of economic activity and especially those with high financial rewards. While higher numbers of female non-executive directors would go some way towards addressing this, there is scarce evidence that it would change anything else.

In fact the Norway example that is so often used for the quota argument shows that despite 35 per cent of female NEDs on Norway’s publicly listed company boards, there has been no increase of female representation at the CEO level.

The UK is heading in the same direction – only 6.6 per cent of the FTSE 100 and 4.9 per cent of FTSE 250 of executive directors are women. In October 2012, two female FTSE 100 chief executives resigned (Cynthia Carroll and Dame Majorie Scardino) and once their resignations come into effect, this will cut in half the number of women holding the top spot at a blue-chip company (Alison Cooper at Imperial Tobacco and Burberry’s Angela Ahrendts will be the only two FTSE 100 female chief executives standing).

And this is what we are acutely lacking – a focus on why women remain under-represented in senior management positions. Issues such as stereotypes, the cost of childcare, pay inequality are the really difficult issues that are lacking high profile supporters and that are infinitely more difficult to solve and commit to such short-term targets. Two reports released last month (see here and here) show that for all the talk of women on boards, and there has been plenty, there has been no change in the prospects of women running big businesses. And this points towards a real danger of the women on boards debate overshadowing the real issues.

ACCA’s own research shows that stereotypes still remain despite the unprecedented focus of female board appointments. For this reason the language of finance is seen to help break down some persistent stereotypes about women’s competence and emotional nature. Finance is also seen as the language of the board and for women with a finance background it gives them access to the conversations. Thus, the finance qualification is seen as a masculine qualification that combats some of the female stereotypes.

We need more research that helps us understand better what is hindering women in their careers and more importantly, what is helping them succeed. The women on boards agenda does very little on this front yet it is the only issue we should be looking at. Once we have more women leading our businesses, it would seem the rest would take care of itself, including the numbers of women at board level.

After all, our research shows that for every board member in the FTSE 100, there are 5,500 employees, demonstrating a real need for a more bottom-up approach.

In ACCA, Finance Transformation, Rosana Mirkovic, Women in Business , , , , , , ,
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Turning boardroom diversity inside out

accapr —  7 September 2012 — 1 Comment

By Manos Schizas, senior economic analyst, ACCA

If you have been following any European politics this week, apart from the ECB’s bond-buying programme, you will already know the European Commission is expected to propose that, by 2020, 40% of all non-executive board members of European companies should be women – with companies risking fines or other penalties if they fail to comply. Although no one has seen anything other than leaks for the time being, plans are predictably meeting opposition from many quarters.

ACCA being well versed in Brussels etiquette, we do not comment publicly on proposals the EU institutions haven’t placed in the public domain. However, we’re also not new to the debate on quotas, which has been going on throughout Europe and beyond (e.g. in Pakistan) for quite a few years. Our positions have evolved over time (see here, here and here) and will continue to do so, reflecting the new experiences and evidence in our markets. On the other hand, our core values of diversity, opportunity, innovation, integrity and accountability haven’t changed.

While we wait for the full proposal and ACCA’s response, I thought I’d share with you a real gem in the diversity research literature. It comes from the Bank of Finland of all places, which recently published a remarkable research paper on the subject by Yiwei Fang, Bill Francis and Iftekhar Hassan. Its title: More than connectedness – Heterogeneity of CEO social network and firm value.

Rather than focusing on diversity among board members, the researchers looked instead for the diversity within – the extent to which individuals have access through their social networks to truly different perspectives and could draw on experience, skills, knowledge and mindsets different from their own.

In order to measure the diversity of CEOs’ social networks, the researchers used a massive biographical database of EU and US CEOs in order to track down business leaders’ contacts among the business world from their school days onwards. They then analysed the heterogeneity of these social networks in terms of gender, ethnicity, academic and professional background, as well as geographical dispersion around the globe. To be safe, they controlled for the overall size of CEOs’ social networks – after all, it’s easy to have a more diverse network if you know more people!

They also included as control variables a battery of factors already known to influence firms’ financial performance, including two traditional measures of board diversity (by ethnicity and gender), and tested against four kinds of outcomes:

a) sustained share price reactions following a change of the CEO

b) patents filed (as a proxy for innovation)

c) sustained share price reactions to mergers and acquisitions initiated by the CEO’s company

d) proxies of firm value and financial performance.

Their overall finding was that the more diverse the CEO’s social network, the more value they tended to add to their companies – they made a difference by enhancing innovation and export potential, as well as extracting more value from the firm’s investments, including major items such as mergers and acquisitions. As a result, investors typically pay a premium for the shares of companies who have just replaced their CEOs with someone with a more diverse network.

This resonates with earlier ACCA research. Back in 2011, we worked with Forbes Insights to look into the personalities of Europe’s business executives and whether they help influence company performance, and our work resulted in the report, Nurturing Europe’s Spirit of Enterpriseas well as some excellent online coverage. But what we found was even more satisfying.

The most innovative business executives, and the ones most likely to become CEOs, were a category we named ‘the Star Pupils’. This is what we had to say about them at the time:

STAR PUPILS. These are professionals who invest heavily in their own personal development, acquiring mentors with ease and making the most of other people’s expertise. Of the entire sample they are the likeliest to rise through the hierarchies of organisations, even when the dominant business culture is stacked against them. Women who thrive in masculine environments often fall into this category, and CEOs are significantly more likely than other executives to match the Star Pupil profile.

Star Pupils form the largest category at about 24% of the respondents. Over half of the Swiss respondents fall into this group, as well as 30% of the French and Italians, as opposed to only 16% of British executives.

Otherwise, Star Pupils exist in similar numbers everywhere: large companies and small, finance and IT, men and women. However, only 5% of CFOs, treasurers or controllers are Star Pupils. It is not clear why this might be, as the traits of Star Pupils would appear to be adaptive in any function, but one possible explanation arising from the research literature would point to the lack of a full-fledged mentoring culture in these functions.

Looking even deeper into the Forbes data, we were able to unpack the particular personality traits that made up different categories – ‘pursuing personal development through others’ was the dominant characteristic of Star Pupils (see a comparison here). The Movers and Shakers, who shared a lot of the Star Pupils’ innovative capacity, also scored well in this dimension.

Here’s an interesting question – would the findings of Fang et al apply to CFOs as well? Do CFOs with more diverse social networks create more value? Is it important that the social networks of CEOs and CFOs overlap/complement each other? And at any rate, how diverse are the social networks of CFOs? Going by the Forbes data on ‘pursuing personal development through others’, finance professionals were slightly worse than average social networkers and our small sample of CFOs in particular were even worse. I’ve written to the researchers and maybe one day we can repeat their analysis.

In Manos Schizas, Women in Business , , , , , , , , ,
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Mentoring: good for mentor, good for mentee

theaccablog —  26 June 2012 — Leave a comment

Anita Brook, Managing Director of Accounts Assist UK Ltd and vice-president of ACCA’s practitioners panel explains how mentoring is good for both the mentee and the mentor

 

We all start somewhere. We’ve all taken the first steps in our careers and at times could have done with some additional support. This is why having a mentor can be an essential link between knowledge, experience and support.

Typically within the accountancy sector a mentor will be a fully qualified accountant with a number of year’s frontline experience. A mentee is normally a student studying for ACCA accreditation, or a degree in accountancy or they are already a practicing accountant at junior level. 

 

The mentor and mentee both gain from the mentoring experience in difference ways. A few are listed below:

Benefits for the mentor:

  • Get to reflect on their own experience and knowledge
  • Gain an insight into the younger side of their own industry 
  • Gain an insight into new/current teaching methods
  • A way of being close to current issues as they happen
  • Recognised at work for getting involved and giving something back in a positive way
  • Can be a great way to spot talent for future recruitment campaigns

 Benefits for the mentee (student):

  • Having a mentor is an important form of learning during the early stages of a professional career
  • Mentors offer real experience and working knowledge that cannot be gained from textbooks or the internet
  • Access technical support. A mentor traditionally has a higher qualification level, typically a qualified accountant with a number of years experience
  • A mentor can provide an independent, yet experienced voice that isn’t work or education focused
  • Can advise how to balance workloads and set priorities 
  • Mentors can share work place do’s and don’ts
  • Provide networking opportunities and other important contacts
  • A mentor can be a positive force to push a mentee forward to achieving professional goals and qualifications
  • A mentor can also become a mentee’s champion. This could be for further opportunities within the business or wider industry

Both mentor and mentee benefit from the relationship, and when undertaken in a business environment it can have a positive effect on the team’s working relationships.

In ACCA, Anita Brook, Practices, Women in Business
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Women in the global economy

theaccablog —  7 October 2011 — 1 Comment

By Rosana Mirkovic, senior policy adviser, ACCA

You’re all probably familiar with the global gender development gap.

But even in economies where there is a long history of equal rights and where women are now more likely to outperform men in education, the question remains: why do women still lag behind men when it comes to business ownership and leadership?

The figures are stark: on average, women are about half as likely as men to be involved in business start-ups and they account for fewer than 8 per cent of top managers in OECD countries.

It seems obvious that progress is at very best slow if not stagnant. Here at ACCA we are happy to share a better story with the majority of our students now being female as well as 42 per cent of our membership. And not only were we the first professional body to appoint a female chief executive, but we are already onto our second one.

But the point here is not to show off about our own achievements but to show that things can be different in successful global organisations. The problem is that we still haven’t arrived at the answers of why this isn’t happening more often in other professions and industries. Of course we know that family life and childcare responsibilities have a large role to play but they don’t explain everything.

We’re soon launching a new report that looks at how women have fared since the beginning of the financial crisis in 2008.

A couple of findings are worth pointing out a bit early: while our members are most likely to be influenced by their environment and more importantly the position they hold within their organisations, there were still some interesting gender related nuances we observed. For example, female members were found to be more negative towards government policy but more likely to interact with business support initiatives, including access to finance projects.

Most interestingly of all however, is the very fact that our female membership is much less likely to respond to our Global Economic Conditions quarterly surveys; although 42 per cent of ACCA members are female, only 33 per cent of GECs respondents are women.

While it is difficult to prove this, it seems possible that women are generally less interested in making predictions and general assessments on economic matters. For instance, academic and non-academic studies show that women are less attracted to economic blogging and few among even the leading female economists blog (and here too)

So the ‘silent majority’ adage might be more accurate then we thought. And therein lies a bit of problem. Diversity leads to policy- and decision-making based on a mix of views, perspectives, and experience. Without the full engagement of a significant section of society, that pool for diverse opinions is more limited than it should be.

In Economy, Global Economic Conditions, Rosana Mirkovic, Women in Business
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