According to the International Finance Corporation, only 13% of the 303 companies, surveyed in Pakistan in 2010, had more than one woman director on the board. This sample included publicly listed companies, large family-owned corporations, and private, unlisted companies.
Another review conducted in 2012 of the 97 largest publicly listed companies of Pakistan, which are part of the Karachi Stock Exchange-100 Index, revealed that only a few women are part of the country’s corporate leadership. Only three out of 97 companies, at the time, had women chief executive officers (CEOs).
The picture is much gloomier now that a similar survey conducted in 2017 by Profit of the 99 largest publicly listed companies of Pakistan (part of the KSE-100 Index) suggested that only one company i.e. Arpak International Investment Limited has a female CEO.
To top it all, officials from the company confirmed that the day to day operations of ARPAK are run by Mr Abbas Sarfaraz Khan, son of the on paper CEO Begum Laila Sarfaraz Khan. Begum Khan attends office occasionally and is an active member of All Pakistan Women’s Association.
Moreover, our study revealed that only 5.5% of the total 881 board of directors at the KSE-100 Index companies are women. Additionally, women serve on the boards of only 32 out of 99 companies under review.
There are numerous reasons behind this disparity. Many blame men, others blame women, and some, the overall system.
The Pakistan Institute of Corporate Governance (PICG) said in its report titled “Gender Diversity at Board Level” that the lack of qualified women in work environment is the top reason for the under-representation of women on corporate boards in Pakistan.
However, it can be argued that female professionals face numerous other barriers to being elected to corporate boards. There are societal norms and biases whereby male-dominated boards and directors frequently overlook qualified female candidates.
Moreover, the majority of Pakistani companies that have female board members tend to be family-owned enterprises, implying that female board members can be successful when they are able to bypass traditional social barriers through existing connections in the form of family members.
A close look at the corporate boards of companies like Dawood Hercules, Ferozsons Labs, JDW Sugar Mills, Kohat Cement, Lucky Cement, DG Khan Cement, and Muslim Commercial Bank present accurate examples of the given. The women members on the board of said companies are either wives or daughters of the owners.
Developed countries have tried to overcome the problem. Gender diversity growth is rapid in many developed countries. Three countries with the highest percentage of female workers are Iceland (78%), Denmark (75%) and Norway (71%). Four of the five lowest rates of female economic activity are in emerging economies: UAE (42%), Chile (39%), Turkey (25%) and Pakistan (22%).
Pakistan’s Female employment rank, among 50 countries studied in a report, is 49. Women on boards rank and women in parliament rank is 38 and 20, respectively. The overall rank of Pakistan is 50 out of 50 – that is we are at the bottom.
This not only elucidates the poor condition of the current corporate scenario, but also explains the deep rooted gender bias prevailing in the most developed sector of our society.
“There are limitations because being in business in Pakistan is like being part of a men’s club and they do not wish to welcome woman. An example can be Sind Club which does not accept female members to this day. They always have to be the wife of someone successful,” said Neelofar Saeed, the owner of Hobnob Group, which operates chains of Hobnob Cafe, Hobnob Bakery, and N’eco’s.
However, many, including Saeed, believe that the scenario is going to and must change in the years to come.
Given the relatively low number of female board members, it is unsurprising that gender diversity has become a focus of investors in recent years. In the wake of the 2008 financial crisis, many investors expect boards to lead companies in new directions, to introduce fresh perspectives and to focus more on risk mitigation.
According to a report by Glass Lewis, a global proxy advisory service, investors believe that new and different ideas can come from those boards that are diverse in race, gender, background and experience and that have appropriate levels of independence. It also said that investors have pressured regulators to require companies to provide more information about the racial and gender composition of their boards. This helps them create multiple ideas generated by diverse minds working in a field.
Board diversity is also seen as the key to ensure that a company is able to reach all segments of its market. It is questionable whether a company that provides products or services generally purchased by women can effectively gauge opportunities or challenges if no women are consulted or given a role in setting strategies or direction. However, unfortunately, this is the case with numerous companies in Pakistan and abroad.
According to a 2011 review by executive research firm CT Partners, 29 Fortune 1,000 consumer companies had no women on their boards. Clearly, this possesses strategic challenges for these companies, given that women control nearly 75% of consumer purchasing decisions in a household.
In addition to that, several studies suggest that greater gender diversity in the boardroom improves financial performance. A 2007 Catalyst study found that companies with more women on their boards outperformed companies with fewer women, relative to metrics such as return on equity, return on sales and return on invested capital.
There are other examples that indicate that the benefits of board gender diversity may be realized under certain circumstances.
A 2011 study of German public companies found two major benefits for companies that had greater number female workers:
- Consumer-oriented companies benefited from women holding decision-making positions, because women tend to control household purchases, thus other women understand better what appeals to them.
- Companies with large female workforces benefited from lower turnover and the ability to retain talented employees.
These and many other evidences can be taken into account when the current debate is in order. Another issue faced by women in the corporate sector is the pay gap prevailing in the market. The gender pay gap is influenced by a number of interrelated work, family and societal factors, including stereotypes about the work women and men ‘should’ do, and the way women and men ‘should’ engage in the workforce.
However, the pay debate is farfetched when the situation of gender diversity in the corporate world is far from ideal.
On the other hand, needless to mention, women are doing great for themselves and are moving ahead everyday.
“Reaching the top is normally organic and since women have only started coming into all fields in the last 10 years, I feel very soon you will see many women climb the corporate ladder and many board members will be female.” said Saeed.