Why Women on Boards Drive Greater Success
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- Player: Donna Rachelson
- Position: CEO
- Company: Seed Academy
- What they do: Seed Academy is an enterprise that aims to transform the SA economic landscape through entrepreneurship. It offers high impact training and business support, access to markets and funding for entrepreneurs, while assisting corporates to get a real return on their Enterprise and Supplier Development spend.
- Established: 2013
- Visit: www.seedacademy.co.za
Mention transformation and most people tend to rightfully think about BEE and racial inequality. But Seed Academy CEO Donna Rachelson is also interested in a different kind of transformation: Bringing more women into the boardroom, and into leadership positions.
“There is still huge inequality between men and women in the South African workplace,” says Rachelson.
“Women typically work for 12 months in order to earn what men make in eight. Women also make up only about 15% of local boards, and a mere 9% of JSE listed companies have 25% or more female directors.”
Another worrying trend is the fact that things seem to have stagnated somewhat. The percentage of women in senior management positions locally has stayed at around 27% for the last seven years. Transformation isn’t happening fast enough. In fact, 39% of South African businesses don't have any women in leadership positions.
Boosting the bottom line
In a country that’s trying to address a history of inequality, this is obviously an issue. But it’s about more than that. A failure to bring women into the boardroom is actually hurting the bottom line.
“Including women at the C-suite level makes good business sense,” says Rachelson. “A recent study researched almost 22 000 firms globally and found that when women comprise a third of executives, companies are more profitable. Companies that increased the number of women on boards reported significant increases in profitability — typically by around 15%. It’s also been revealed by the MSCI World Index that many institutional investors are increasingly focused on the gender composition of company boards. These investors are looking for diversity.”
Why is this? It ultimately comes down to a company’s ability to stay relevant and continue to innovate.
“Companies with a more diverse board composition tend to be more innovative and make better decisions. Put simply, having more women in business leadership results in higher returns in sales, a greater return on invested capital and a higher return on equity,” says Rachelson.
A culture of inclusion
Having a diverse board is the result of a certain kind of company culture. And companies with this kind of open and inclusive approach to doing business tend to be far more innovative.
“Diversity breeds innovation and better problem-solving,” says Rachelson. “If everyone around the boardroom table looks and thinks the same, the company is going to struggle to stay relevant. Every business wants to appeal to a bigger market, and that means bringing in a diverse group of people. As a business, you’re going to struggle to appeal to a group of people who you are excluding from the decision-making process.”
And what in particular do women bring to the table? “Generally speaking, women are good at dealing with other people and working collaboratively. This makes them very effective in the boardroom, where you want someone who is interested in different ideas and opinions. A good board is able to work as a team.”
Luckily, it's not all bad news. Even though women are still largely excluded from the boardroom table, things are changing. More and more women are slowly moving into top leadership positions.
Just consider, for example, Sheryl Sandberg’s role within Facebook, or Marissa Mayer’s role within Google a few years ago. These role models are important, says Rachelson: “Strong role models are especially powerful. Successful women should mentor and support other women where they can, and more importantly, they should accelerate progress by recommending other women.”
But how should companies — those that have typically excluded women from leadership roles — try to bring about change? “In my view, the implementation of quotas will not make the critical and immediate difference we need in South Africa,” says Rachelson.
“Rather, a recognition that diversity drives transformation, while giving businesses access to new markets and new thinking, is the key to unlocking greater participation.
“One of the reasons for poor female representation in business leadership is the tendency for women to be concentrated in specific managerial functions -that don’t position them on the correct path to the chief executive, such as HR and marketing.”
In order to bring about change, says Rachelson, companies need to start by looking at things as they stand. How many women are currently in leadership positions? What specific departments are they concentrated in? Why is this?
They also need to look at the pipeline? Who is being groomed for leadership? Like men, women need to have the opportunity to be placed on a leadership track.
“Like men, women have strengths and weaknesses. Some have the potential to be great leaders, and some don’t. Women can bring a lot to the boardroom table, but they can also learn a lot. There are certainly things that they can learn from men. But it all starts with being given the opportunity to operate at the highest levels,” says Rachelson.