There is a business case to have women in leadership. According to the McKinsey Women Matter report for Africa, released recently, there is a link between companies which perform better financially and that have gender diversity.
The report shows that in the past 10 years Africa has made progress in terms of gender diversity in leadership. However, only 5% of CEOs in the private sector in Africa are women, compared to 4% globally. This indicates that achieving gender equality is still an issue, according to Lohini Moodley, partner at McKinsey.
“In terms of gender diversity, one of the key findings is that we [Africa] are doing well compared to the rest of the world and we have made progress but we are not making the most of the opportunity,” explained Moodley. Organisations with a greater share of women on their boards tend to have higher operating margins, return on equity, and total return to shareholders.
The report also found that Earnings before Interest and Taxes (EBIT) for companies with at least a quarters share of women on boards was on average 20% higher than the industry average.
However it is important to note that the proportion of women in senior positions and financial performance does not imply causation, cautioned Moodley. “Women bring a different dimension to organisations … they bring different considerations. More diversity allows for robust decision making,” she said. Research shows that benefits of diversity influence risk management, decision making and board dynamics which all impact financial performance.
“When more women are involved in decision making, the dynamics of which a decision is reached are different,” added Tania Holt, partner at McKinsey. Research shows that 70% to 80% of global consumption is influenced by women, as women leaders relate to customers better.
Findings also show that female representation also varies by industry. The representation of women in industries traditionally dominated by men is lower. “Historically, few women studied in these areas… the pipeline of women is smaller than men than in other areas,” explained Moodley.
Other key findings show that in Africa 44% of women hold line roles. These are roles which are critical for business activity to function, including operations and finance. “There is a higher likelihood for CEOs to be selected from line functions than support functions,” said Moodley.
Although there are more women in leadership positions, women do not necessarily have more power. In the private sector, more than half of senior women occupy staff roles, which take a support function in business, including communications, human resources, legal and corporate social responsibility, explained Moodley. In government the equivalent would be roles in social welfare, with limited political influence, added Holt. “We need to look at the roles of women to allow them to reach higher levels,” she said.
Line roles offer more exposure to decision-making, core operations, and promotion to CEO, the report stated. In the companies surveyed, statistics in Africa show that 56% of female senior managers hold staff roles. A substantial pay gap between men and women holding senior positions in private sector companies still exists. In South Africa, women board members earn 17% less than their male counterparts.
At executive committee level, African women hold 23% of positions, compared with a global average of 20%. At board level, African women hold 14% of seats compared with a global average of 13%. In the Southern Africa region, 20% of board positions are held by women, compared to the 14% average on the African continent.
The Women Matter Africa was compiled over 12 months, using data gathered across 14 African countries, including insights from 55 leading companies and interviews with 35 African women leaders, explained Moodley.
Data from 210 publicly traded African companies, across seven sectors including pharmaceuticals, telecoms, media, technology, finance, transport, logistics and tourism, was also analysed. The longest part of the research involved getting feedback from companies regarding data on female representation in leadership, she explained.
Source: Fin24/ News24Wire.com.
