Considering the current climate of low economic growth and continued pressure to drive value, Elize Botha, managing director of Old Mutual Unit Trusts, says that the lack of women in leadership of JSE-listed companies is hampering performance.
“By increasing the number of women in senior leadership roles in the private sector - the potential exists to drive better performance for South African investors in the local equity market, which will in turn drive positive growth for the South African economy as a whole,” she says.
Studies show substantial evidence that gender diversity at senior management level enhances company performance. Referring to a 2016 report by the Peterson Institute for International Economics, Is Gender Diversity Profitable?, Botha says that research has found that companies with a minimum of 30% women in C-suite positions – a term denoting the highest-level executives in senior management – demonstrated a 15% increase in profitability, compared to companies with no gender diversity.
“The suggestion is not that women should lead alone, but increased representation would ensure more diverse views which in itself is a proven performance enhancer. South Africa has prioritised cultural diversity, which is a welcome move, gender diversity is as important in the workplace as it exposes men and women to each other’s unique and complementary perspectives, which is a proven recipe for success,” says Botha.
She goes on to explain that while having more women in leadership is not a causation of company performance, the correlation between the two exists for a good reason. “Diversity in an executive team is an indicator of good management, because diversity drives innovation and creativity in all aspects and types of businesses. In a time of rapid technological innovation and social change, it makes sense that a lack of diversity of opinions and perspectives wouldn’t deliver the best possible business results.”
Gender diversity is a driver of creativity and innovation. The lack of gender transformation on a national level, therefore, has implications far broader than just the companies themselves, but also their shareholders and investors, Botha emphasises.
“Diminished performance as a result of the lack of transformation of listed companies, therefore, has consequences for ordinary South Africans who look to local growth assets to drive the performance they need in order to reach their long-term investment goals and ensure a comfortable retirement.”
However, Botha warns boards and C-suite management against chasing gender targets without a meaningful desire to effect long-term transformation and to create a company that fosters women talent. “It needs to be about more than just having a few strategically placed women at the very top. Rather, corporate South Africa needs to create a strong pipeline of women managers before investors will begin to reap the proven financial benefits of greater gender diversity among listed companies.”
Botha believes that South African investors have an opportunity to direct greater capital to businesses that make a positive impact concerning gender diversity. “Investors need to take a greater interest in the gender transformation displayed by the companies they choose to invest in, to ultimately drive other listed companies to follow suit."
The issue of gender disparity, however, runs far deeper than this, and Botha acknowledges that there needs to be a societal shift to bridge the gender gap in South Africa effectively. “There is no quick-fix to remedy gender inequality in the workplace. We, as a society, need to work towards challenging gender bias on a day-to-day basis to drive better growth,” she concludes.
