Bringing women into mainstream business not just a matter of compliance

Bringing women into mainstream business not just a matter of compliance

A growing body of evidence suggests that gender diversity plays a positive role in enhancing corporate performance. That’s the thinking that lies behind the decision by the South African Institute of Professional Accountants (SAIPA) to sponsor the first ever Gender Mainstreaming awards.

“We know that accountants are important catalysts for business growth and ultimately job creation. As part of our strategy to increase the number of accountants in the profession, and to maximise their impact, we are very focused on increasing the number of female professional accountants,” says Faith Ngwenya, technical executive at SAIPA. “South Africa has the legislation in place but we should look beyond mere compliance to see the reason behind the law. When we understand the business case for gender equity, we’ll see it become the ‘normal’ way of doing business—and the need for the law will reduce.”

Seminal studies by McKinsey show that there are strong reasons for corporates to pursue gender diversity, leaving compliance aside. For example, women are an increasingly important consumer segment and are frequently decision-makers—even in surprising categories like the purchase of cars. Thus having women not only in one’s company but participating in its decision-making is sensible.

McKinsey also found a clear correlation between a company’s level of excellence in nine key organisational criteria and its financial performance. Excellence in these criteria tended to translate into operating margins and market capitalisation “twice as high as those of lower-ranked companies”, says the report.  But there’s an interesting correlation between this outperformance and gender: those companies with three or more women in senior management functions score more highly on each of these crucial organisational criteria.

This performance enhancement is even greater once critical mass of women has been achieved.

Financial analysis further confirmed that companies with a high level of gender diversity outperformed their sectors in terms of return on equity, operating results and growth in share price.

“This research is backed up by many other studies that link gender and other diversity to financial performance. This correlation lies behind the Gender Mainstreaming Award programme,” says Colleen Larsen of Business Engage, the company behind the awards. “We want to move beyond measuring whether people meet the letter of the equity law and try to look at how they are using gender diversity initiatives to grow their businesses.”

The Woman Empowerment and Gender Equality Bill, which is yet to be put to Parliament, will make it law for companies and government departments alike to fill a minimum of 50 percent of senior and top management positions with women. Another initiative is the Thirty-Percent Club, which seeks to ensure a minimum of 30 percent female board participation—a more realistic goal in the short term, Larsen believes. As the McKinsey study shows, there needs to be a critical mass of women in a company’s decision-making structures to generate the “gender dividend”.

Ngwenya says that the accounting profession remains too uniform and needs to become more diverse in many ways, including gender. “SAIPA is making progress in changing the demographics of its membership as a new generation of professional accountants goes through our training and accreditation process, and as an organisation we are gender diverse as well,” she says. “We want to become more effective and to help our clients become more effective too.”