This Arab Nation Made it Mandatory For Women to Be in Positions of Power
Women are underrepresented in corporate boardrooms and in executive offices around the world. Some countries have recognized this and taken action to increase the percentages of slots occupied by women. This week, the UAE became the first of the Gulf Cooperative Council countries to take steps to improve women's representation on their boards. While the United States has not legislated quotas, there are several U.S.-based organizations working hard to banish the myth that there are not enough qualified women to serve on boards while making progress toward gender parity.
Earlier this week, the United Arab Emirates cabinet made it a requirement that their companies and government agencies appoint women to their boards. Woman make up over 50% of their public sector workforce but only about 25% reach board level, as reported in Gulf News. Women will now have to prove they deserve such "positive discrimination" in their favor. The sheik of Dubai, Mohammad Bin Rashid Al-Maktum, announced the decision on Twitter and later wrote, "Women have proven their worth in many professions, and now we also want their strong presence in institutional decision-making roles."
In the UAE private sector, women make up as little as 1.5% of boards. Only 7 of the 40 members of parliament are women. Of all of the Gulf Cooperation Council countries — Bahrain, Kuwait, Oman, Saudi, Arabia, Quatar and UAE — the UAE have "the highest rate of female participation in the work force": 59%, compared to Kuwait; 42%, Qatar; 36.4%; Bahrain, 34%: and Saudi Arabia, 22%.
In 2006, the Dubai Women's Establishment (DWE) was founded to "encourage and facilitate the participation of Emirati women in the workforce and society." Of the sheik's announcement, the DWE executive director commented, "This is the most important piece of news in the history of our organization." It seems that women executives may have more opportunities in the UAE and hopefully grow in numbers.
Several other countries have introduced quotas or proposals for mandatory female representation on boards including Norway, Italy, France, Spain, Belgium, Malaysia, The Netherlands, and Iceland. Recently, the European Union Commission dropped plans for mandatory quotas for the number of women on company boards. Instead, a new proposal would oblige companies to favor "the underrepresented sex" from 2016 on, until a share of 40% is reached.
Across Europe, women account for fewer than 15% of non-executive board positions in companies with more than 250 staff. In the United States, women make up 47%of the workforce but only hold 16% of the Fortune 500 board seats.
Why do boards need women? While we're collaborative, we don't avoid controversial issues. Our collaborative leadership style improves dynamics by increasing the amount of "listening, social support and effective problem-solving," according to research published by Vicki W. Kramer, Alison M. Konrad, and Sumru Erkut in “Critical Mass on Corporate Boards: Why Three or More Women Enhance Governance.” Some participants in their research found that women are more likely than men to ask tough questions and demand answers that are direct and detailed. Women also bring new issues and perspectives, broaden the content of discussions by including the insights of multiple stakeholders.
The study found that the "magic seems to occur when three or more women serve on a board together. Suddenly having women in the room becomes a normal state of affairs. No longer does any one woman represent the ‘woman’s point of view’ because the women express different views and often disagree with each other. Women start being treated as individuals with different personalities, styles, and interests. Women’s tendencies to be more collaborative, but also to be more active in asking questions and raising different issues, start to become the boardroom norm. We find that having three or more women on a board can create a critical mass where women are no longer seen as outsiders and are able to influence the content and process of board discussions more substantially.”
A study by Credit Suisse Research Institute, of 2,400 companies over six years, found that companies with at least some female board representation outperformed those with no women on the board in terms of share price performance. The study named several reasons that women added to a company's competitiveness.
Another study was recently published by the Committee for Economic Development, "Fulfilling the Promise: How More Women on Corporate Boards Would Make America and American Companies More Competitive" offers some of the reasons why boards don't have more women. Of particular interest was that board nominating committees say that there are fewer women candidates to choose from, although that is not the case. They point to the organization WomenCorporateDirectors, with a membership of more than 1,350 who serve on over 1500 boards worldwide. They believe that nominating committees do not do enough to recruit women to their boards.
While "little evidence of overt bias in selection" was found, many mentioned the tendency of individuals to associate with people like themselves, helping to explain the homogeneous makeup of many boards. They concluded that "nominating committees and search firms need to look harder and show better results."
Unlike the gender quotas instituted United Arab Emirates, in the U.S. the fight for more women on corporate boards is taking place in the board rooms, with many nonprofit and for-profit organizations pitching it to highlight women's value. Organizations working to diversify corporate boards include Catalyst, the 30% Coalition, 20/20 Women on Boards, and WomenCorporateDirectors.
Private citizens can play a role in creating change as well. If you are a stockholder, communicate. Vote for women nominees. If there are no women on the company's board, write to your chairman of the board and CEO and/or call the Investor Relations department. If you know other stockholders, ask them to do the same. Invest in and do business with companies that have women on their boards, and avoid investing in or doing business with companies that do not have women on their boards.
The UAE's new measures may not be right for America, but there is nonetheless a great deal to be done here as well. Change is in the air, but the percentage of women on corporate boards is still unacceptable. In the U.S., a jump from 16% to even a mere 20% would be a huge accomplishment, but we have a lot to do to get there.