According to a research study conducted by the Government Accounting Office (GAO) of US,
According to a research study conducted by the Government Accounting Office (GAO) of US, it has been estimated that even if equal proportions of women and men joined the American corporate boards each year, it may still take more than 40 years for women's representation on boards to be on par with that of men. This estimate highlights the state of affairs of corporate boards in a country where the voters are poised to elect the first ever female president next year, and where the number of women on corporate boards has been steadily increasing during the last one decade or so.
Does the Pakistani corporate sector have any such study to introduce better planning for gender diversity in a country which had its first ever female prime minster about three decades ago, but where the actual gender diversity on corporate boards is horrendously low?
The study by GAO has also highlighted that women made up about 16 percent of board seats in the Standard & Poor's 1500 Index in 2014, up from eight percent in 1997. The study found out that there are still major factors inhibiting greater gender diversity such as boards not prioritizing the recruitment of diverse candidates, few women in the traditional pipeline and low turnover of board seats. In case of Pakistan, the number of female directors on the boards of listed corporate entities was only eight percent, and there seems to be no direction or policy about how the country can work towards more gender balance in the corporate boards.
One way of increasing gender balance on corporate boards would be to introduce a quota system for the listed corporate sector requiring the companies to have a certain fixed representation of women on their boards. Another way would be to raise the awareness and require more voluntary adoption of the gender parity standards on the corporate boards. Each approach has its own merits and demerits.
If quota system is introduced through any parliamentary or regulatory action, then it is most likely to speed up the process of induction of women on the corporate boards-just the way that the country’s federal and provincial parliaments now have a certain quota for female parliamentarians. But the downside of this approach is that the quotas could force the companies to appoint such women who are not the best fit for the board service, or could create a perception that women did not earn their board seats because of their skills.
The quota system could also be misused whereby the companies, in order to meet with the requirement, would appoint related women on their boards. This too would obviously further dilute the corporate governance standards in our listed companies.
The country’s experiment with the increased parliamentary representation for women is a case in point where the leaders of the political parties have mostly used the quota system to nominate their kith and kin in the legislative assemblies, thereby making a mockery with the objective and intent of the law.
In case of the other strategy for encouraging voluntary adoption of greater corporate gender diversity by corporate entities themselves, though we may see the start of the appointment of more qualified women on the corporate boards, the outcome of this strategy may still not be sufficient. The body corporates may adopt exhaustive gender diversity policies on papers, but when it comes to actual appointments, they may side-step the issue by arguing that there are not enough qualified women with sufficient experience to be appointed.
So what’s the best strategy to be adopted which could lead to more women representation on the corporate boards? Considering the matter is not that of supply side but that of demand side, as there are many qualified women professionals in Pakistan; my recommendation is to follow a hybrid model whereby simultaneously prescribing a minimum quota of ten percent initially, some incentive is given to such listed corporates who voluntarily double this quota for their boards.
One such incentive could be some reduction in the listing fee paid by the company to the exchange for listing. It is time to take action against the male dominated redundancies on the corporate boards.
The writer is a corporate communications professional
