Women Directors in Malta (WDM) have identified a series of principles which it believes, if adopted here, will lead eventually to greater gender equality and improve the % of women in the boardroom.
In Malta, many women are just as confident, able and ambitious as men; however, they need more support from their employers to achieve their ambitions. There is a need to focus on creating inclusive workplace cultures that are free from bias, with policies and processes in place that ensure women of all backgrounds have an equal opportunity to progress to senior positions, a level playing field, no more, no less. This is what we mean by gender equality.
The Current Situation
According to EU statistics, in 2013, women represent just 3.5 per cent of board members of the largest, publicly listed companies In Malta, the lowest share in the EU, far short of the EU average of 15.8 per cent. Women also account for only 3.5 per cent of non-executive directors and 6.8 per cent of executive directors, well below the EU average of 16.8 and 10.2 per cent respectively.
Why do women not achieve their capabilities?
The problem is not gender imbalance but unequal or lack of opportunities as opportunity is the key to equality which leads to gender imbalance in organisations. One cannot have true opportunity without equality. This inequality has led to a lack of talented women being identified and developed in the pipeline for executive positions. If Malta is to achieve sustainable change both now and in the future, employers must focus their efforts on women at every level of their organization, not just at Board level.
So, what can be done?
If we examine both what steps are being undertaken and the latest research from other countries, we can identify key principles which could be applied in Malta. However two important facts cannot be ignored: men’s participation is necessary for real change; and no single initiative will fit all countries due to the different legal, social and cultural backgrounds and due to the way corporate governance takes shape. The real issue therefore is how to move towards a more equitable scenario with respect to Women directors on boards whose access to men control.
“Use of the “old boys” network remains prevalent and open advertising is almost non existent. This is preventing businesses and other organisations choosing from the widest talent pool and recruiting more women. Job descriptions often used the terms ” fit” and ” chemistry” to reinforce the existing boards “(Equality and Human Rights Commission report, 2016)
Real change takes time and often the environment is not always conducive to the changes needed. Committed leadership, corporate transparency and focused public attention are critical to drive change and increase the number of women on boards. Sustainable change requires that employers must focus their efforts on women at every level of their organization and that workplace diversity makes good business sense. It’s the organizations that must change. Even the most talented women won’t rise to the top unless they have real chances to lead.
According to a recent report, (The Female FTSE Board Report 2015-CRANFIELD INTERNATIONAL CENTRE FOR WOMEN LEADERS) there are three approaches to change:
These targets can be strengthened by a number of supporting actions:
- Voluntary Search Code, whereby most leading search firms have agreed a set of principles by which they will help to appoint more women directors.
- Changes in the Corporate Governance Code so that every listed company is required to publish its diversity policy and the numbers of women on its board.
- Required Narrative Reporting by the Government, so that companies need to disclose the number of women at different levels.
- Regular communications from the Government highlighting successes and or reminders of the need to change.
- Regular research reports on progress and economic benefits.
Yet if we examine the latest report by the Equality and Human Rights Commission last week on the issue of gender equality, it stated “the biggest firms in the UK’s FTSE 100 have hit the 25% voluntary targets for increasing the % of women in the boardroom. However, this has been achieved by largely appointing them to non executive posts rather than more powerful and higher paid permanent posts; little progress has been made on the number of women appointed to Senior Independent Director or Chair positions. Below board level, there has been little change in the number of women on executive committees and the number of women in the senior executive pipeline”
Research in the UK shows that almost half of the directors surveyed had been recruited through personal friendships and contacts. Only 4% had a formal interview and only 1% had obtained the role through answering an advertisement.
More than 20 countries have adopted quotas for women on corporate boards. Norway was the first and continues to be the most prominent which went from 9% women on their boards in 2003 to more than 40% in 2012. Companies that do not comply face being dissolved, so the penalties are serious .and often quoted as an example of what can be done. However, this again is misleading as analysis shows that most appointments in Norway are at non executive level
- Corporate Transparency.
In several countries, disclosure standards for listed companies now include requirements to report on gender diversity policies and numbers of women and how they intend to grow their female executive pipeline. Visible targets are needed and to review and report gender metrics on a regular basis Unless companies can articulate their plans for increasing gender diversity in writing, then it is unlikely that anything positive will happen. CEOs have a specific responsibility to lead on this agenda.
The EU recently adopted its non-financial reporting Directive, under which certain large companies will be required to disclose information on diversity about their board of directors.
WDM does not believe that voluntary targets, adopted in the UK and elsewhere, is the way forward.
Board appointments should be made on the basis of business needs, skills and ability. All companies are different. It is in their own interest to set and develop their own targets and strategies, so that they can effect the necessary change through means best suited to their own circumstances.
Companies should set out in their strategies on how they think the skills on their boards meet their needs. In a talent-driven world, the composition of both executive boards and boards of directors should reflect more gender diversity.
WDM also does not believe that legislation to increase the number of women on boards in Malta is appropriate as this would increase a sense of tokenism, and that good quality male board members could be ousted to make way for poorer quality women candidates, Such action will also be resented by women as appointments should be ideally on the basis of merit.
What actions can be taken?
Diversity thrives where there is great leadership, vision and transparency
- Getting Chairmen to champion gender diversity is an important step but CEOs and senior managers must join Chairmen in this effort to focus on the executive pipeline. The only way of growing and sustaining the female pipeline is to change the predominant culture. Culture change can only be led and managed from the top and CEOs need to champion this next stage. Transparency around issues such as promotion requirements, processes and outcomes are essential in order to achieve greater meritocracy
- Develop a culture where real meritocracy is nurtured. There needs to be continued and consistent systemic change where female talent is better represented throughout the whole organization, treated as any other process of organizational and social change – there is a need to have a clear understanding of the current situation, to set aspirational goals and targets, to develop a road-map to achieve these (including responsibilities and accountabilities) and to report on progress on a regular basis. Companies should be exposed and held accountable through this need to report. Government and other stakeholders) must act as enabling forces.
- Extend greater visibility in the board appointment process and the selection of and interviewing practices used by current boards, despite awareness that these interviews sometimes lack rigour.
- Executive search firms should draw up a Voluntary Code of Conduct addressing gender diversity and best practice which covers the relevant search criteria and processes relating board level appointments. Written by executive search firms, the best practice code for executive search firms tasked with board level and other senior appointments will help them demonstrate their ongoing commitment to supporting diverse boards, building on and sharing good practice.
- Ensure that women make more headway not only as NEDs but as Chairs, Senior Independent Directors and Heads of Nominations Committees where they are currently under-represented. More focus is also needed on the development of board directors through mentoring and developmental feedback.
- Champions of change outside of business are also needed, such as WDM, the Government, media and researchers, to ensure that progress continue.
Article published in the Sunday Times – June 2016
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