Women in the boardroom: Progress, but intentional focus required

The commemoration of International Women’s Day in March allows for an opportunity to reflect on the strides that women have made to influence a range of areas in society. These include areas traditionally dominated by men such as science and technology as well as the upper echelons of corporate leadership in both executive and boardrooms.

Deloitte Global in collaboration with the 30% Club recently had the privilege of launching the 7th edition of Women in the boardroom: A global perspective. The 30% Club is a business-led advocacy group that is dedicated to a global mission of achieving 30% women representation in boards and executive committees of listed companies through policy influence, lobbying, and leadership development programmes.

Global perspective

While the report reveals some progress in female representation for board chairs, board members, and CEOs across the globe, it must be acknowledged that it is occurring “at a snail’s pace”. The effort to promote female leaders must therefore be deliberate and consistent.

The report found that women hold just 19.7% of board seats globally, a 2.8% increase from the report’s last edition, published in 2019. At this pace, the world could expect to reach near-parity in 2045, over twenty years from now.

However, progress at the Chair and CEO levels are less apparent. This underscores the notion that placing more women on corporate boards does not necessarily equate to progress across leadership positions. The latest edition found that only 6.7% of board chairs are women, representing a 1.4% increase from the 2019 report. Even fewer women – 5% – hold the CEO role, representing only a 0.6% increase from the 2019 report.

The latest edition of the report includes updates from 72 countries on the representation of women in the boardroom, exploring insights on the political, social, and legislative trends behind these numbers. Countries with the highest representation of board seats held by women are France (43.2%), Norway (42.4%) and Italy (36.6%).

The report also found that nearly all countries surveyed have local organisations or governments committed to increasing the number of women serving on company boards. It also highlights which countries use legislation and quotas to drive change and which opt for a voluntary approach.

Africa perspective

For Deloitte Africa, this report is timely as we currently have women leaders in both the CEO Elect and Africa Board Chair roles. These appointments demonstrate Deloitte’s commitment to advancing its strong culture of inclusion and gender representation in leadership. Currently, Deloitte Africa has 44% women leaders on the Deloitte Africa Board. This is good progress, but there is more work to be done to ensure the Deloitte Africa Board continues to embrace diversity and inclusion from a gender perspective, amongst other things.

In March last year, Deloitte Africa launched its AllIn Sponsorship wave programme where each member of the Deloitte Africa Executive Committee and Africa Board committed to sponsor a female member of staff into a position of leadership. This entailed advocacy on behalf of the identified female staff member, providing them with leadership exposure and opportunities to work on critical assignments in their areas of specialisation as well as sponsorship through a Leadership Development Programme.

The Women in the boardroom report included research from the following countries in Sub-Saharan Africa: Kenya, Nigeria and South Africa. This African region has 30.5% of its board seats held by women, an impressive figure given the social and economic challenges that women face on the continent, while 16.3% are Board Chairs. The continent has 7% female CEOs and a remarkable 22.7% female CFOs, which provides a rich pool of possible succession. This is good progress, however, there is still much work to be done to achieve gender balance.

• South Africa

South Africa does not have legislation compelling boards to be representative but is rather guided by parts of its constitution and Principle 7 of the King IV Code of Corporate Governance, in which diversity is considered in terms of fields of knowledge, skills, and experience, as well as other factors such as age, culture, race, and gender.

After analysing 81 companies, it was found that 31.8% of board seats are held by women in South Africa. However, within the top 100 listed companies on the Johannesburg Stock Exchange (JSE), female board representation was 29%, while 20% of the Top 40 companies listed on the JSE are chaired by women.

• Kenya

Kenya on the other hand appears to successfully use legislation to achieve its goals. In addition to its constitution, the Capital Markets Act of 2015, which outlines the Code of Corporate Governance Practices for Listed Companies in Kenya, requires companies to consider gender when appointing board members. It also states that board appointments should “not be perceived to represent a single or narrow constituency”. Companies are also required to have a diversity policy.

Kenya has achieved 36% representation in its listed company boards, with 21% of boards chaired by women.

• Nigeria

Nigeria uses the Corporate Code of Good Governance to drive change. In addition to gender, the code addresses board diversity in terms of knowledge, skills, experience, age, and culture. But gender diversity is emphasised as being critical in determining the size and mix of the board, appointing new board members, assessing board performance, and defining business sustainability policies, as well as in corporate governance reporting to stakeholders.

Nigeria has 21.7% female representation on boards and 20% of boards are chaired by women.

Other outcomes

• Correlation between female CEO leadership and board diversity

The research revealed a positive correlation between female CEO leadership and board diversity. Companies with women CEOs have significantly more women on their boards than those run by men—33.5% against 19.4%, respectively. The statistics are similar for companies with female Chairs – 30.8% women on boards compared to 19.4%, respectively. The inverse is true as well as gender-diverse boards are more likely to appoint a female CEO and Board Chair.

• The stretch factor: are the same women joining more boards?

A key consideration we have to make as we strive for diversity is to ensure that we do not burden a smaller pool of women to take up so many board seats that their effectiveness is undermined. The Deloitte Global Stretch Factor metric examines how many board seats an individual holds in a particular market. The higher the stretch factor, the greater the number of board seats the same director occupies in a given market.

Globally in 2021, the Stretch Factor for women increased slightly from the 2018 figure of 1.26 to 1.30 whereas men, by comparison, have a Stretch Factor of 1.17. This means that compared to men, a smaller group of women are taking on a larger number of board seats.

• Women occupy board seats for fewer years than men

Another challenge that the report highlights is that women are serving a shorter tenure both as board members and board chairs. More research may be required to better understand the underlying cause of this trend. One possibility is that experienced women now have a broader range of opportunities to select from, such as executive positions that encourage them to leave boards earlier than men.

Conclusion

My colleague Dan Konigsburg, Managing Director of the Deloitte Global Boardroom Program emphasises that, “Consistent dedication and commitment are required to overcome the persistent barriers to improving gender diversity within the boardroom. Leaders must recognise, advocate, and actively advance gender parity in the boardroom even as progress remains slow. Whether by addressing bias, implementing programs designed to help women prepare for board service or supporting legislation, we all have a part to play in advocating for a more diverse and equitable future.”

We are likely to see the debate around gender diversity in the boardroom and at executive level continue for some time. Whilst notable strides have been made, there is much more to do. Diversity needs to be seen as a business imperative that will build resilience in an organisation. There is a direct link between a company’s performance and the diversity of its board. There is also a growing consensus that 30% female representation on boards is a start, but simply not good enough. Many executives and boardroom leaders recognise that part of their responsibility is to mentor, sponsor, and invest in the next generation of boardroom talent, and they are committed to making lasting change.