Bartleby

A small step for women

Progress in the boardroom is only a start

THE GLASS ceiling in the corporate world is not broken, but it is starting to crack. Women are getting on to corporate boards at greater speed, and in greater numbers.

Research by LinkedIn, a professional networking site, shows that across five countries (America, Germany, India, Italy and Norway) women it lists as directors reached the position faster than their male counterparts did. In America, for example, women got there 9.8 years after leaving university and men after 10.9 years.

This suggests that younger women are making good progress in the boardroom. Overall, however, females are still lagging behind the males. The proportion of people in leadership roles (director-level and above) that is female in the five countries varies from 17% in India to 35% in America.

Britain has seen a clear advance; a campaign there called the 30% club has managed to increase the share of female directors of FTSE 100 companies from 12.5% in 2010 to 30.6%. But as the world marks International Women’s Day on March 8th, it is clear that the glass ceiling has not shattered.

Some firms may be paying only lip service to the idea of female leadership. A paper in the Academy of Management Journal* highlights the phenomenon of “twokenism”, a statistical bunching of American companies with exactly two female directors. The authors suggest this is directly related to the average number of female directors on S&P 1500 boards in the period studied (2004-13), which was 1.92. By opting for two women, businesses could claim they had “above average” female representation.

In any case, a rise in the number of female directors is a narrow measure of female economic success. Having women at the top of organisations may inspire others to emulate them, and board members may be able push through more female-friendly policies lower down in their organisations. But the vast majority of women would never expect to become directors. What they value is an opportunity to get a well-paid job and to be free from discrimination while doing it.

In this respect the news is less encouraging. Across the OECD the gender pay gap of full-time employees averages 13.5% and varies widely, from 3.4% in Luxembourg to 36.7% in South Korea. It can be hard to adjust for all the many factors, such as skill levels, that might explain this gap. Nevertheless, the OECD found last year that full-time employed women with a college degree earned, on average, 26% less than their male equivalents.

A World Bank survey of 187 economies, published last month, found that women had, on average, three-quarters of the legal and employment rights of men. The survey asked questions such as whether women were free to travel and open a business, if they had property rights and if they were protected from sexual harassment. In the Middle East and north Africa, women were found on this basis to have less than half the rights of men (Saudi Arabia was ranked lowest of all the countries surveyed). Only in six countries (Belgium, Denmark, France, Latvia, Luxembourg and Sweden) did the law and society grant women equal rights.

Problems are deep-rooted. Research by Lisa Cameron of the University of Melbourne with the IZA, a German think-tank, found that in many developing economies more than half of all non-agricultural female workers relied on informal employment, a higher share than men. Not only do these women get paid less as a result, they also lack access to state social programmes, such as unemployment benefit and pensions, which are often designed with formal employment status in mind.

The result is that poorly paid women have few resources to fall back on. In addition, social programmes are much less generous in developing economies than they are in the rich world, absorbing 17.7% of GDP in Europe and 10.7% in America, but only 9.7% in Latin America and just 1.4% in South-East Asia. Without the cushion of a benefit system, working women in the developing world probably must endure more bullying and harassment at work, for fear of losing their jobs.

So there is certainly cause to celebrate women making small steps forward in the boardroom. But bigger leaps are still needed elsewhere.

* “Diversity Thresholds: How Social Norms, Visibility and Scrutiny Relate to Group Composition” by Edward H. Chang, Katherine L. Milkman, Dolly Chugh and Modupe Akinola

Mar 7th 2019

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