By Joe Esau - Adapted from a presentation delivered at the Launch of the Caribbean Corporate Governance Institute on October 3rd 2013.
The practice of sound Corporate Governance requires the development of a culture of inclusion and transparency that is inculcated by the Chairman and the CEO. At GraceKennedy the outgoing chairman and former CEO drove a living culture of best governance practice that is now embraced by all business units as being positively integral to their objectives.
Sound Diversity criteria include ethnicity, age, functional expertise and experience, but gender has been the glaring absence in most Caribbean company boards.
Following are some interesting facts about women in the marketplace, and in business:
- In 2012, 126 million women were starting or running new businesses, in 67 economies; 98 million were running established businesses. Ref: Global Entrepreneurship Monitor (2013).
- Women already own approximately 33% of all businesses in the world, nearly half of which are in developing nations. Ref: Maria Pinelli, Ernst & Young Global Vice Chair, Strategic Growth Markets.
- Boards with 0 or only one woman represent 52% of the Fortune 1000 Companies; and 16% of those boards have no women (June 2011). Women control nearly 75% of consumer purchasing decisions, but 29 consumer products companies don’t have a woman on their boards! Beyond the Fortune 1000, women directors are even sparser. Ref: The Conference Board- Julie C. Norris, Women on Boards, May 2012. The picture would have improved a bit since then, due to shareholder activist pressures.
- Ref: Catalyst Research Report March 2011, Nancy M Carter, PhD and Harvey M Wagner, PhD “The Bottom Line”- This research confirmed the October 2007 findings. “Companies with sustained high representation of women board directors (WBD), defined as those with three or more WBD in at least four of five years, significantly outperformed those with sustained low representation by 84 percent on Return on Sales, by 60 percent on ROIC, and by 46 percent on ROE”.
- Europe leads in gender diversity on boards. Norway met a 40% quota in 2008; Spain and France have quota legislation in process; the 2011 Davies Report “Women on Boards” recommends that FTSE 100 companies should aim for at least 25% females on boards by 2015; and the European parliament wants an EU-wide quota of 40% by 2020.
Among the T&TSE listed companies, women non-executive directors (NEDs) number 32, or 13% of the 250 directors; and 64% of the companies have 0 or one female NED. Our two largest conglomerates currently have no female NEDs. (Statistics exclude Berger Paints, National Flour Mills and L J Williams, which have very small capitalizations and are thinly traded).
I do not support board quotas in the Caribbean, which I think would be counter-productive. However, a cultural shift that recognizes “Women on Boards are Good for Business” would contribute greatly to our socio-economic development.
When the question of gender diversity is raised in filling board vacancies, the frequent response is to scan existing boards and claim that experienced women can’t be found. However, a well-structured nomination and appointment process that starts with identifying the board’s skills/experience gaps, then a genuine search for suitable, high-potential women, could bring surprising results. Those who deny the existence of suitably qualified women to fill board vacancies, in an environment where women represent the distinct and growing majority of graduates (including those from business schools), do so at the detriment of their companies and shareholders.
My board experience with women directors has been nothing but positive. This includes the following listed Companies:
- Prestige Holdings Limited where I was chairman for 15 years. We had three independent females directors out of six NEDs for much of that period- currently there are two female directors out of five NEDs.
- Agostini’s Limited where I have been chairman for 9 years; we have two independent female NEDs, soon to be increased to three.
- GraceKennedy Limited where I am a director since 2007, with two independent female NEDS.
These women board directors are powerful professionals, prepared for meetings, and are actively engaged in well-informed discussions; and that results in better decisions. Women also bring to our boards several critical sensitivities that men generally lack, including seeing the conciliatory window, without being weak.
In the end, we are left with the question as to why should we, in the Caribbean, not include qualified women on our boards, when they have such great influence on customers’ purchasing decisions and add exceptional value to Boards?
Photo credit: http://tribune.com.pk