Mending the gender gap – advancing tomorrow’s women leaders
The number of women operating in executive directors’ roles is slowly making progress but corporate South Africa still has some way to go in making changes to diversity in boardrooms, says PwC. “A promising picture of women emerging in executive roles is emerging in the boardroom but women still continue to lag behind their male counterparts,” says René Richter, PwC Partner responsible for managing the Research Division of Human Resources Services. “Studies suggest that companies with a gender diverse board perform significantly better than their competition .This includes higher returns in sales, a greater return on invested capital, and a higher return on equity.
"While South Africa has made some strides in terms of addressing employment equity in the workplace, more work remains to be done. Women still find it difficult to climb the corporate ladder and this is apparent in the lack of visible role models at executive level.” PwC’s 2013 Executive Directors’ Remuneration report shows that the percentage of women operating in executive roles has increased from 4.2% in 2012 to 8%, and this year it has improved to 10%.
The 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 11% of women operating in executive roles in the technology sector, compared to 89% of men operating in executive positions. The financial services sector is also largely dominated by men at board level (87%), with a minority of women (13%).
At CEO level the gender gap widens some more. For example, 94% of men occupy the position of CEO in the technology sector, compared to a minority of 6% of women. In the financial services sector, 93% of men are also CEOs, whereas 7% are women.
In addition, 22% of male CEOs were paid in the upper quartile of the market, while only 2.5% of females were paid at the same level, according to PwC’s REMchannel® on-line salary survey. According to recent statistics issued by the South African Revenue Service (SARS), the percentage of female taxpayers has been steadily increasing over the last few years. For the 2011 tax year, women accounted for 44.3% of the assessed individual taxpayers, earning 36.3% of the taxable income and contributing 29.6% of tax assessed. Women on average earn 28.1% less than men as measured through taxable income and are liable for 47.1% less tax than their male counterparts.
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. According to the report Eurasia is ranked as the leader for women empowerment, with some interesting outliers such as Kenya and the Philippines. Norway, Sweden and Finland are actively doing something to address the problem. Mexico, Egypt, the UAE, Chile, Japan and Saudi Arabia were the worst countries in the battle of the sexes. The gender gap is also tending to narrow in economies such as Brazil, Germany, Italy, US, UK and Australia. China shows less discrimination by awarding the top jobs to a few more women.
PwC’s study on millennials (born between 1980 and 2000) in financial services found that over 50% expect to work for more than five employers over the course of their careers. This staff churn could take promising female talent out of the leadership pipeline and negate investments that companies make to prepare internal candidates for leadership positions.
The lack of women leaders is grabbing the spotlight globally and the European Commission recently adopted a proposal for legislation requiring women to make up 40% of board director seats by 2020. “To avoid sanctions, many companies will need to take urgent measures to comply and local organisations may soon feel the ripple effect of the policy. This will make the global talent race even more competitive and organisations that don’t actively develop and promote female talent could soon see well qualified women leave to join companies that do,” says Richter.
Among the European Union member states, the number of women board members has increased by an average of only 0.6 per year since 2003. This trend is also evident in South Africa as the female representation in top management positions has increased on average with 6.1 percentage points since 2002.
“As organisations remain challenged to address the looming skills shortage, there is a greater need for them to fundamentally re-evaluate how they define leadership and how they identify and nurture talent and specifically female talent,” says Richter. “While it is widely acknowledged that transformation has been slow and is nowhere near representative levels, our research suggests that the shift is taking place albeit at a slow pace,” she concludes.