Women Leadership in Emerging Markets

Featuring 46 Women Leaders

Shireen Chengadu, Caren Scheepers, Shireen Chengadu, Caren Scheepers

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9781138188969
• eBook ISBN: 9781317281559
• Topic: Business
• Subtopic: Business General
• Index: Business

This book focuses on the increase in female leadership over the last fifty years, and the concrete benefits and challenges this leads to in organizations. It moves beyond the typical focus on developed, Western contexts and answers the call for research on how women in emerging markets rise above the proverbial "glass ceiling".

The authors integrate two underdeveloped topics that are highly relevant to modern business: women in leadership roles, and women in emerging markets. They examine how women leaders in a range of professional services—including accounting, consulting, law, engineering and medicine—have managed to navigate their careers while considering the role emerging markets play in their work. Based on cutting-edge research, the topics are brought to life through examples and profiles of leading women across Africa, the Middle East and the Far East. These narratives, told in the leaders' own words, are key to understanding women's achievements and the barriers they face.

Students of leadership, diversity, gender studies, and human resource management will learn much from this insightful book.

1 Macro-level perspective on women’s leadership

Shireen Chengadu and Pravina Makan-Lakha

Introduction

Globally, women constitute about 50% of the population, while in some countries—for example, South Africa, Japan, Russia, Canada, Argentina, Kazakhstan, Mozambique, Namibia and Nepal—they count for just over 50% (World Bank 2015). At the same time, women now make up 40% of the labor force. These two variables are significant in and of themselves and make this citizenry highly relevant politically, economically and socially. Regarding business, not only do women comprise half of the consumer market, they also make up not much under half of the constituency that labor is drawn from. Concomitantly, gender equality remains an unrealized aspiration for almost half the world population.

Why does the inclusion of women matter for leadership? What is the business case for women in leadership? These questions are increasingly being posed in the wake of shifts towards empowering women in business.

Women in leadership roles deliver better financial results for business corporations. Studies on the correlation between women’s leadership and bottom line in companies indicate that “Companies with top-quartile representation of women in executive committees perform significantly better than companies with no women at the top” (Carter and Wagner 2011). These studies indicate that there is a 47% increase in return on equity and a 55% increase in average earning before interest and tax. Despite these findings, globally, women’s leadership in business, while improving, remains low, averaging at 24%, with a staggering 33% of businesses revealing a complete absence of women in their leadership structure (McKinsey & Company 2010).

As the greater significance of the potential of women in business is realized and understood, a number of studies and research, coupled with shifting trends towards investing in women’s participation, are becoming observable, even in developmental agendas.

Equally significant is the global gender equality gap and the failure of any country worldwide to achieve gender equality to date (World Economic Forum 2016). Given these findings, why are businesses slow to appoint women to leadership roles? To what extent can women’s leadership and gender equality, in emerging markets, contribute to the competiveness of companies and, in turn, the prosperity of these countries? What range of perspectives can women who have risen to leadership roles share, not only with aspiring leaders but also regarding the complexity and ambiguity of the macro environment of women’s leadership? These are the questions that will be explored and discussed in this chapter.

Why women matter in leadership

Today, gender diversity is widely embraced as a starting place for diversity of thought and perspective on boards and for senior management (Brunswick 2016). Having women fairly represented in decision-making roles brings the right mix of skills and perspectives necessary to successfully tackle the business and national challenges that increasingly characterize the dynamic landscape in which we live and work.

Later in this chapter we sketch the uninspiring performance of corporations and society in their response to achieve gender parity in leadership. While the gender equality gap exists in both developed and developing markets, it is more prevalent in the labor markets, in political representation and in households of emerging markets.

Several arguments, together with a growing body of evidence to illustrate why women matter in the business sector, will be presented in this chapter and throughout this book. The empirical evidence is drawn from previous research in this field and is corroborated by the data we have gathered through interviews, conducted primarily with women leaders from emerging markets. Through dialogue with a diverse range of women in leadership roles in emerging markets and by incorporating the views of a small sample of men with leadership experience in developed and emerging markets, we analyze a range of perspectives on attracting, developing and retaining top women talent as a means to increase the financial business performance of companies, particularly those in emerging markets.

These arguments continue to gain strength and contribute to hastening the slow progress we witness across the business sector, but also importantly in the political sector. While it is our aim to draw particular attention to women’s leadership in business, if we did not also reflect on women in leadership in politics we may communicate the incorrect view that women’s leadership and equality is a matter peculiar to the business sector, when in fact the issue is clearly a cross-sectoral challenge. The slow progress is systemic to our core sectors of society—politics, business and civil society. This chapter explores the importance of overall progress in the political sphere and its meaning for the business sector. We focus on three dominant arguments for why women’s leadership matters.

The economic argument: the bottom line

The first argument is purely an economic one: does women’s leadership have a direct impact on the bottom line of corporations by boosting economic results? Research carried out by Catalyst, McKinsey and the Credit Suisse Research Institute has dominated the discourse on the economic value of women in leadership. The research comprised year-on-year studies on women’s representation on boards, at directorship and management levels. The outcome was improved financial performance of companies. The study by Carter and Wagner (2011) of Fortune 500 companies illustrated that companies with the highest representation of women at the level of board of directors demonstrated a higher than average financial performance. The basis of these claims is constructed on three important financial measures of performance—Return on Equity (ROE), Return on Sales (ROS) and Return on Invested Capital (ROIC) (Carter and Wagner 2011). Increases in women’s leadership lead to improvements across all measures: 42% in ROS, 53% in ROE and 66% in ROIC.

McKinsey’s “Women Matter” studies have underscored these earlier claims with several subsequent studies. Their longitudinal studies (2009, 2010, 2012 and 2013), which included the BRICS emerging markets, attest that companies with the highest share of women on boards reported a 41% higher return on equity compared to companies with no women on their boards. Also, companies scoring in the top quartile of organizational performance had more women in top management. While follow-up studies went on to explain the reason behind these varied results, the McKinsey studies demonstrated a definite correlation between the performance of companies and the proportion of women serving in their leadership.

The Credit Suisse Gender 3000 study, which has tracked 28,000 executives at 3,000 companies in 40 countries, has shown that “the average ROE of companies with at least one woman on the board over the past six years is 16%, four percentage points higher than the average ROE of companies with no female board representation” (Credit Suisse Research Institute 2016). While exploring their studies through the lens of gender diversity and corporate performance, they emphasize the core of their study by declaring that “While much of the focus continues to center on the equality or fairness argument, we believe that the question should be whether diversity is to the benefit of not just women themselves, but also to the benefit of other stakeholders, corporates, investors and the wider economic environment.”

Justus O’Brien of research firm Russell Reynolds, who works with organizations around the world on succession planning and recruitment of board directors, suggests that a primary issue inhibiting the gender composition of boards is that the talent pool is too limited (Brunswick 2016). It is typically a cohort of retired or active CEOs—primarily men given, the historical legacy of leadership of corporates. The “old boys’ club” mentality is strongly entrenched and this grouping is often seen as the only talent pool to draw from. Similarly, in emerging markets where there are women being appointed to boards, they too are drawn from a small pool, which leads to the phenomenon of many women occupying multiple board positions. The talent pools have to be widened and the networks of “old boys’ clubs” and the small, tight group of women already occupying board positions must shift to sponsorship of more women into board and leadership positions. This habit of “soft recruiting”, as O’Brien calls it, is the habit of introducing potential candidates to other directors at social gatherings. Boards now have the duty of care to plan ahead and expand their networks to include eminently qualified women to the seats of power. In order to address this issue, governments from a number of developed countries such as Norway, Spain, France and Finland have taken steps to introduce quotas, targets and recommendations regarding the percentages of women on corporate boards in publicly listed organizations (Sealy et al. 2010). But the very idea of quotas and targets challenges women being appointed to positions of power based on targets rather than on merit. How women get there is another matter for investigation, but for the purpose of this argument, that they actually get there is important because of the growing body of evidence that points to the business benefits of diverse boards and senior leadership roles.

While the economic arguments mostly focus on the difference women’s leadership offers in corporations, in countries such as Norway and Denmark more empirical studies are being commissioned at a country-specific level to test the correlation between gender representatively in political and economic participation and country competitiveness. For example, in the African region alone, “the total annual economic losses due to gender gaps in effective labour could be as high as US$255 billion. Results confirm that Africa is missing its full growth potential because a sizeable portion of its growth reserve—women—is not fully utilized” (Bandara 2015).

In later chapters we demonstrate that there is certainly no scarcity of critical skills and merit, so there must be variables in play that keep the numbers of women lower in the top positions. We therefore ask whether the economic argument alone is sufficient to turn the tide for women in leadership.

The equality and equity argument: a moral obligation

Women’s rights are human rights. Rights, justice and fair treatment are moral obligations. In 1945 the founding charter establishing the United Nations (UN) emphatically declared “equal rights for men and women”. In 1979, the UN adopted “The Convention on the Elimination of Discrimination of Women” (CEDAW), which is considered the bill of rights for women. CEDAW defines discrimination and provides guidance on how to address it.

Towards the end of the 20th century, several legislative initiatives, policy frameworks and action plans resulted from the efforts of the global women’s movement for gender equality and women’s empowerment. With less than half of the labor force comprising women, gender equality in the business sector remains evasive. Women continue to suffer discrimination in the types of job they are offered and able to hold, their access to power and decision-making in these jobs, and their pay scales. While this inequality shows up most prominently in the business environment, it does not stem from within the business sector. A primary cause is the cultural norms that determine gender roles and their resultant impact on the female labour supply. The 2005 World Development Report as cited by Hiller (2014) has emphasized that economic and cultural inequalities might feed on each other, leading to such gender inequality traps.

A wide spectrum of research has recorded the inequitable treatment of women in the business environment. This dearth of leadership has its origins and perpetuation at various points in the journey of women from birth into adulthood. Consider the norms dictating the manner in which each gender is nurtured; the social discrimination inherent in the performance of household chores; the skewed availability of primary and secondary education; the unequal access to tertiary education and, later, positions in the job market. Hiller (2014) agrees that initial cultural norms entrench gender inequalities from the time an investment in education is made in boys rather than in girls; such discriminatory practices are not easily overcome by legislation and institutional practices to create greater equity. Advocates and champions for gender equality, rights, fairness and justice have enabled the establishment of normative frameworks to advance gender equality, but the results have been poor and most evident in women’s under-representation in leadership roles. Even though women have a right to equality and fairness to assume leadership positions, the statistics of women occupying leadership positions at board and CEO levels and as heads of states in emerging markets show the obvious lack.

Smart economics is the developmental approach of investing in women and girls for economic competitiveness and growth. Chant and Sweetman’s (2012) research into this strategy points to the ambiguity of the approach that aims to “fix women or fix the world”. In it, they allude to the linearity and simplicity of this reductionist approach: the very problem we are trying to fix might become more burdensome because it discounts strategies which aim to ensure women are seen as equal to men; instead the approach of investing in women to fix the world is advocated. This research also points to the lack of attention paid to the role of other critical stakeholders in women’s lives, such as men and societal actors who have influence on women’s ability to reach their full human potential. They argue that “smart economics is concerned with building women’s capacities in the interests of development rather than promoting women’s rights for their own sake” (Chant and Sweetman 2012).

While we recognize and support the need to place particular focus on the developmental needs of women and the inclusion of women in all levels of decision-making roles, we also acknowledge that this approach cannot be adopted solely for economic or business imperatives; it must be embraced for women’s own sake as well. The gender inequality trap cannot be eliminated by women or by development agendas alone; it also requires the shifting of deeply entrenched cultural norms and mindsets of other significant role-players in women’s lives.

The diversity argument: moving from gender diversity to leadership diversity

Gender diversity has various definitions, but perhaps most common and relevant to this argument is “the mixture of attributes within a workforce that in significant ways affects how people think, feel and behave at work and their acceptance, work performance satisfaction, or progress in an organization” as a concept has several meanings. While diversity and inclusion have been two concepts advocated extensively for responding to complex issues like race, gender, religious orientation, culture, and so on, they are criticized for being simple solutions to a complex problem (Bendick 2007; Hays-Thomas and Bendick 2013).

The gender diversity argument has been easier to advance for the inclusion of women in corporations and when dealing with the larger gender inequality in corporations and companies for two primary reasons. First, business explores new approaches to improving profit on a daily basis. Second, the human resource factor in business is critical. The argument of diversity speaks directly to a more effective use of the workforce and harnessing human capital ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of illustrations
• List of contributors
• List of interviewees
• Acknowledgments
• Overview and orientation
• Foreword
• 1. Macro-level perspective on women’s leadership
• 2. Leadership in context
• 3. Women’s movements in emerging markets
• 4. Women leaders in education
• 5. Institution-level interventions in women’s leadership
• 6. Workplace barriers faced by women leaders in emerging markets
• 7. Women’s leadership in entrepreneurial contexts
• 8. Women in professional services
• 9. Women’s leadership in corporate enterprises
• 10. Women on boards
• 11. Conclusion
• Index