Tuesday, 31 December 2013 00:01
On 10 December 2013, as the year was drawing to a close, something unprecedented happened at Henry Ford’s venerable General Motors (GM). Mary Barra took the wheel, as CEO, to become the most powerful woman in the US car industry.
Barra is one of a fast growing cadre of top female managers at GM; a quarter of its factory management are female. The cutting-edge technology electric vehicle program is driven by a woman. Barra has been described as ‘a coach, and that’s the sort of management style this company needs’ says David Cole of the Centre for Automotive Research.
She takes over from Dan Akerson, a former military man, who leaves on a high note. His new Chevrolet Impala has been cited as ‘the best saloon ever tested’ by the magazine Consumer Reports.
Will 2014 be different?
Does this foretell that 2014 will be different in the long battle to get women into positions of authority in top corporate entities? A recent survey found that the proportion of women reaching top management in the City of London has doubled in 2012. 12% of all managing directors are now women. This is an increase from 6% a year ago. Also 19% of directors and vice presidents are female, up from 14% one year ago.
Women now account for 20% of all professional level employees in the London’s’ Business District, known as the ‘City’. In 2011 it was 12%. Women also represent 60% of human resource professional in the City and 40% on internal auditors. But there is a dearth of women in certain sectors – only 19% in corporate stock broking, and 25% in private equity. Women running FTSE 100 companies include Moya Greene of Royal Mail, Carolyn McCall of easyJet, Angela Ahrendts of Burberry, and Alison Cooper of Imperial Tobacco. Liv Garfield will take over Severn Trent soon.
The research company which conducted the survey stated that a higher proportion of women were breaking through the so-called ‘glass ceiling,’ up the corporate ladder. This showed that aggressive gender diversity programs are having an effect on women’s progress to the upper echelons of business.
If one considers the proportion of women on London FTSE 100 boards, the latest data shows that women make up 19% of FTSE 100 directors. In May 2013 it was 17.4%, three years ago it was only 12.5%.
Increasing pressure on corporates
There has been increasing pressure on corporates to have more female representation on their boards. The European Union has proposed that a 40% quota be imposed on female representation on boards of large companies. However some countries prefer a voluntary target to be set, which the business community should set out to achieve on their own.
Britain has set a voluntary quota of 25% to be achieved by 2015. Britain opposed the European move for quotas. Britain claimed that at least 10 other European nations supported them on this. Britain’s position is that when countries are taking voluntary steps of their own to improve women’s representation on corporate boards, an imposition of a quota by European authorities was unwarranted.
On the other hand, Norway, which has had a quota requirement since 2002, today has more than 40% of women on their corporate boards. In Sri Lanka analysts point out that of 25 top corporate entities in the country which have a total of 198 directors, only 10 are women. In the generality of case, the few women who were on such boards are there due to being relatives of the owner. The law does not require gender representation on corporate boards.
Women’s activists say that a woman has to be twice as good as a man to achieve parity in the corporate world. Germany is poised to force listed companies to fill 30% of non executive board seats with female candidates from 2016. Companies will also be obliged from 2015 to set and publish individual binding targets to increase female representation in top management.
Royal Mail’s Moya Greene has said: “If you want quotas, I am open to leading that discussion. There is something about the UK – for all its egalitarianism, women are not represented as they should be in society or companies.”
Currently in Germany, women fill just 17.4% on corporate supervisory boards of the top 160 listed companies and only 6.1% of the management board members are female. Joe Kaeser, the Chief Executive of Siemens, the electronic giant, has said that it was up to individual companies to promote diversity and “if companies cannot achieve greater female representation, in the long term, then I could imagine the state stepping in”.
In the recent past, as part of an agreement to form a coalition federal government in Germany, the two major parties agreed that by 2016, it would be required that at least 30% of non executive board members of companies should be women.
The real dilemma
Analysts point out that the real dilemma is how to promote women through the ranks of business, when the pressure of balancing work schedules with family responsibilities are factored in. Statistically women tend to drop out of the corporate rat race after seven to 12 years of work at the executive level. The reason is almost always the lack of affordable care or children and/or aged parents.
Quotas and targets cannot address issues like these. There must be care homes for elders or visits by caregivers to elders living at home, and crèches and child support centres to look after preschool children while parents are at work. While companies can assist in some of these matters, by providing in-house childcare and crèches, etc., it is governments, both national, to create the policy framework and local, to provide the requisite services, that must be activated.
On the other hand, what corporates can do is to take steps to make the expectations of both themselves and their female employees more realistic, given the environment. Better management training and more flexibility about where, how and when, employees with children and/or ageing parents, both mothers and fathers, work would be a good place to start.
Norway’s generous parental leave provisions, flexi hours and mandated crèches at work places are examples of steps which have made some impact on women working in the corporate sector.
Gender should not be the only target; achieving diversity on the board to reflect the diversity of the community the corporate entity operates in will create a much better working environment for all concerned. Identifying at an early stage of the career those with potential to do well at the board level and providing for a promotion scheme which will incentivise them continuing to work, even when family responsibilities intrude on working life, will help. Helping them to cope with these issues through the provision of services and facilities will be a great advantage.
The reason is not simple that boards with diversity or even more women directors guarantee better performance – there is unfortunately no hard evidence yet to prove this – but it is simply because any corporate entity that does not have human resource systems in place that gives it access to the whole 360 degree talent pool available in the market, including male, female and differently-abled, etc., will never be able to reach its full potential in competition with its peers. The lack of diversity on the board will always be a limiting factor for access to markets, technology, design and all other aspects of business.
A feminised recovery
A recent story in a newspaper that the economic recovery in the United States was fast becoming a man-less recovery, in that the main victims of the recession of 2007-2008 were men; the men were disproportionately represented in the types of businesses which were hit hardest by the recession – such as financial services, manufacturing and construction. The recovery, if the halting pace at which the US economy is moving, can be truthfully, called that at all, is disproportionately favouring women, it is in fact a feminised recovery. In August 2009, male unemployment in the US stood at 11% while it was 8.3% for women. Larry Summers, the economist who was President of Harvard University and one-time President Obama’s top economic advisor, recently considered for but not appointed as USA’s Secretary/Treasury, has gone on record saying, “When the economy recovers, five years from now, one in six men who are 25 to 54 will not be working.”
This feminisation of the work force is one of stunning proportions for an industrialised nation.
In more traditional primary industry-oriented economies or transformational ones, like Sri Lanka, women’s role in the economy has always been underestimated and underemphasised.
In traditional agriculture and fisheries, women play a critical role. In rice and related crops, transplanting, harvesting and processing have always been traditionally women’s roles, before mechanisation. In traditional fishery, value addition, processing and marketing were to a great extent, female responsibilities.
With the dawn of plantation agriculture, tea plucking, rubber tapping and coconut processing were all exclusively women’s roles. Today, in Sri Lanka, with labour shortages and optional employment opportunities, mechanisation is increasingly being resorted, with the fact that garment factories, foreign jobs as housemaids, government service and the armed forces are increasingly drawing the female work force.
In Sri Lanka a high proportion of the bottom of the pyramid in government service, clerks, primary and secondary teachers, etc., are women. Policymakers are increasingly becoming aware that the human resource policy framework essentially must provide for the full participation of the both the brains and the brawn of the nation’s women if economic development is to be achieved and economic rewards distributed in an equitable manner.
Importance of women
Another factor which reflects the importance of women in the economy is a study done by the House of Commons Library in Britain for the Fawcett Society, on the gender impact of the deep cuts in expenditure and increases in taxation announced by the Chancellor of the Exchequer, in order to bring Britain’s humongous budget deficit under control, found that 72% of the reforms will take money away from women, while only 28% will do so from men. Others argue that as in the US, women in Britain came through the recession better off than men, 2/3 of those made unemployed by the crisis have been men.
In politics, women seem to be doing well in emerging economies. Of the 36 lower houses of parliament that women have reached the threshold level of 30%, which has shown to be the level at which women can influence policy making effectively, 11 are African. In Britain women make up 23% of the House of Commons, while in the US they constitute 18% of Congress. In South Africa women hold 42% of Parliamentary seats. Some of countries have quotas; in South Africa the ANC has a voluntarily imposed quota of 30%. In Rwanda women hold a record of 64% seats. But in Botswana it is only 8% and Nigeria 7%. In Latin America Brazil, Argentina and Chile already have or will have in the near future female presidents.
The explosion of micro finance as a development tool, and the 70% gender bias it has shown, worldwide, including South Asia, is affecting the quality of life indicators positively, as studies have conclusively shown that women reinvest 90% of their income into community and family, housing, children’s health, education and nutrition, compared to 40% by men, although alcohol and gambling have made some inroads into women’s groups in some communities, it is not yet endemic.
This is happening in developing and emerging economies, notwithstanding inadequate support for women in their essential role of child bearing, childcare and nurture. There are hardly support systems, outside the immediate family circle, existing to assist a housemaid who has to leave her young growing up and vulnerable children and travel to West Asia to earn money as a housemaid, or travel a hundred kilometres to a garment factory in another part of the country.
Even those women who work near their homes, day care for children or elderly relatives is not available, outside the ubiquitous, unregulated preschools which provide a dubious level of service, in most cases. The below replacement level birth rate which has prevailed here for over the last two or three decades is really hitting home.
Universal access to education in Sri Lanka has also made women academically on par if not superior to men and in the work force, in offices and factories, women have important functions and hold responsible posts. This is a worldwide phenomenon. In Brazil, the United Arab Emirates and Russia, the vast majority of college graduates are female. American women are already the breadwinners or financially on par with their husbands in two-thirds of all households. In the European community, women filled two-thirds of eight million new jobs created since 2000.
American women are the decision makers in 83% of all purchases by consumers, 89% of all bank accounts in the US are held by women, 51% of the personnel wealth is held by women and American women control over US$ 5 trillion in consumer spending. In Japan, the majority of currency traders are women. The number of female managers in Singapore has tripled. One in five management jobs in Hong Kong are held by women.
South Korea, Taiwan and Malaysia have reached their economic prowess by legions of their women working in repetitive, dead-end, poorly paid (by First World standards) factory jobs in electronics, textiles and making toys. The same revolution is being repeated in Bangladesh and China.
The information and communication technology revolution in Bangalooru, Hyderabad and Chennai is again driven by women computer programmers and call centre operators, to a large extent. This has been a revolution based on economic necessity, not a revolution brought about by confrontation, marches and manifestos. Now, only when the one child policy in China hits home, through a shortage of those of working age, we find strikes for higher pay and perks in Honda, Toyota and Samsung factories of multinational corporations.
Future belongs to women
So, one thing is clear, the future is feminised and it is already here, it is destined to belong to women. Across the board, women have and are destined to play an equal if not dominant role in society generally and in the economy specifically, in the future.
Regarding the presence and effect of women on corporate boards, a recent study by the Wellesley Centre for Women found that three was the magic number when it came to impact of women on corporate decision making; after that tipping point is reached, the board as a whole begins to function differently.
The policy framework to make this happen painlessly, providing for facilitation of a women’s essential role of nurturing the next generation, their right to employment and to bring a reality to check into men’s responsibilities in this area, such as parenting leave in the Scandinavian countries, etc., has to be urgently provided. In this area, the world, generally, and developing and emerging economies in particular, are sorely lacking. The man-less, feminised economic recovery in the world’s largest economy may be a wakeup call to the world’s policymakers.
With populations ageing and the work force reducing in numbers it is essential that all available man and women power is utilised for the forward march of a nation. Systems must be put in place so that gender is no longer a limitation for participation actively in the work force.
Participation in the informal work force, in which women in developing countries play a big role, must be formalised, recognised in the mainstream and regulated. The responsibilities of women in child care and the care for the elderly must be shared by the community. Crèche services should be provided. Paternal leave should be legalised.
The rigidity of labour laws should be relaxed to allow women to join and, leave and rejoin the formal work force, when family requirements, demand that they spend time as home makers. These are things which are very difficult to practically implement. But when less and less people of working age have to support an older and ageing population, these are imperative steps.
The Nordic countries have viable models, which they have achieved at an economic cost. But the direction in which worldwide population trends are moving show that they have taken, sensible and pioneering steps.Take the example of Sri Lanka. In 2012 67% of the population is at working age. Those of a working age will remain larger than the population of children and elderly dependent persons until around 2020, on present projections. The percentage of elderly people is expected to reach 16.7% in 2021. By 2041 one in every four persons in Sri Lanka will be an elderly person.
In this context, steps have to be taken for the full participation of people of working age in the economy. Education policy, labour policy, technology all must be aligned to achieve this goal. It is simply not affordable to have large segments of the population, when it is ageing rapidly, which can be productive, unable to contribute to the economy.
The age of retirement must be reconsidered. With life expectancy increasing, people must be legally permitted to work until they are older. However, special provisions will have to be made to provide the space for this. As Helena Morrissey of Newton Investment Management says: “Men and women are different – equally intelligent, but we behave differently motivated by different things.” At the tail-end of 2013, Mary Barra successfully smashed through one glass ceiling at GM; how many others will follow in 2014?
(The writer is a lawyer, who has over 30 years of experience as a CEO in both State and private sectors. He retired from the office of Secretary, Ministry of Finance and currently is the Managing Director of the Sri Lanka Business Development Centre.)