Chapter 4. Achieving gender balance in corporate leadership

Women’s economic empowerment supported by sound corporate governance is a critical policy area that enhances economic growth and competitiveness. This chapter assesses progress, identifies challenges and proposes policy options for MENA economies to increase gender balance in corporate life, in line with the 2013 OECD Gender Recommendation and 2015 G20/OECD Principles of Corporate Governance. It highlights why greater participation by women in corporate leadership is important for the region, including its positive impact on company performance, and shows why better data is needed in order to make informed policy decisions. The chapter then explores the challenges women in MENA face in accessing corporate leadership positions and presents examples of good practices in OECD and MENA economies. It concludes with policy options. Analysis is based on publicly available information, survey responses and input from practitioners in the region.

    

4.1. Introduction

Closing the gender gap in corporate decision-making roles remains a challenge, yet there is strong impetus for MENA economies to embrace initiatives that empower and promote women in the corporate sphere. Women’s leadership and talent are increasingly seen as cornerstones for building competitive, value-creating companies and, by extension, resilient, inclusive economies.

During the last decade, MENA economies have responded to a shifting global and regional landscape by embarking on an era of transformation characterised by economic diversification and reform. In particular, citizens have called for governance reforms and an inclusive society with social and economic opportunities for all. As such, increased access for women to corporate leadership is an extension of a much larger debate within the region on women’s participation in economic life and society in general.

OECD research shows that progress in the MENA region on gender balance in the workplace and women’s increased participation in corporate leadership roles has been slower than in other regions, but is still on par with global trends. However, data on women’s participation in corporate life in MENA is limited, due in part to lack of publicly available information and the scarcity of research on this topic in the region. This complicates efforts to design and implement policies for increasing women’s access to corporate leadership roles.

This chapter aims to identify the challenges facing MENA economies with respect to achieving gender balance in corporate leadership. It highlights why increased female participation in corporate leadership is important for the region, including its positive impact on company performance, stressing the need for better data to inform policy design. The chapter then explores the challenges women in MENA face in accessing corporate leadership positions and presents examples of good practices in OECD and MENA economies. It concludes with policy options that were developed in discussion with experts involved in driving change in MENA.

4.2. The case for gender balance in economic and corporate life

Increasing gender balance in corporate decision-making roles has been a priority for OECD countries. Most have initiated policies to promote gender balance on company boards and in senior management (OECD, 2017b). Advancing the gender balance at decision-making levels has also become a goal for many companies globally that wish to capitalise on female talent and bring about gains for both the company and the overall economy.

The G20/OECD Principles of Corporate Governance1 acknowledge that diversity in the boardroom is integral to sound corporate governance, and a key component of this is gender diversity. Likewise, the 2013 OECD Recommendation on Gender Equality in Education, Employment and Entrepreneurship recommends increasing the representation of women in decision-making positions across the public and private sector, as well as eliminating gender wage gaps and other discriminatory factors (Annex 4.A).

Nevertheless, and despite the efforts of many economies worldwide to promote women’s empowerment, gender gaps persist in all areas of social and economic life, and in economies at all levels of development.

Women’s labour force participation rates have moved closer to men’s over the past few decades, but in every country women are still less likely than men to engage in paid work. When women do work, they are more likely to work part-time, are less likely to become managers or to be entrepreneurs, and they earn less than men. Globally, the median full-time female worker earns 15% less than her male counterpart on average (Figure 4.1).

Figure 4.1. The global gender income gap has widened
picture

Source: Global Gender Gap Index 2017, World Economic Forum.

Women in the MENA region remain an untapped resource for the economy. While women represent around 49% of the region’s total population, their participation in the labour force is significantly lower (World Bank, Gender Statistics, 2017).

The average female labour force participation rate for OECD countries is 51%. In contrast, only 16% of women participate in the labour force in Jordan and Algeria, and just 25-32% participate in Egypt, Libya, Morocco and Tunisia. At the same time, men’s labour force participation in these six MENA economies reached 70% or more in 2014, only slightly below other emerging economies (WDI, 2017).

Women are also underrepresented in public sector management and in politics, holding on average only 17% of seats in national parliaments in MENA economies. Gender gaps are largest in private sector employment and entrepreneurship.

Gender equality is a fundamental driver for more inclusive and equitable societies, in particular women’s economic empowerment through economic participation as employees or entrepreneurs. Closing the gender gap in labour force participation by 2025 could add USD 12 trillion (26%) to global GDP (OECD, 2017c). However, recent progress has been slow; research on current trends in 106 economies signals that it will take 100 years to close the global gender gap. In the MENA region, estimates suggest this could take as long as 157 years, given current trends (WEF, 2017).

Gender balance and company performance

Diversity is a critical pillar of effective board performance. A lesson learnt from the global financial crisis is that overly entrenched boards may fail to identify risk factors, protect the interest of all stakeholders and act in consequence. “Groupthink” is more likely to occur among homogeneous groups lacking diversity in areas related to gender, nationality, age and educational backgrounds.

Bringing the experience and perspective of women to the table enhances the decision-making process, helping to avoid groupthink and contributing to better conflict resolution (Bernardi, 2009). Research conducted in 2015 by Morgan Stanley Capital International’s Environmental, Social and Governance arm (MSCI ESG) found that “companies lacking board diversity tend to suffer more governance-related controversies than average” and have “higher environmental, social and governance risk management ratings and strategies across virtually all risk issues” (Lee et al., 2015).

Studies show a positive impact of increased female participation in corporate leadership in several ways. Gender diversity on boards and within senior management improves employee retention and company reputation by utilising available talent pools more effectively (MSCI, 2016; Catalyst, 2017a; Hunt et al., 2015). Moreover, boards with three or more women correlate with improved decision-making; can help steer the hiring and promotion of women in a company; and show that women’s leadership is valued (Thwing-Eastman et al., 2016; Lee et al., 2015). The trickle-down effect of fostering a stronger gender diversity framework at all levels is crucial to the retention of female talent and employee engagement.

Gender-balanced leadership provides the diversity in thinking, ideas and knowledge that are needed to mitigate risks and strategise in an age of rapid digital advancements, big data analytics, artificial intelligence and the internet. A diverse board is less likely to come to swift consensus and can examine a problem from more angles to reach well-thought out decisions (GMI, 2013). Women with board-level experience who were interviewed in the United Arab Emirates said that boards needed women because they brought a transformational leadership style, better teamwork and a reduction in aggressive culture, and that women were less prone than men to take risky and unethical ventures, going instead for steady growth and improvements (Hawkamah Institute, 2013).

Although causation is not fully established, a growing body of research suggests that firms with strong female leadership enjoy better financial results. MSCI ESG research found that companies with more women on their boards have higher results on same-year return on equity (ROE) and earnings per share (Thwing-Eastman et al., 2016). ROE for global companies with strong female leadership was 2.7% higher than for those without (Thwing-Eastman et al., 2016; Lee et al., 2015). The 2016 Credit Suisse Gender 3000 report, which covers 3 400 companies, found that companies with at least one female director had generated a compound excess return per annum of 3.5% for investors over the previous decade. Companies where more than 15% of senior managers were women had profitability more than 50% higher than companies with fewer than 10% female senior managers (Credit Suisse, 2016).

Recent studies in the MENA region also provide financial arguments for supporting gender diversity on boards and in senior management. Research in Jordan by the International Finance Corporation (IFC) showed a positive correlation between, on the one hand, gender diversity in the boardroom and senior decision-making positions, and on the other, higher returns on assets and equity (IFC, 2015) (Box 4.1). A 2013 study conducted by the Moroccan Institute of Directors across 500 large enterprises, including 75 listed companies, found that average turnover at state-owned companies with women on boards was higher by 5 billion MAD (Moroccan dirham; USD 533.6 million) than at those without.

Box 4.1. Impact of gender diversity on company performance in Jordan

In 2015, the International Finance Corporation conducted a study of the impact of gender diversity on the economic performance of 237 listed companies in Jordan, of which 52 had a woman on the board of directors.

The study recorded a correlation between the financial performance of companies and gender diversity in the boardroom and in senior decision-making positions, although there was no evidence of causation.

The average return on assets in 2012 was three times higher in companies with women on their boards (3.03) than in those without female participation (0.99), and companies with women on boards had an average return on equity (17.51) almost double the ROE of companies without (9.83). In 2011, 2010 and 2009 the data showed similar results.

From a corporate governance perspective, the results also showed that companies with increased gender diversity in the boardroom experienced a greater improvement in the implementation of good corporate governance practices than those without.

Source: IFC (2015), Gender Diversity in Jordan: Research on the Impact of Gender Diversity on the Economic Performance of Companies in Jordan,

www.ifc.org/wps/wcm/connect/e93318004a0d7ff195cfb7e54d141794/IFC_Jordan_Gender_Report_Sep_2015.pdf?MOD=AJPERES.

Putting gender balance measures into practice

Introducing measures to ensure greater gender balance in corporate leadership has helped MENA economies to align constitutional guarantees of equality and equal opportunity with international commitments. However, not all economies have seen results in corporate practice.

All MENA economies considered in this report have ratified or are in accession in line with the United Nations Convention on the Elimination of Discrimination against Women (CEDAW) (Table 4.1). Article 2(e) of CEDAW requires jurisdictions to take all appropriate measures to eliminate discrimination against women by any person, organisation or enterprise. Article 3 of CEDAW encourages economies to take “all appropriate measures, including legislation, to ensure the full development and advancement of women, for the purpose of guaranteeing them the exercise and enjoyment of human rights and fundamental freedoms on a basis of equality with men”, especially in “political, social, economic and cultural fields”.

Table 4.1. MENA constitutional provisions on equality and non-discrimination

Country

Constitution (year instated, revised or promulgated)

Constitutional provision on equality and/or non-discrimination

Ratification or accession (a) of CEDAW

Algeria

1996

Preamble, Articles 29, 31 &140

1996a

Bahrain

2012

Articles 4, 5 & 8

2002a

Djibouti

2010

Article 3

1998a

Egypt

2014

Preamble, Articles 4, 9, 11 & 53

1981

Iraq

2005

Preamble, Articles 14 & 16

1986a

Jordan

2016

Article 6

1992

Kuwait

1992

Preamble, Articles 7, 8, 29 & 175

1994a

Lebanon

2004

Preamble, Article 7

1997a

Libya

2011 (interim)

Preamble, Articles 6 & 8

1989

Mauritania

2012

Preamble, Article 1

2001a

Morocco

2011

Preamble, Articles 6, 19 & 35

1993a

Oman

1996

Articles 9, 12 & 17

2006a

Palestinian Authority

2003 (basic law)

Preamble, Articles 9 & 26

2014

Qatar

2003

Articles 18, 19, 34 & 35

2009a

Saudi Arabia

2013

Article 8

2000

Tunisia

2014

Preamble, Articles 21 & 46

1985

United Arab Emirates

2001

Articles 14 & 25

2004a

Yemen

2001

Articles 25, 41

1984a

Source: UN Women (2016), Global Gender Equality Constitutional Database,

http://constitutions.unwomen.org/en; country constitutions.

Yet when it comes to corporate board composition and senior management, constitutional measures and ratification of CEDAW have not yet translated into company practices in MENA economies.

In making the case for improved company practices, the Office of the UN High Commissioner for Human Rights states that “the private sector creates and defines jobs, produces growth, sets parameters of income distribution and affects the social and environmental conditions of the communities in which they function. Women’s equal access to business leadership is essential both for women’s empowerment and for their ability to affect economic policy making which determines the quality of life for women and men, their children and communities.”

4.3. Women in the workforce and in corporate leadership

Closing the gender gap in economic participation is a work in progress throughout the world, but it is especially challenging in the MENA region. This section considers women’s labour force participation and representation in senior management, first across the OECD and then in MENA economies.

A slow narrowing of the gender gap in OECD countries

In every OECD country, men remain more likely to be in paid work than women. Women’s labour force participation rates have improved, but the average gender gap in OECD employment rates has been narrowing slowly, decreasing by just 0.6 percentage points from 2012 to 2016.

Most OECD countries have initiated policies to promote gender balance on boards and in senior management. As of 2016, nine OECD countries had introduced gender quotas for the board of publicly listed and/or state-owned enterprises. Other countries have taken an approach involving voluntary targets, corporate governance codes and/or disclosure rules.

Yet a recent OECD study highlights a continued gender imbalance in corporate leadership and concludes that the glass ceiling remains intact. Women make up only about one-third of managers in OECD countries (Figure 4.2). They are also far less likely than men to become chief executive officers (CEOs), sit on boards of private companies or hold public leadership positions, although government quotas – and, to a lesser degree, targets – have led to relatively quick changes in the share of private and public leadership positions held by women in some countries (OECD, 2017b).

Figure 4.2. Women in management and the labour force in OECD countries (%)
picture

Note: All ages, 2015 or latest year. The female share of managerial employment is the female share of the employed who hold jobs classified in International Standard Classification of Occupations 1968 (ISCO 68) major group 2 (administrative and managerial workers) for Colombia; in ISCO 88 category 1 (legislators, senior officials and managers) for Canada, Chile, India, Indonesia and the United States; in ISCO 08 category 1 (managers) for all other countries except China, which uses the National Occupation Classification. Data for Colombia and India refer to 15-64 year-olds only.

Data for China refer to 2010, for India to 2011-12, for Indonesia and the United States to 2013, and for Australia, Brazil, Canada and South Africa to 2014.

Source: OECD Employment Database, www.oecd.org/employment/emp/onlineoecdemploymentdatabase.htm; ILO (2016), ILOSTAT database, www.ilo.org/ilostat; census data for China; and OECD Secretariat calculations based on the Gran Encuesta Integrada de Hogares for Colombia and on the National Sample Survey for India.

In the OECD countries,2 the average percentage of women on company boards is modestly higher than the global average (Box 4.2), reaching 20% in 2016, up from 16.4% in 2013. On average, 4.8% of CEOs in the OECD countries were women in 2016, double the 2.4% in 2013 (OECD, 2017b).

Box 4.2. Global gender trends in corporate leadership

Beyond the OECD, global progress in increasing the number of women on boards and in senior management has also been slow. Findings from three reports are presented below.

  • MSCI World Index Research covering 4 218 companies found that 16% of corporate board members were women in 2016, up from 12% in 2014, and that 19% of company directorships were held by women in 2016, up from 18% in 2015.

  • An analysis by Deloitte covering 64 countries and nearly 7 000 companies found that women held 15% of board seats in 2017, up from 12% two years earlier.

  • The 2017 Credit Suisse Gender 3000 Survey reviewed gender balance in senior management across 3 400 companies and found that the global average for women’s participation had barely improved, growing to 14% in 2016 from 13% in 2014.

Source: Eastman (2017), Deloitte (2017a), Credit Suisse (2016).

A large and persistent labour force participation gap in MENA

Women’s labour force participation rates in the MENA region are among the world’s lowest: around 24% on average, compared to around 50% in OECD countries (Figure 4.3). Wage gaps between men and women persist in both the private and public sectors, and vulnerable or informal employment is particularly high among women (OECD, 2017c).

Figure 4.3. MENA labour force participation rates by gender (2017)
picture

Note: Modelled ILO estimates, percentage of population ages 15+.

Source: World Bank (2017), World Development Indicators.

Although the causes of low female labour force participation vary across MENA economies, the relationship between legal frameworks and social norms plays a role in driving gender gaps in the labour market (OECD, 2017c). Restrictive family law provisions impact job choices for women and influence employers’ behaviour in hiring and promoting. Social norms and attitudes – informed by gender-based labour regulations including parental benefits, retirement provisions and income taxes – also play an important role in labour market decisions.

These factors have led to a large share of women working in low-wage positions, often with a high level of informality, without access to social protection and pension provisions. Women in MENA economies tend to work in traditionally female roles such as teaching, social services and nursing, with career choices often based on “societal pressures of what are deemed to be respectable occupations” (Momani, 2016). Women’s employability, as shaped by educational attainments, also plays a role.

The labour force participation rate of women in Gulf Co-operation Council (GCC) economies3 tends to be much higher than in other MENA economies, due in large part to the considerable number of foreign workers (OECD, 2017b; Young, 2016). Disaggregated data show that the overall percentage of non-national women working far exceeds that of national women in GCC countries (Table 4.2).

Table 4.2. National vs. non-national women working in selected GCC countries

Time period

National women

Non-national women

Bahrain

2003-11

15%

40%

Kuwait

2012-13

29%

56%

Qatar

2010

20%

44%

Saudi Arabia

2011-13

7%

24%

UAE

2016

18%

42%

Note: Data availability differs for each country, therefore time periods vary.

Source: Young (2016) “Women's Labour Force Participation Across the GCC”, www.agsiw.org/wp-content/uploads/2016/12/Young_Womens-Labor_ONLINE-4.pdf.

Female labour force participation in MENA is often lower in the private sector than in the public sector. Women in MENA economies state that they prefer to work in the public sector, citing better working conditions and benefits (OECD, 2017b, 2017d, 2014). This preference may also be driven by societal pressure to undertake work deemed respectable for women. Public sector work, which ends early in the day and provides substantial time off and “oversight by fellow nationals”, is more acceptable to husbands and family than a private sector job with an uncertain environment, potential work travel and longer work hours (Momani, 2016).

Reaching positions of senior responsibility is also challenging for women in the region both because of their high drop-out rate from the labour force at a young age and because of early retirement. The share of total public and private sector executive leadership positions held by women was 15% in Tunisia and 10% in Egypt in 2012, 13% in Morocco in 2008, and 5% in Jordan and 5% in Algeria in 2004 (ILO database quoted by OECD, 2017c).

To boost female labour force participation, countries can take measures, including laws that mandate equal pay for equal work and labour codes that ensure non-discrimination in hiring. However, the majority of MENA economies do not yet have laws on these two key issues. As of 2018, only Algeria, Morocco and UAE had legislation on equal pay for equal work, while Bahrain, Lebanon, Morocco, Tunisia and UAE had laws to prevent gender-based discrimination in hiring. And even when laws are on the books, challenges remain in their implementation.

Low female representation in corporate leadership in MENA

Assessing women’s actual participation in corporate leadership is a challenge in the region. As there is no central mechanism to disclose the gender composition of boards and senior management, statistics tend to be based on public disclosures of information to stock exchanges and company websites. Data from unlisted enterprises are often not available.

A 2016 policy paper by Shareholder Rights provides a snapshot of women’s participation on boards in the MENA region. The paper, covering 1 483 publicly listed companies in 13 MENA economies, found that 305 companies failed to disclose any information on the composition of their boards. Of the 1 178 companies with full disclosure, 248, or 21%, had women on their boards of directors (Figure 4.4).

Figure 4.4. MENA listed companies with women on the board of directors (%)
picture

Source: Shareholder Rights (2016), “Women Representation on Boards of Directors on MENA Exchanges”. https://euromenafunds.com/Women-On-Board-Report-2016.pdf.

The Shareholder Rights research found that women’s participation on boards can fluctuate by sector. The number of companies with female board members was highest in pharmaceuticals (29%) and education (27%), and lowest in the media (0%), chemicals (4%) and food and agriculture (10%).

The 2016 study only pertains to publicly listed companies, and therefore the number of firms varies across countries. Disaggregated data across sectors and company types – listed, unlisted, family owned, etc. – are needed to better evaluate women’s standing in corporate leadership and hone in on problem areas. For example, data on the participation of women on boards and in senior management within unlisted enterprises would be useful for purposes of comparison.

Information on women in top management positions (CEO or equivalent) in large firms is scarce for MENA economies. According to disparate international sources that provide a slightly different picture than the Shareholder Rights paper, women make up 23% of senior management positions in Morocco, 17% in UAE, 16% in Egypt and 7% in Qatar (Deloitte, 2017a; ILO, 2016b). According to IFC research, women hold 21% of senior management positions in Jordan, but the influence of these positions may vary and many are not on a path that can lead to the boardroom (IFC, 2015). In Bahrain’s banking and finance sector, women hold 2% of CEO posts, 5% of executive manager positions and 8% of directorships (Intellect Resources Management, 2015).

A 2018 survey commissioned by the OECD4 found that, despite progress, the representation of women on the boards of the largest 142 public companies in MENA remains modest, at 4.8% of total voting board seats (60 of 1 258 seats). The survey found that 31% of companies had at least one women board member, 24% had at least two and only 7% had three or more women board members. Morocco’s MASI exchange leads, disclosing just over 11% women board members, while Saudi Arabia’s TASI falls behind, with only 0.7% women board members (Figure 4.5).

Figure 4.5. Voting women board members by MENA exchange (%)
picture

Note: The following exchanges are covered: ADX 20 (UAE); ASE 20 (Jordan); DFMGI/NASDAQ Dubai 23 (UAE); EGX 30 (Egypt); MASI 20 (Morocco); and TASI 30 (Saudi Arabia).

Source: OECD secretariat analysis (2018), based on data collected by Ethics & Boards Governance Analytics.

Women are underrepresented in board chair positions across the six stock exchanges. Only two companies in Morocco and one each in Jordan and Egypt disclose that they have a women chair.

The survey also looked at women’s representation on boards by sector. The education sector was found to be strongest, with 24%. Mining, retail distribution and food and beverages followed, with 19-20%. However, no women were present on boards in the industrial, cigarettes, automotive and construction sectors (Figure 4.6).

Figure 4.6. Voting women board members in MENA listed companies by sector (%)
picture

Source: OECD secretariat analysis (2018), based on data collected by Ethics & Boards Governance Analytics.

Given the unique challenges facing women across economies, market capitalisation of companies appears to have little impact on the number of women board members across the 142 companies (Table 4.3). Companies surveyed in Saudi Arabia have an average market capitalisation of USD 14 billion, yet only 7% have women board members. In contrast, companies surveyed in Morocco have an average market capitalisation of just under USD 4 billion, yet 70% have at least one woman on the board.

Table 4.3. Market capitalisation and voting women board members by MENA exchange

Country

Stock exchange index (no. of companies)

Index market capitalisation (USD billion)

Women voting board members

Total voting board members

Women board members (%)

Companies with 0% women board members

Companies with 0-10% women board members

Companies with 10-20% women board members

Companies with > 20% women board members

Saudi Arabia

TASI (30)

427

2

277

0.7%

93%

0%

7%

0%

UAE

ADX (20)

123

2

167

1.2%

90%

5%

5%

0%

UAE

DFMGI /Nasdaq Dubai (23)

100

7

175

3.9%

67%

0%

26%

4%

Morocco

MASI (20)

79

21

184

11.4%

30%

10%

35%

25%

Egypt

EGX (30)

29

11

244

4.5%

73%

3%

13%

10%

Jordan

ASE (30)

21

17

211

8.1%

45%

25%

25%

5%

Total

142 companies

776

60

1 258

4.8%

69%

6%

18%

7%

Note: UAE’s DFMGI and Nasdaq Dubai have been grouped to account for the jurisdiction (this differs from separate values in Figure 4.5).

Source: OECD secretariat analysis (2018), based on data collected by Ethics & Boards Governance Analytics.

Board committees are important to oversee some of the core management functions of the company. Of the 44 companies disclosing women board members, women are better represented on audit committees (7%) than on remuneration (4%) or nomination (4%) committees (Table 4.4).

Table 4.4. Women on MENA audit, nomination and remuneration committees (%)

 

Representation of Women by Board Committee (% of total committee members)

Country

Index

Companies With Available Information

All Committees

Audit Committee1

Nomination Committee1

Remuneration Committee1

Morocco

MACI 20

8

11%

18% (8)

0% (7)

0% (7)

Jordan

ASE 30

11

8%

12% (11)

15% (4)

15% (4)

Egypt

EGX 30

11

7%

3% (11)

10% (5)

8% (7)

UAE

DFMGI / NASDAQ Dubai 23

18

6%

7% (18)

6% (15)

8% (18)

UAE

ADX 20

16

3%

4% (16)

0% (11)

0% (13)

Saudi Arabia

TASI 30

16

0%

0% (16)

0% (14)

0% (13)

Total

142 Companies

79

5%

7% (79)

4% (55)

4% (61)

1The number in brackets refers to the number of companies declaring a specific board committee in each index. Percentages have been rounded.

Source: OECD secretariat analysis (2018), based on data collected by Ethics & Boards Governance Analytics.

4.4. Challenges faced by women in accessing corporate leadership positions

Family cohesion is of prime importance in the MENA region, and any strategy to increase women’s presence in economic life would be remiss without taking this into account.

Nevertheless, a stronger role for women in economic life, particularly via corporate leadership, does not need to come at the expense of family cohesion. Rather, it can be an opportunity for both men and women to exercise a stronger sense of agency over work and family life and enjoy the benefits that this freedom of choice and women’s inclusion can bring to society at large. The dual income generated by both spouses working can help families to afford greater opportunities for their children, and in life too.

This section explores the challenges faced by women in the MENA region that hinder gender balance in corporate leadership.

Underlying causes and costs of gender inequality in MENA

The legal framework underpinning women’s rights in MENA economies has a tremendous effect on women’s ability to participate actively in the labour force.

The OECD’s Social Institutions and Gender Index (SIGI) is a cross-country measure of discrimination against women in social institutions – both legal and customary practices that can affect the opportunities of women and girls over a life cycle and limit their ability to participate equally with men in economic life. According to SIGI, common areas where discriminatory practices occur in the region include: household responsibilities, inheritance, secure access to formal financial resources, workplace rights, access to justice and political voice.

In recent years, legal transitions, especially affecting a woman’s role in economic life, have begun to take shape. As noted above, MENA economies have ratified international conventions on gender equality and include constitutional provisions that guarantee women’s access to equal opportunity and equality with men in economic life. Still, hindrances exist in national legal provisions (OECD, 2017c).

The Family Codes of MENA economies tend to assign specific duties to men and women that entrench gender roles and constrain the choices men and women have over how best to organise work and family life. Often men are not only socially perceived as responsible for providing for their families financially, but they are legally bound to do so. In turn, women are expected to maintain the household, rear children, and care for sick, disabled or ageing relatives (OECD, 2017c).

In addition, customary laws, which are often not favourable to gender equality and women’s empowerment, continue to exist in parallel with statutory laws. Even when the right legal frameworks are in place, their enforcement and implementation remains a challenge (OECD, 2017c).

OECD research based on SIGI indicates that the economic cost of gender-based discrimination in social institutions is immense worldwide, including in MENA (Box 4.3).

Box 4.3. The economic cost of gender-based discrimination

Gender-based discrimination in social institutions lowers female access to education and jobs. The current level of such discrimination induces an estimated annual loss of 16% of global income, or up to USD 12 trillion, according to research using the OECD Social Institutions and Gender Index (SIGI).

The research suggests that gender-based discrimination in social institutions has a significant negative impact on economic growth in MENA. It estimates annual income losses for the region due to such discrimination at USD 575 billion.

Regional income losses are also significant elsewhere: about USD 6.116 trillion in OECD countries, USD 2.4 trillion in East Asia and the Pacific, USD 888 billion in South Asia, USD 733 billion in Eastern Europe and Central Asia, USD 658 billion in Latin America and the Caribbean, and USD 340 billion in sub-Saharan Africa.

About the SIGI

The Social Institutions and Gender Index measures gender-based discrimination in social norms, practices and laws across 160 countries. The SIGI comprises country profiles, a classification of countries and a database; it serves as a research, policy and advocacy tool for the development community and policy makers. The SIGI covers five dimensions spanning major socio-economic areas that affect the life course of girls and women: discriminatory family code; restricted physical integrity; son bias; restricted resources and assets; and restricted civil liberties. These dimensions look at the gaps that legislation and attitudes create that impact rights and opportunities for women.

Note: Figures refer to the results of the 2014 SIGI.

Source: Ferrant and Kolev (2016), “The economic cost of gender-based discrimination in social institutions”, www.oecd.org/dev/development-gender/SIGI_cost_final.pdf.

Barriers to corporate leadership positions for women in MENA

Social norms and inclusive workplace culture are important to providing opportunities for women’s advancement. Metaphors such as “glass-ceiling”, “sticky floor” and “labyrinth of leadership” 5 have been used to describe barriers to women’s upward mobility in the workplace. Even women who make it to top-tier positions face continuous hurdles.

Studies show that women in the MENA region are held back by a variety of social, legal and institutional barriers (Deloitte, 2017b). They face significant constraints: the double burden of work and domestic responsibilities; expectations that women will not work; lack of female role models; and lack of opportunities to network. Moreover, recruiting and promotion systems can be based on lateral career paths that do not consider potential career breaks, notably for women who take maternity leave. In board selection in particular, woman suffer from the slow turnover of board seats, non-transparent board selection criteria, lack of female role models and informal board appointments based on networks.

Networking can be especially challenging for women in the MENA region. In some economies, women cannot participate in men-only social gatherings such as majlis or diwaniya, where men “informally exchange information and expand their professional networks” (McKinsey, 2014).

Restrictive laws can have an impact on women’s advancement in their careers. Labour codes in some MENA economies restrict women’s activities at night and in hazardous work (OECD, 2017c). There are also limitations on the freedom of movement, such as women’s ability to travel for business without a male companion. In Saudi Arabia, companies are required to invest in creating separate spaces for women and men, which can be a disincentive for hiring women (McKinsey, 2014).

Women account for a disproportionate share of unpaid care work. Women globally spend more than three times more time on unpaid care work than men do; in the MENA region, this rises to more than five times as many hours on unpaid care work for women than men (McKinsey, 2017).Women also often lack family-friendly and work/life balance policies such as part-time or flex-time arrangements.

Labour codes in Jordan6, Morocco7, Egypt8 and Libya9 require private-sector employers to provide childcare facilities on site when they employ more than a specific number of women. In Jordan, a private-sector employer with 20 or more married women employees must provide childcare facilities if the women collectively have at least ten children under the age of four. The minimum number of women employees for mandatory provision of childcare facilities is 50 in Morocco and Libya, and 100 in Egypt (OECD, 2017c). In practice, the obligation of private-sector employers to provide parental leave and childcare for female employees exerts a negative influence on women’s recruitment and on the payment of salaries equal to men’s.

A further barrier to women is that gaining the credentials needed to rise to the top of a company’s board or serve in a management position requires expertise and the development of certain skills over time. Entrepreneurship can be a springboard for attaining leadership roles in corporations or a seat on the board. However, levels are low in MENA. On average, 3% of firms in MENA have majority female ownership, compared to 13% in Europe and Central Asia, 20% in Latin America and the Caribbean, and 29% in East Asia and Pacific (World Bank Enterprise Survey, 2018).

There have been valuable studies in the region analysing women’s perceptions of barriers to corporate leadership roles. A survey of 160 companies in the United Arab Emirates, conducted by the Hawkamah Institute in 2016, asked respondents about cultural elements perceived to have the greatest impact on gender parity. The respondents cited maternity, work/life balance, stereotypes about housewives and working mothers, and lack of self-confidence. The study also indicated that women often sacrifice their careers to support their families (Hawkamah Institute, 2016).

The IFC study of gender diversity in Jordan (cited above) found that a mix of underrepresentation, cultural influences and legal issues act as barriers for women to reach leadership roles. It is also interesting to note that Jordan’s current corporate governance regulations require directors to have a certain level of shareholding to be nominated, which means that only women with shares can be directors. Alternatively, women can be nominated as directors on behalf of corporate shareholders; however, in this case, they need to be in senior positions (IFC, 2015).

In a 2015 survey conducted by the Pearl Initiative in GCC countries, just 27% of female respondents agreed that the leadership in their organisation was committed to having women in senior roles, and only 25% believed that they were treated equally in the workplace. A further 80% believed that gender bias had negatively impacted their career progression. And though 62% aspired to move into management roles, only 45% believed that this would be feasible given current policies.

Research by McKinsey in 2014, using a survey of female managers in GCC countries, suggested that the main constraints contributing to low female representation in corporate leadership included:

  • family and social expectations of women causing a double burden

  • conscious and unconscious biases against women in leadership (by both men and women)

  • infrastructure gaps such as HR capacities and transport services for daily commuting

  • limited networking opportunities and lack of targeted leadership programmes for women.

4.5. Good practices for increasing gender balance in corporate leadership

Policies to increase women’s access and participation on corporate boards and in senior management positions can be driven by governments, regulators and companies themselves, with measures adapted to specific contexts (by sector, country, etc.). Policies can include quotas; reporting requirements; targets; voluntary disclosure by companies of gender composition or gender equality policies; increasing the size of a board; and actively recruiting qualified women to replace outgoing male board members.

4.5.1. Good practice examples from the OECD

On the whole, OECD countries follow four main policy approaches:

  • laws that set a minimum quota for women on boards

  • rules on disclosure of the gender make-up of company boards and/or diversity policies

  • comply-or-explain provisions on gender in corporate governance codes

  • voluntary targets for gender diversity on boards and/or in senior management.

Quotas and numerical targets can encourage an increase in the number of women on boards in the short term. The mere expectation that mandatory measures will be implemented can spur companies into action. In both France and Italy, for example, anticipation of a quota incited companies to take measures to increase the proportion of women on boards through hiring practices, numerical targets and/or recommendations on board composition in their corporate governance codes (Deloitte, 2016).

European countries have seen women’s representation on boards double, triple or more since the adoption of quota laws. In Germany, for example, a 2014 law introduced a quota of 30% with a deadline of 2016; women’s representation on boards increased from 16% in 2011 to 33% in 2018 (DIW Economic Bulletin, 2013). The results of Italy’s 2011 quota law were even more striking: women’s representation on boards jumped from 3% in 2009 to more than 35% in 2018 (CONSOB, 2011).

Policies that combine targets with strong monitoring and accountability mechanisms have proven effective (OECD, 2017b). European countries lead the charge in terms of the overall participation of women on boards. The five top performers globally are OECD members: Norway, France, Sweden, Italy and Finland, all of which have implemented mandatory quotas. In North America, where board diversity is advancing slowly, advocates have preferred investor pressure and voluntary initiatives over regulation.

Disclosure driven policies, like those of North America, can be ineffective without the market dynamics needed to drive desired changes, such as investor and shareholder activism (Kamalnaath and Peddada, 2012). Investors have been the most active proponents of greater gender diversity on boards in the United States where quotas remain unpopular and regulators and legislators have been slow to demand change (Deloitte, 2017).

The assets of institutional investors have more than doubled since 2000, reaching USD 84 trillion in OECD countries in 2017 (OECD, 2018). Shareholder activism can therefore help galvanise change. Companies such as State Street and Blackrock have taken steps to promote greater board diversity. Blackrock notably voted against the re-election of directors at more than 400 companies that failed to encourage diversity.10 The results can be good for business. In a 2014 study, Credit Suisse found that companies where at least 15% of senior managers were women had profitability more than 50% higher those where fewer than 10% of senior managers were women (Credit Suisse, 2016).

In the United Kingdom, a combination of policy initiatives has helped to increase the share of women in corporate leadership. For example, a requirement for mandatory reporting on gender pay gaps has named and shamed companies that do not promote pay transparency and has forced disclosure. Measures for flexible working arrangements and reduced childcare costs, including a new tax-free childcare scheme, have fared well in combination (OECD, 2017b).

Corporate governance codes have become a popular method of improving corporate governance in OECD countries. Australia and the UK use comply-or-explain mechanisms in their codes to encourage greater gender balance on boards. In Australia, the presence of women on corporate boards has increased from 8% on the ASX 200 index in 2010, when code recommendations were introduced, to 23% in February 2016 (Clarke et al., 2016). In the UK, the corporate governance code was updated in 2018; it now requires companies to report on the gender balance of senior management in their annual reports and to provide details of company practices to encourage greater diversity on boards.

A selection of policies, programmes and good practices in OECD countries is presented in Annex 4.B.

Resistance to quotas in MENA’s corporate sector

The constitutions of all MENA jurisdictions call for equality and non-discrimination between the sexes, and MENA economies show a commitment to improving gender balance across the public and private sector. Yet the use of quotas and targets in the corporate sector remains controversial in MENA economies.

The region’s only country formally to mandate a quota is United Arab Emirates, where state-owned enterprises are required to have at least one woman on their boards (Deloitte, 2017a). In the Pearl Initiative’s 2015 survey in GCC countries, only 24% of respondents supported the use of quotas.

Business leaders in GCC countries interviewed in a Deloitte study in 2017 had similar views. Though some were in favour of quotas, others said that quotas or targets should not be used because: they involve reverse discrimination; men are hostile to them; they lead to tokenism; market forces will correct gender balance; and alternate routes should be explored first (Deloitte, 2017b). Respondents felt that issues such as oil prices and geopolitics should take priority over fostering gender diversity in corporate leadership.

While similar arguments have been made elsewhere, countries that have introduced quotas “have seen more immediate increases in the number of women on boards, while those that have taken a softer approach, using disclosure or targets, have seen a more gradual increase over time” (OECD, 2017b).

Cultural norms in MENA may be hindering the acceptance of quotas and targets in the corporate world, where, as in the political realm, a patronage-like system is not uncommon. Given this similarity, it is worth considering the use of measures taken to increase women’s representation in political decision-making bodies that might render similar results in corporate leadership. Such lessons from the public sector could help guide policies for the private sector.

In order to strengthen women’s participation in political bodies, some MENA jurisdictions have adopted quotas or special electoral measures. These steps have increased the number of women in parliaments and on local councils in countries including Algeria, Egypt, Jordan, Libya, Morocco, Saudi Arabia and Tunisia. Moreover, the overall number of women who are elected outside the quota system grows with each election, giving credence to the notion that quotas are a first step to greater women’s participation.

Similarly, MENA economies could use quotas or targets to increase the number of women on corporate boards and in senior management. The quotas can be a temporary measure implemented until goals have been met and social norms have evolved to allow for more equal representation in decision making.

Prior to the harder-line step of implementing quotas, MENA companies and economies may take other measures, such as disclosure-driven policies, to increase women’s representation in corporate leadership. However, as companies in the region commonly have a controlling shareholder (either family or government), disclosure-driven policies could be less potent in advancing change without a willingness on the part of controlling shareholders to promote women in leadership.

It is important to note that an increase of women on boards may not directly translate into an increase in women’s participation in executive positions. While quotas have boosted the number of women on boards in many economies, the gains have not been reflected below board level (OECD, 2017b).

A 2016 survey by the Hawkamah, The Institute for Corporate Governance of companies in UAE asked respondents what methods they thought would be most useful for achieving gender diversity on boards and in top management. Respondents suggested:

  • targeted training and development programmes

  • leadership and mentoring programmes

  • company quotas and targets

  • top management involvement in setting targets

  • following up on gender diversity and transparency in hiring and promotions.

An innovative approach that has been used in the MENA region is an in-company training programme that targets male executives and employees. It takes as its starting point the premise that men are often an untapped yet critical resource in diversity and inclusion efforts to eliminate gender bias (Box 4.4).

Box 4.4. Dell EMEA’s Men Advocating for Real Change campaign

An initiative called Men Advocating for Real Change (MARC) has developed in-company training at all levels to tackle gender inequality in the workplace. The aim is to sharpen awareness of the societal and cultural influences behind unconscious gender biases. Participants, including both men and women, attend intensive workshops on subjects like “exploring gender role conditioning and its link to leadership”.

The MARC programme has been used by Dell EMEA to train more than 2 000 staff across 21 economies, including Egypt, Morocco, Qatar, Saudi Arabia and UAE. After receiving training, 82% of participants said that MARC had changed the way they think and behave, and 68% reported that they had seen a change in their leaders’ behaviour. Dell EMEA has committed to training 100% of their executive-level staff by 2020 and would like all staff to take e-learning on unconscious bias.

MARC is an initiative of Catalyst, a global non-profit organisation working with companies to build workplaces that work for women.

Source: Presentation at the OECD on 9 March 2018 by Stéphane Reboud, VP at Dell EMEA; Catalyst, www.catalyst.org/events/marc-men-advocating-real-change-engaging-men-change-agents.

Use of corporate governance codes to encourage gender diversity

Corporate governance codes set the rules, standards and priorities on how companies should operate for optimal performance.

All economies in the region except Iraq have corporate governance codes (OECD, 2019). However, the importance of encouraging gender diversity on boards is mentioned in only two of the 27 codes, guidelines and ministerial resolutions reviewed for this chapter across 12 economies (Algeria, Bahrain, Egypt, Jordan, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Tunisia, UAE and Yemen).

The only MENA economies with corporate governance codes that mention gender diversity on boards are Jordan and Morocco. Jordan’s 2012 Corporate Governance Code11 includes gender balance among factors to be considered in the composition of boards of directors (ECGI, 2017a). Morocco’s 2008 Code of Good Corporate Governance Practices states that the governing body must be composed of members who, among other qualities, ensure diversity, including gender balance, “to provoke real debate and avoid the systematic search for consensus”12 (CGEM, 2008). A 2011 annex to the Moroccan code on the governance of state-enterprises uses similar language, while annexes covering small businesses and credit institutions do not (ECGI, 2017f, 2017g).

Broad diversity provisions are included in Lebanon’s 2010 Guidelines for Listed Companies (Article 10), Tunisia’s 2008 Code of Best Practice for Corporate Governance and Egypt’s Code of Corporate Governance. A non-discrimination clause to ensure that company employees are treated fairly regardless of “race, gender or religion” is included in Qatar’s 2009 Corporate Governance Code13 and Lebanon’s 2006 Corporate Governance Code (Deloitte, 2017a; ECGI, 2017b, 2017c).

Using the relevant vocabulary in corporate governance codes signals that gender diversity is important. If this is not acknowledged, there is less impetus for reform. Important key words such as “diversity”, “inclusivity”, “non-discrimination” and “gender” are absent from most MENA corporate governance codes. Guidelines can even differ within economies that have adopted specialised codes for financial institutions, state-owned enterprises, small and medium-sized enterprises, family businesses, etc.

The 2010 Muscat Declaration on Effective Implementation of Governance Frameworks in the Middle East and North Africa Region14 encourages policy makers and regulators “to focus on improving the transparency and disclosure of enterprises” including on executive compensation and board structures. This could be taken to mean that the gender composition of boards is also a factor to be disclosed.

Gender diversity as a means of increasing organisational effectiveness has started to gain a place on the corporate agenda in MENA, especially in GCC countries, (McKinsey, 2014). There tends to be greater awareness at the company level of the importance of gender balance in decision making and improving women’s access to corporate leadership. However, multinational companies tend to be more open to the concept, while companies owned by family groups are more traditional in their view of male and female roles and are conservative when it comes to change (Deloitte, 2017b).

One multinational that has implemented policies to improve gender balance is the global building company LafargeHolcim. The company aims to achieve a minimum of 30% of gender diversity by 2030 at all management levels across all sites, including more than 200 locations in MENA economies with more than 10 000 employees. The company’s share of women among senior managers has already increased, from 15% in 2016 to 18% in 2017.

Accelerating progress and sustaining a stable pipeline of female talent to fill leadership roles in the future requires a comprehensive approach. The “leaky pipeline” phenomenon, in which women discontinue career paths at a higher rate than men, is well-documented in both OECD and MENA economies and tends to occur at crucial times in women’s careers, for example in middle management before advancement to more senior roles (ILO, 2015). This leads to a shortage of women in senior management posts who could serve as role models (ILO, 2016a).

Table 4.5 provides an overview of initiatives already in place in MENA economies and companies to address the challenges outlined above and to increase the number of women in corporate leadership.

Table 4.5. Selected MENA initiatives to increase gender balance in corporate leadership

Country Level

Egypt

Egypt’s National Global Compact & Corporate Social Responsibility Centre, in collaboration with the American University in Cairo and the IFC, developed a “Women on Boards” initiative to improve the gender balance on corporate boards through awareness raising, networking, coaching, facilitation, direct training for certification and lobbying for legislative and policy reform. The programme has a Corporate Governance Module for “providing a general understanding of corporate governance concepts, board structure and responsibilities as well as basic understanding of financial statements, internal planning, family business governance, etc.” and a Leadership Module for “developing leadership identity, practicing leadership skills and managing vision and voice”. The initiative also works on sensitising male board members to gender issues and to qualifying women within and outside of the corporate mainstream to be appointed to boards.

United Arab Emirates

The UAE Gender Balance Council, established in 2015, is a federal entity responsible for developing and implementing the UAE’s gender balance agenda. Its overall objectives are to enhance women’s participation and achieve gender balance across all sectors, and to promote the UAE’s status as a benchmark for gender balance legislation. Notable measures include: i) the launch of a Gender Balance Index for the government sector that can be emulated by the private sector; ii) the creation, with the OECD, of a UAE Gender Balance Guide to provide organisations and companies with guidance on creating a gender sensitive work environment and increasing women’s participation in upper echelons of power; and iii) an awards system for organisations and companies that reach milestones in fostering greater gender balance. Additionally, the UAE launched the National Strategy for Empowerment of Emirati Women for 2015-2021.

The Securities and Commodities Authority UAE recently signed an MOU with the Gender Balance Council to reach the UAE's target of 20% female participation in the corporate boardrooms of listed companies by 2020.

The Dubai Women Establishment’s Woman in Boards Initiative, in collaboration with Hawkamah and the Mudara Institute of Directors, aims to: identify barriers restricting women’s participation at senior executive levels; advocate changes to remove barriers; increase awareness on gender diversity in local and regional boardrooms; train women leaders for taking on board roles; and mentor the next generation of women leaders.

Regional Level

Hawkamah, The Institute for Corporate Governance

The Hawkamah Institute supports “institution building, corporate sector reform, good governance, financial market development, investment and growth in the region”. Created to advance corporate governance reform, the institute has conducted studies on gender diversity on boards and in senior management.

The Pearl Initiative

The Pearl Initiative, developed in co-operation with the UN’s Office for Partnerships, groups nearly 50 partner companies in a regionally focused network of business leaders “committed to driving joint action, exhibiting positive leadership and sharing knowledge and experience” in order to work towards higher standards in areas such as corporate governance, anti-corruption, codes of conduct, integrity and reporting. Core activities include regional research-based insight reports, business dialogue forums and university programmes, with gender-diverse leadership considered a core tenant of corporate governance.

The 30% Club

A chapter of the 30% Club was established in the GCC in 2015 to support a business-led approach to increasing women’s participation in corporate life at all levels.

Company Level

Glowork

The Saudi e-portal Glowork matches women with jobs by creating opportunities in sectors previously inaccessible to women. It aims to bring more than half a million women into the MENA workforce in the next five years and to leverage the talent of highly educated women to strengthen the region’s workforce.

Saudi Aramco

The Saudi national oil company Saudi Aramco has set up two programmes to address a problem with the retention of female talent. Women in Business, which targets younger people starting their careers, teaches basic soft skills to build young women’s confidence, ensure their contributions are noticed and allow them to navigate the waters of a male-dominated business world. Women in Leadership, for senior employees, combines self-awareness diagnostics, guided discussions, lectures, and interactive exercises (McKinsey & Co., 2014). Since the programme began, the number of women leaders has risen from three to 84. In April 2018, Saudi Aramco appointed the first woman, Lynn Laverty Elsenhans, to the board.

Sources: The following websites were consulted: www.eg.undp.org/content/egypt/en/home/presscenter/articles/WOB-Programme-2014.html, www.oecd.org/gov/gender-balance-guide-actions-for-uae-organisations.htm, https://government.ae/en/about-the-uae/strategies-initiatives-and-awards/federal-governments-strategies-and-plans/national-strategy-for-empowerment-of-emirati-women, www.dwe.gov.ae, www.hawkamah.org/, www.pearlinitiative.org, https://30percentclub.org/about/chapters/gcc, www.glowork.net/.

4.6. The way forward

Key findings

Increasing the representation of women in corporate leadership roles is a cornerstone of the inclusive economic growth needed to boost the competitiveness of the MENA region. Evidence demonstrates that increasing the gender balance in corporate leadership brings benefits to both companies and economies. Not undertaking measures to ensure this would be a missed opportunity.

MENA has made progress in improving gender balance at the workplace. However, despite differences among jurisdictions, the region faces common challenges in terms of increasing women’s representation in corporate leadership. Key findings include the following:

  • Corporate governance codes in MENA economies rarely endorse gender diversity

  • Constitutional measures in MENA on non-discrimination against women have not yet translated into company practices, and representation of women on company boards remains modest

  • Company and securities laws generally neither acknowledge the importance of gender diversity nor mandate the disclosure of board composition and senior management by gender

  • The region lacks targeted measures, such as quotas, to encourage gender balance in corporate leadership

  • Assessing women’s actual participation in corporate leadership is a challenge due to limited disclosure and a lack of reliable data

  • MENA legal frameworks and social norms, including family codes, play a role in driving gender gaps in the labour market

  • Networking can be especially challenging for women in the MENA region.

Policy options

Removing the barriers to entry and retaining female talent in corporate leadership requires efforts at multiple levels, including broader societal and cultural change.

A group of interrelated policy reform areas can be proposed to address the challenges facing MENA economies in terms improving gender balance in corporate leadership (Figure 4.7).

These possible strategies and actions for governments and companies in the MENA region are summarised in Table 4.6 and developed below. As not all policy options apply to every country, they should be tailored to each MENA economy’s specific circumstances and needs.

Figure 4.7. Main policy areas to promote gender balance in corporate leadership
picture
Table 4.6. Policy options for promoting gender balance in corporate leadership

Objectives

Policy options

Reform legal and policy frameworks

Revise corporate governance codes and related laws and regulations to endorse gender diversity.

Combine national goals with company strategies

Underpin goals, targets and policies by strategies aimed at fostering gender balance throughout the company and the career cycle of women.

Involve company leaders to make government policies more likely to succeed.

Improve data collection and use

Gather more and better-quality data at the regional and national levels and from companies.

Share good practices and compare approaches.

Use scorecards and Gender Impact Assessments to assess governance practices, show progress and compare companies within or across economies.

Attract talent and limit pipeline issues

Develop a “whole of company” diversity framework and conducive human resource policies to create an ecosystem that facilitates women’s corporate leadership.

Ensure that the business community and government co-ordinate goals underpinned by sustainable policies.

Facilitate networks and provide support for women

Provide training programmes and facilitate leadership networks to drive change.

Create coalitions and compacts to boost implementation of core government policies, and provide mentoring to shift values.

Create a conducive cultural environment

Make use of advice, feedback and education to help in adapting to new and more diverse corporate paradigms.

Use best-practice models and reference points to ensure that governments encourage companies to grow and evolve into vehicles for change.

Reforming legal and policy frameworks

There is a strong momentum for change in the MENA region, and the OECD is committed to supporting policy dialogue among governments, authorities, companies and business associations to accelerate the pace of change for gender balance in corporate leadership. Good practices, as outlined in this chapter, can help to guide policy options, but galvanising change will require increased engagement between government and the private sector to facilitate an environment capable of increasing the number of women on boards and in top-level executive positions.

Revising corporate governance codes and company and securities laws to endorse gender diversity is a first step towards increasing women’s participation on corporate boards and within senior management.

At a national level, disclosure mechanisms within corporate governance codes, such as comply-or-explain approaches, are especially effective in highlighting problem areas and providing data to guide policy implementation. For instance, analyses might show that women are better represented in some sectors than others or reveal barriers for women’s upward mobility.

Combining national goals with company strategies

Goals, measurable targets and policies can be underpinned by strategies aimed at fostering gender balance throughout the company and the career cycle of women. Results from government policies are more likely to succeed when company leaders are active and involved.

Company boards should regularly carry out evaluations to appraise their own performance and assess whether they possess the right gender mix. These evaluations can be implemented at company level on a voluntary basis or at a national level, whereby the national authority encourages companies to engage in board training and evaluation according to the needs of the individual company. Economies may wish to combine these with company measures such as voluntary targets, disclosure requirements, boardroom quotas and private initiatives that enhance gender diversity on boards and in senior management.

Improving collection and use of data

The lack of gender-disaggregated data on education and economic participation makes it difficult for governments to enact informed policies that support female employment and entrepreneurship and to monitor these policies. There is a need for data on women’s presence and absence in the labour force to support effective management in the private sector. There is also a lack of data on women in senior leadership in different business classifications or according to company size.

Accurate information guides implementation and allows companies to tailor practices to ensure that they are most effective. What is disclosed matters, too: the more, the better. Going beyond board composition, disclosure can and should cover remuneration packages, family-friendly and work/life balance policies, mentorship and sponsorship programmes, recruitment procedures, sexual harassment policies, etc. Cross-referencing of this information can help to reveal why qualified women may not be advancing to decision-making positions at the same rate as their male colleagues. As for increasing the presence of women on boards, disclosure allows for the creation of national databases with information on qualified female board candidates to allow the lack of female corporate visibility to be addressed immediately.

Scorecards and regular Gender Impact Assessments, such as EDGE certification15, can be used to assess a company’s governance practices, show progress over time and compare different companies and groups of companies within or across economies. These measures are especially effective in ensuring the implementation of family-friendly and work/life balance policies such as flex-time, teleworking, paternity and/or parental leave. They also provide support for models that allow for paid or unpaid leave for life-cycle needs (emergency family needs, childcare, etc.) and that do not penalise employees in their career progression. In this regard, rewarding and acknowledging performance and workable methods used by companies to reach gender targets is complementary.

Data fortify an evidence-based approach for informing policy by identifying bottlenecks that hinder progress and by monitoring the effectiveness of initiatives over time. Despite commonalities among MENA economies on corporate makeup and private sector operation, each country has its particularities. Sharing good practices and comparing approaches is therefore essential to success and a timesaver for those companies and economies that adopt already tested practices.

It is important to highlight two elements when analysing data on women in the workforce in MENA economies. First, the population and employment figures can be skewed due to the high number of expatriate male workers that impact the equal weighting between men and women. Second, lack of disaggregated data makes it difficult to decipher the cause of increased female participation in the workforce in the case that government policies are aimed at increasing the total numbers employed in both the public and private sectors (Kemp et al 2015). Therefore, better quality sectoral data is needed on the composition of company boards and senior management as well as measures to increase gender balance in corporate leadership in the MENA region.

Creating an ecosystem for gender balance in corporate leadership

A pipeline of talent and identification of the next generation’s female leaders is key to a “whole of company” diversity framework. New human resources policies in recruitment, development of talent, etc., are needed to create an ecosystem that is conducive to women’s corporate leadership in the region.

Shifting negative attitudes surrounding women’s ability to lead, and accelerating a women’s path to leadership, require measures that are sustainable. Policy dialogue between business and government is needed to underpin objectives, and works as an important vehicle for sharing knowledge and experience.

Several key tools and strategies can be used to help galvanise change. These involve ensuring new standards within traditional company practices, mentoring, collaborative career mapping through coalitions and compacts, and scorecards and impact assessments to ensure that targets are being met at the company and national level.

Revised human resource management guidelines create a clear standard for gender-sensitive techniques and criteria used for recruitment, hiring and promotion across companies. Mentorship and sponsorship programmes cultivate talent and create a successive pipeline for female talent at all levels of business.

Facilitating networks and providing support for women

Engaging top-tier management and support for a diversity agenda within the largest companies in each country is a critical starting point, especially at the board and senior executive levels. The creation of regular training programmes and leadership networks within and across companies, sectors and regions are effective in driving real change, especially in economies with stricter societal norms and biases.

Coalitions and compacts can boost the implementation of core government policies and provide upwards and downwards mentoring to shift values. They help to create “gender champions” throughout companies and sectors that advocate for the gender-balance agenda and to ensure that targets are met. They also create networks for women in business.

Global examples are the 30% Club, launched in the UK in 2010 with a goal of achieving a minimum of 30% women on FTSE-100 boards. The compact has helped to accelerate progress: female representation on FTSE-100 boards increased to 27.9% after the initiative, from 12.5% previously. Signatories include the CEOs and chairs of some of England’s most prominent companies.

A similar initiative in the United States is Paradigm for Parity, a coalition of businesses dedicated to addressing the leadership gender gap in corporate America. The coalition has set a target for companies to achieve 30% female board seats by 2030. Its more than 60 signatories range from product and services industries to advertising, food processing, finance and mining. In 2017, the Women’s Forum of New York recognised 19 Paradigm for Parity member companies as Corporate Champions for having at least 25% of board seats held by women.

Creating a conducive cultural environment

Cultural changes take time. Advice, feedback and education can help MENA economies to adapt to new and more diverse corporate paradigms. However, creating a cultural environment conducive to increased women’s participation in corporate leadership also requires conscious effort on the part of business and government.

In order to enhance the gender balance in corporate leadership, policy makers need to address the factors that lead women to drop out of the workforce while they are on the road to management roles. This implies changing the cultural environment so that women no longer feel undervalued.

Factors that discourage women from pursuing careers up the corporate ladder include lack of work/life balance, unequal pay in comparison to male colleagues and grim prospects for promotion in an environment where executives promote successors who are like themselves (i.e. other men).

Reference points and models of good practice are important in helping companies to grow and evolve into vehicles for change. Good practices in MENA economies, such as the Men Advocating for Real Change initiative described above, focus on encouraging a culture that sees the value of female leaders.

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Annex 4.A. OECD gender recommendations
  • The 2013 OECD Recommendation of the Council on Gender Equality in Education, Employment and Entrepreneurship recommends adopting practices that promote gender equality in education, promoting family-friendly policies and working conditions that enable fathers and mothers to balance their working hours and their family responsibilities and facilitate greater women’s participation in private and public sector employment. It also recommends increasing the representation of women in decision-making positions, eliminating the discriminatory gender wage gap, promoting all appropriate measures to end sexual harassment in the workplace, reducing the gender gap in entrepreneurship activity, and paying attention to the special needs of women from disadvantaged minority groups and migrant women. See: https://www1.oecd.org/els/2013-oecd-recommendation-of-the-council-on-gender-equality-in-education-employment-and-entrepreneurship-9789264279391-en.htm.

  • The 2015 Recommendation on Gender Equality in Public Life promotes a government-wide strategy for gender equality reform, sound mechanisms to ensure accountability and sustainability of gender initiatives, and tools and evidence to inform inclusive policy decisions. It also promotes a “whole-of-society” approach to reducing gender stereotypes, encouraging women to participate in politics and removing implicit and explicit barriers to gender equality. See: www.oecd.org/gov/2015-oecd-recommendation-of-the-council-on-gender-equality-in-public-life-9789264252820-en.htm.

  • Reports

    • OECD (2017), Women’s Economic Empowerment in Selected MENA Countries: The Impact of Legal Frameworks in Algeria, Egypt, Jordan, Libya, Morocco and Tunisia, OECD Publishing, Paris.

    • OECD (2017), The Pursuit of Gender Equality: An Uphill Battle, OECD Publishing, Paris.

    • OECD (2017), Gender Balance Guide: Actions for UAE Organisations, OECD Publishing, Paris, www.oecd.org/gov/gender-balance-guide-uae-2017.pdf.

    • OECD/CAWTAR (2014), Women in Public Life: Gender, Law and Policy in the Middle East and North Africa, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264224636-en

Annex 4.B. Policies and good practices in OECD countries

Country

Selected policies and good practices for increasing gender balance in corporate leadership

Australia

The Australian Stock Exchange (ASX) recommends that listed companies establish and disclose board diversity policies. In 2015, the Australian Institute of Company Directors (AICD) announced a voluntary target of 30% for all boards (Deloitte 2017a). The AICD began a mentoring programme for women in 2010 where female aspirants sign up to a “Mastering the Boardroom” course or an “International Company Director’s Course” to make them board ready (Kamalnaath and Peddada, 2012). Successful candidates are paired with a mentor who works with them for one year and places them on public company boards after the programme. The participation of women on boards for ASX 200 companies has more than doubled since these changes, from 11% in 2010 to 25.1% in 2016 (Catalyst, 2017c). In the largest listed companies, women’s participation is even higher – at 29.1% on ASX20 company boards, 27.4% on ASX50 company boards, and 25.7% on ASX100 company boards (Deloitte, 2017a).

France

France enforces a mandatory quota of 40% for both genders on boards of companies whose shares are traded on a regulated market and for companies (listed or not) whose revenues or total assets exceed EUR 50 million and employ at least 500 people for three consecutive years. This increased the previous quota of 20% set by France’s National Assembly in 2010. The changes were ushered in under the 2014 Gender Equality Law, effective 1 January 2017, which amended France’s Code of Commerce (Article L225-18-1). As of 1 January 2020, the same conditions will apply for companies that employ at least 250 people. If a company’s board of directors is composed of eight members or fewer, the difference between the number of directors of each gender may not exceed two. Any appointment made in contravention is considered null and void. Fines are applicable for non-compliance, and director appointments not in line with the law can result in the withholding of all director fees until there is a resolution (Deloitte, 2016). As of March 2017, women filled 40% of seats on CAC40 boards, 42% on SBF120 boards, 34% at all companies covered by the regulation and 37% at France’s largest listed companies (Deloitte, 2017a).

Germany

A 2015 law affecting around 110 companies required the introduction of a fixed women’s quota of 30% on non-executive supervisory boards in Germany as of 1 January 2016. The law also introduced a “flexi-quota” for smaller firms, affecting around 3 000 companies, requiring them to set their own targets for women on executive and supervisory boards and for senior management (Hans Böckler Stiftung, 2015). Women’s participation in supervisory board posts hovered at around 10% between 2005-2010; an expectation that mandatory targets would be set led companies to appoint more women, and the share of women supervisory board members in a sample of 160 public traded companies rose to 22% by 2016, although this was still short of the target (Rayasam, 2016). No fines exist for non-compliance. Instead, larger companies must keep a relevant board seat empty until it is filled by a woman, and smaller companies cannot set a quota less than their current status quo (Hans Böckler Stiftung, 2015). Women represent 19.5% of board members in Germany (Deloitte, 2017a).

Italy

Italy has significantly increased women’s participation on boards of directors in recent years. Quotas require that women make up at least 33% of board members at listed companies; the percentage of women on boards doubled from 15% in 2013 to 30% in 2016 (OECD, 2017b). The government has also made efforts to support families with childcare through a voucher system. Improving access to childcare should help more women enter the workforce given that Italian women do more than three-quarters of all unpaid work in the home, such as care for dependents (OECD, 2017b).

Japan

In 2015 the Japanese Diet passed the Act of Promotion of Women’s Participation and Advancement in the Workplace. The law requires companies with more than 300 employees to collect and analyse data on women’s participation in the workforce, including the ratio of women in management. The law further requires these companies to formulate and make public an action plan to close gender gaps, including numerical targets, and to disclose gender-related statistics to the public (Abe, Javorcik and Kodama, 2016). Companies with fewer than 300 employees are not formally required to comply but are encouraged to do so (Sanford, 2015). The presence of a single female director has corresponded to a higher percentage of women in middle and senior management and new females hires in Japan (Thwing-Eastman et al., 2016). Japan’s Gender Equality Bureau statistics show that women make up 6.2% of managerial positions and 3.4% of executive level positions in private corporations (2017).

Norway

Norway was the first country to introduce a quota for women on company boards. The quota of 40% was introduced in 2005 via the Norwegian Public Limited Liability Companies Act, which covers public limited companies, state and municipality owned companies, and co-operative companies. Companies that do not comply are delisted (Shareholder Rights, 2016). Norwegian boards are close to gender parity, with 46.7% of board seats held by women, an increase of seven percentage points since 2013; women represent 41% of board members at the largest listed companies (Deloitte, 2017a).

United Kingdom

In 2010, the 30% Club was launched in the UK with a target of increasing the proportion of women on FTSE-100 boards to 30% by 2015 without using mandatory quotas. In 2016, it expanded its 30% target to FTSE-350 boards (currently at 24.1%) and to senior management of FTSE-100 companies by 2020. This initiative has led to a doubling of female directors on FTSE-100 boards, from 12.5% in 2010 to 26.6% in 2016. Its success has led to the launch of 30% clubs in Australia, Canada, GCC countries, Hong Kong, Ireland, Italy, Malaysia, Southern Africa, Turkey and the United States. Women currently hold 22.8% of all board seats in the UK (Deloitte, 2017a).

Notes

← 1. The revised G20/OECD Principles of Corporate Governance provide a non-binding reference for policy makers to build effective corporate governance processes: http://dx.doi.org/10.1787/9789264236882-en.

← 2. OECD-wide includes South Africa, India, Colombia, People’s Republic of China, Hong Kong China, Brazil and Indonesia in addition to the 35 OECD member countries.

← 3. The Gulf Co-operation Council groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE.

← 4. Data collection and research provided by Ethics & Boards Governance Analytics, information as of 23 May 2018.

← 5. The expression “the glass ceiling” first appeared in the Wall Street Journal in 1986 in article entitled “Breaking the Glass Ceiling: Can Women Reach the Top of America's Largest Corporations?” (Economist, 2009) and is defined by Merriam-Webster as “an intangible barrier within a hierarchy that prevents women or minorities from obtaining upper-level positions.” The term "sticky floor" is used to describe a discriminatory employment pattern that keeps a certain group of people at the bottom of the job scale. See “Women and the Labyrinth of Leadership”, by Alice Eagly and Linda L. Carlin in the Harvard Business Review, published in the September 2007 Issue, https://hbr.org/2007/09/women-and-the-labyrinth-of-leadership.

← 6. Article 72 of the 1996 Labour Law

← 7. Article 162 of the 2003 Labour Law.

← 8. Article 96 of the 2003 Labour Law.

← 9. Article 26 of 2010 Labour Relations Law.

← 10. Wall Street Journal, February 2018: www.wsj.com/articles/blackrock-companies-should-have-at-least-two-female-directors-1517598407.

← 11. The 2012 Jordanian Corporate Governance Code covers private shareholding, limited liability, and non-listed public shareholding companies.

← 12. Original French text: 2008 Code Marocain de Bonnes Practiques de Gouvernance d’Entreprise, section 3.4.1. Composition de l’organe de gouvernance: “La composition de l’organe de gouvernance est essentielle pour lui permettre de remplir au mieux son rôle. Il doit être composé de membres intègres, compétents, informés, impliqués, apportant une diversité (formation, parcours professionnel, équilibre hommes-femmes, âge, nationalités, …) de nature à susciter de vrais débats et à éviter la recherche systématique du consensus.”

← 13. Applies only to companies listed in markets regulated by the Qatar Financial Markets Authority.

← 14. Policy makers, representatives of stock exchanges, not-for-profit organisations, insolvency profession and business leaders from the countries of the Middle East and North Africa, including Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, the Palestinian National Authority, Tunisia, Syria, Saudi Arabia, Qatar, Yemen and the United Arab Emirates, gathered with international and regional experts on the occasion of the 5th Regional Annual Corporate Governance Conference organised by the Hawkamah Institute for Corporate Governance, the OECD and the Oman Capital Markets Authority and endorsed the Muscat Declaration.

← 15. The Economic Dividends for Gender Equality (EDGE) Certification is a global assessment methodology and business certification standard for gender equality. EDGE Certification has been designed to help organizations not only create an optimal workplace for women and men, but also benefit from it. EDGE Certification is currently working with nearly 200 organizations, in 50 countries and 23 industries.

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