Women in Leadership

In the past, we hardly have women on boards in Ethiopia. It is true that the developed nations report that they are committed to promote diversity. But that commitment has not been translated in to meaningful progress. Prime Minster Abiy Ahmed (PhD), however, defied the odds by appointing women to make up half of his cabinets. This huge turnaround caused a spark in a country where men have a mounting presence in top government positions. Undoubtedly, this has a far reaching consequence with regards to solving the boardroom diversity challenge. In this article, I would like to emphasize on what we should be done in Ethiopia to give space for women to enable them to climbthe corporate ladder and to have a place on boards.

Women are still vastly unrepresented at every level. According to a research by McKinsey, only about one in five senior leaders is a woman, for woman of color, it is even worse, that is, it is one in twenty – five. The problem is not staff turnover. Both men and women are leaving the corporate world at similar rates. The problem starts with hiring and promotions. Companies disadvantage women from the very beginning. This is because research has revealed that we tend to overestimate men’s performance and underestimate women’s as men are hired and promoted based on their potential while women are hired and promoted based on proven track record, in turn, disadvantages women as track record at the start of everybody’s career is very short . This uneven playing filed impacts profoundly the talent pipeline.

Diverse Workforce
Phillips in his study published in 2014 argues organizations open to diversity are more creative,innovative, agile and demonstrate a competitive edge with regards to better decision making and problem solving , all of which leads to an improved bottom line. This is because diversity increases organization’s agility and resilience by helping employees generate a better variety of solutions to problems and allocation of resources than more homogenous workforces.

Over the past two decades, we have witnessed a number of researches that demonstrate the benefits of workforce diversity. A 2012 study conducted by University of Maryland and Columbia University highlighted that having women at the top leadership levels leds to an increase of USD42 million in firm value. The study also looked at innovative intensity and found that organizations which promoted innovation intensity enjoyed more financial gains when women were part of the top leadership team.

McKinsey & Company in its January 2018 article entitled ‘Delivering through Diversity’, reported that companies in the top quartile for gender diversity on executive teams were 21Pct more likely to outperform on profitability and 27Pct more likely to have superior value creation. Companies in the top quartile for ethnic/cultural diversity on executive teams were 33Pct more likely to have industry-leading profitability.”On the contrary, the data showed that not being diverse can hurt a company’s performance. “Overall, companies in the bottom quartile for both gender and ethnic/cultural diversity were 29Pct less likely to achieve above-average profitability than were all other companies in our data set.

All of the above showcase that when organizations are not committed to promote workforce diversity; they are leaving profits on the table and are outperformed by other organizations. You might wonder why diversity remains elusive for organizations despite the fact that they are aware of the benefits of a diverse workforce. Studies have noted that having diversity in the workplace has its own challenges, that is, it can cause unease and discomfort in social interactions. It can also raise distrust, contribute to increased perceived interpersonal conflict, stymie communication, threaten a group’s sense of cohesiveness, and increase disrespect among workers, according to Philips. Fundamentally, people are naturally attracted to work with people of similar race and cultural background. This unconscious bias profoundly impact workplace diversity. This is very much the case in Ethiopia where the society is paternalistic.

Prime Minster Abiy has walked very important steps to bring more women onboard. While celebrating this huge achievement, it is important to keep this momentum going by modeling this exemplary deed to the corporate boards as well as cascading it to the workforce. The following are some of the suggestions I forwarded to increase the representation of women on the corporate boards.

Enacting Law Requiring Firms’ Board to Include Women
It is important to have a blunt instrument to increase the representation of women on corporate boards given implicit biases. Thus, Ethiopia needs to pass a law that requires boards including private corporates to have a minimum of one woman on their Boards of Directors. The country might wish to draw on experiences from some European countries, including Germany, Sweden, Iceland, Finland and France where these countries imposed quotas and fines requiring companies to add women to their boards.

Leadership by the Government
Government needs to provide clear direction by modeling examples of good practice in the public sector and actively promote gender diversity on public sector boards. Besides, the government needs to develop gender diversity policies for private companies to increase women’s representation in the boardroom and the workforce. Companies should set clear and achievable goals for the representation of women and regularly monitor progress against these targets.

Increasing the Talent Pool
Effectively nurturing an active talent pipeline deepens the pool of women potential candidates for board positions. I strongly recommend that companies bridge the gender equity gaps at all levels by reviewing recruitment, promotion and talent development systems on a continual basis to ensure they are unbiased. It is important that companies invest in inclusive leadership training mentoring high-potential women and removing barriers that prevent women from rising to leadership positions. Senior leaders need to keep an eye on promotion rates, aiming for proportional promotion and retention at each level. To promote the most qualified female employees, companies need to establish a culture and promotion process that equally honors male and female talent and institutionalizes systematic succession planning. It is imperative to sponsor to high-potential women, by introducing women to networks, nominating them for board openings and championing their inclusion on boards.

Education, Mentoring and Support
The government in collaboration with the private sector and non – governmental organizations need to embark on providing a supportive framework for girls and women to get support in their careers to improve conditions of diversity in the business world. For example, it is important to set up girls’ career institute for them to learn about career choices, to explore women’s issues and to encourage awareness of contemporary problems and at the same time to gain experience from successful women and to receive mentorship opportunities.

Changing the Mindset
Research by Mckinsey found that there is a general conviction to increase the percentage of women in the workforce and boards as the right thing to do. What is missing in terms of fast – tracking gender diversity on boards is a sense of urgency: “People believe we are going to get there eventually. But that is not enough; it’s too slow. The real obstacle is the lack of urgency.”

Essentially, it is important to make meaningful changes particularly by CEOs and chairs of boards of directors by making this essential strategic business imperative. They need to use their individual and collective influence to ensure the issue of women’s representation in leadership is elevated on the national business agenda.

In conclusion, women are doing their part; the government has paved the way for a much more inclusive cabinet. It is important now to double down on this effort to ensure that women have opportunities in senior management roles and boards.

7th Year • Dec.16 – Jan.15 2019 • No. 69