“TALENT is one of the most essential factors for growth and competitiveness,” writes Klaus Schwab, the founder and executive chairman of the World Economic Forum (WEF), in the Global Gender Gap Report 2017. “To build future economies that are both dynamic and inclusive, we must ensure that everyone has equal opportunity. When women and girls are not integrated — as both beneficiary and shaper — the global community loses out on skills, ideas and perspectives that are critical for addressing global challenges and harnessing new opportunities.”
Pakistan is ranked 143rd on the WEF index, and remains the lowest-ranked country in South Asia and the second to last overall. The index measures gender gaps in four areas — economic participation and opportunity, educational attainment, health and survival, and political empowerment — to rank the 144 countries.
The index shows Pakistan still has a lot to do to integrate women and girls as both beneficiary and shaper of the economy. But it has recently made a major step towards closing the gender gap in the corporate boardrooms to make them more inclusive and diverse.
Only a fraction of directorships are held by independent women professionals in Pakistan
The Corporate Governance Code implemented from Jan 1 this year under the Companies Act of 2017 requires all public interest companies — the ones listed on the stock exchange and others with or above a specified threshold of paid-up capital, turnover, the number of employees, or the number of shareholders — to induct at least one woman director.
“This is a very important step for gender balancing of corporate boards. I expect the number of women directors to at least more than double after the implementation of this legal stipulation,” says Amyn Malik, a partner at KPMG Taseer Hadi & Company.
Women in Pakistan, just like most places around the globe, are underrepresented on almost every rung of the corporate ladder, especially in the middle to senior management positions, as well as in the boardrooms.
Those on the companies’ boards are there by virtue of their relationship with the sponsors or majority shareholders or being owner of a significant part of the firms on whose boards they sit.
“Only a fraction of directorships are at present held by independent women professionals,” Mr Malik notes.
A study of the composition of boards and senior management of 505 firms listed on the Pakistan Stock Exchange (PSX) shows how difficult, rather near impossible, it is for women professionals to make it to the boardrooms of corporations, let alone rise to the top jobs of board chairperson, company chief executive officer (CEO) or chief financial officer (CFO).
The report, released in March last year by advocacy group Women on Board Pakistan, underlines that on an average the companies researched had one women director as opposed to more than 10 men directors at the end of the 2015-16 financial year.
The group says it is working to address an acute imbalance of women professionals on the corporate boards and higher management hierarchy.
According to the study, the women represented less than a tenth (or 351) of the 3,866 directorships of the firms reviewed. Only 32 of them were sitting on the boards of 21 companies as independent women professionals, whereas the remainder were on the boards of another 164 corporations by virtue of their relationship with the sponsoring families or because they themselves owned a significant part of those firms.
Of the 36 boards headed by women, two firms had independent women professionals as their chairpersons. Similarly, one of the 11 women CEOs was not related to the sponsors controlling the majority shareholding. Some nine women rose to the position of CFO and 27 made it to the job of company corporate secretary.
“Women are locked out of the boardrooms because we have never perceived these roles or a career for women (in the corporate sector),” says Rahat Hassan Kaunain, chairperson of the Women on Board Pakistan. “We have always seen them as teachers or doctors or nurses but never as a company CEO or director or CFO.”
Like many others, she thinks that many countries like Norway, India, etc, have successfully helped increase women representation on the corporate boards by enacting legislation and fixing gender quota for them just as Pakistan has done now.
She is confident that the new legislation and the code of corporate governance will go a long way in creating a wider space for women professionals in boardrooms and in increasing their representation in leadership roles in corporate organisations.
“In three to five years, you will see a big change. Women will be on the company boards because of their competence and not because of cosmetic reasons,” she says.
She is critical of people who say they do not find capable, independent professional women. “That is a lie, an attempt to undermine women. We need to change our thinking about women. In the last 25 years of my professional career, I have come across so many capable women. How come the (companies) couldn’t spot them?”
Quoting global studies that prove that the companies with women directors do much better financially than those that exclude them, she insists that the presence of women on the company boards is beyond the issue of just female representation. “Their presence in the boardrooms isn’t only important for gender balancing. Gender diversity is a business imperative because women bring new perspective on decision-making, and help improve financial performance and corporate governance.”
The initiative may or may not help Pakistan improve its ranking on the Global Gender Gap Index this year, but it’ll certainly open new positions for women professionals on the higher rungs of the corporate ladder, including the top ones.
Published in Dawn, The Business and Finance Weekly, February 12th, 2018