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Investors should pay greater attention to gender diversity

The pace of change appears to have slowed.

In celebration of International Women’s Day on March 8, the Johannesburg Stock Exchange will ring its bell in support of gender equality. This is part of a global bell-ringing ceremony hosted by more than 50 stock exchanges around the world, to raise awareness of the role that the private sector can play in advancing gender equality. Other initiatives such as the 30% Club, which launched in in the UK in 2010 with the goal of achieving a minimum of 30% women on FTSE-100 boards, have highlighted the issue of gender diversity in corporate leadership. Gender equality and the empowerment of women and girls make up Goal 5 of the Sustainable Development Goals.

While South Africa has made some advances in improving gender equity in the private sector over the past decade, there is clearly still work to be done. The Kigoda Gender Diversity Index shows that of the 104 companies that will form the JSE’s Top 40 and mid-cap index following the March 2018 quarterly changes, 29 companies (28% of the total) have 30% or more women on their boards. However, only three companies have women CEOs, and only 10 have women CFOs. Ten companies are also chaired by women or have women lead independent directors. Of the 1194 board positions at these 104 companies, only 23% are filled by women.

For investors, efforts to address gender diversity can be important for reasons beyond the moral imperative to promote gender equality in the workplace. Although academic studies have not conclusively shown that there is a positive relationship between board gender diversity and company performance, investor research suggests that gender diversity can impact positively on investment returns.

In 2015, for example, MSCI found that companies in the MSCI World Index with “strong female leadership” (defined as a company with three or more women board members, or a woman CEO and woman board member, or a board with an above average percentage of women) generated a return on equity of 10.1% between December 2009 and August 2015, compared to 7.4% for those with companies with fewer women leaders.[1]

State Street, which offers one of a growing number of gender diversity index investment products (although none yet cover South Africa), argues that the business case for gender diversity is that “greater diversity leads to more perspective, less group think, better decision making and better financial outcomes”.

Similarly, MSCI also found that companies who lack board diversity experience more controversial corporate governance events than average. These arguments are especially pertinent in light of recent corporate governance failures such as Steinhoff and African Bank, both of which were weak in terms of gender diversity at board level.

If asset managers are to fulfil their commitments to incorporate environmental, social and corporate governance (ESG) factors into their investment decisions, it is important that they evaluate board composition. This should include the length of time directors have been in their roles, independence and diversity, both in terms of race and gender. While the JSE (which has a female CEO, CFO and chairwoman) introduced a listing requirement that companies should have a formal policy on promoting board gender diversity, and should report to shareholders annually on how this policy has been applied, it is clear that many companies are failing to comply.

Furthermore, the pace of change with respect to gender diversity appears to have slowed. According to a Businesswomen’s Association of South Africa (BWASA) survey on women in leadership, the percentage of women in senior leadership positions 2017 was 28%, only slightly up from 26% in 2004. Compared to non-executive board appointments, there are also too few women in senior executive positions, where they have far more influence over company culture. This might be related to the fact that too little attention has been paid to the diversity of nomination committees.

Questions also need to be asked of the asset management industry itself, which has come under increased scrutiny for its own lack of diversity. While the focus has been largely related to issues of transformation, a 2016 study found that fewer than 10% of South African fund managers are women. As with gender diversity on boards, there are benefits to having a more diverse asset management industry. To accelerate advances in gender equality, asset managers must not only advocate for board diversity in the companies in which they invest; they must also focus on applying these principles to their own organisations.

Mike Davies is director of Kigoda Consulting, an independent consultancy that provides research and analysis of environmental, social and corporate governance issues. Follow @Kigoda_Consult.


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Gender diversity is like AA. A company should be concentrating on maximising shareholder’s return. Interesting, nobody demands gender diversity in the mines or other hard physical labour requirement fields.

Say after me: “biological sex differences are real”

Exactly, Alaric. To me there is nothing more destructive to male / female relations than men who have “ / womb envy” and women who have “p.nis envy”. We are different and thank goodness for that! Our differences complement eachother, they are not a threat. When we are struggling, we should ask one another for help (not demand or expect it!) and we should not be proud to admit that we have weaknesses.

I asked my colleagues (who happened to be male) to help me when I was struggling at the beginning of my career. They treated me like older brothers: they didn’t just help me, they went out of their way to make sure that I was successful. In return, I used the same empathy that they extended to me to assist other male and female colleagues who were new on the job.

No one likes people who are defensive, pushy and demanding – women don’t like men who behave like that, so why should men be expected to tolerate it in a woman? If a man is stonewalling a woman and giving her the cold shoulder, then she should first consider the possibility that she has approached him with an attitude of entitlement because she has assumed that he is going to look down on her before he even opens his mouth. If he genuinely is giving her attitude because he thinks women are unintelligent and incompetent, then he will be in the minority because most men do not feel that way towards women. I know that for a fact.

Employ the best possible candidate, whether male or female. This Liberal notion of equal outcome instead of equal opportunities is idiotic, to say the least. It was the same with Hillary in the 2016 US elections. They wanted people to vote for her simply because she’s a woman…

I value merit, your biological sex doesn’t matter.

I’m not against diversity, although I think diversity of thought to be probably the most important form. The arguments for gender diversity seem fairly weak went based on company performance – if more gender diverse companies performed better, wouldn’t this be related in share prices and salaries? It strikes me that none of the matters at behemoths like M’soft, Apple, Google or Oracle reflected much gender diversity at all! It’s been said that the time to sell a stock is when the company appoints a Chief Diversity Officer…

I worked in an equities and derivatives dealing room for almost ten years (before I decided to become a full time mother) and I can honestly say that the men I worked with gave me as much career support, opportunities and encouragement as the women did. From my personal experience, an employee will be rewarded if he / she is focussed, works hard, treats all their colleagues the way they would like to be treated (with respect, humility and courtesy) and gives their company every reason to believe in their abilities. No discriminatory laws required because companies are profit-driven and if it makes financial sense to promote you, they will.

I don’t need any “Businesswomen’s Association of South Africa” to represent me as if there is some kind of boys club that is “out to get me”. That is a victim-mentality and it annoys all people, not just men. The only thing that held me back in my career was my own personal decision to enjoy all the blessings of being a mother full-time, instead of focusing on making money and getting ahead at work. The last thing on earth I would like for my son is for him to be forced to put up with unacceptable behaviour and conditions at work because some militant feminist is trying to use her gender to get ahead. This would be reverse-discrimination against men and it would be as unacceptable as discrimination against women!

Take a bow Alannah Anderson.

My BEST group in my 40+ years in accounting was all women. It was an absolute pleasure to work with them. No one ever complained about gender discrimination issues.

A professionally run business is so over this gender thing many years ago.

Exactly, we’ll said. For example, during my first month at work I was teased by some guys at the desk when I messed up and I instinctively said to myself, “They’re looking down on me and trying to upset me because I’m not ‘one of the guys’. Typical males! They want me to fail.” Then one of my self-appointed “Big Brothers’ read my facial expression and said to me later on, “Alannah, chin up, we are teasing you because we like you. LOL!”

That was when I realised that I can’t insist on being treated like “one of the guys” and then get on my high horse because they are doing exactly that. Now I enjoy knowing that sometimes I will be laughed at and sometimes it will be my turn to laugh at another guy. It’s relieves stress and the pressure to be perfect all the time, it is not a personal attack unless you treat it like one. It was just a misunderstanding and a “clash of gender cultures”.

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