Women Directors in Malta (WDM) have identified a series of principles which it believes will lead to greater gender equality and eventually improve the percentage of women in boardrooms if adopted in Malta.
EU statistics show that in 2013, women represented 3.5 per cent of board members of the largest, publicly listed companies in Malta, the lowest in the EU, far short of the EU average of 15.8 per cent. Women also account for only 3.5 per cent of non-executive directors and 6.8 per cent of executive directors, well below the EU average of 16.8 and 10.2 per cent respectively.
The problem is unequal or lack of opportunities. One cannot have true opportunity without equality. This inequality has led to a lack of talented women being identified and developed for executive positions. If Malta is to achieve sustainable change now and in the future, employers must focus their efforts on women at every level.
If we examine what steps are being undertaken and research from other countries, we can identify key principles that could be applied in Malta. But two facts cannot be ignored: men’s participation is needed for real change; and no one initiative will fit all countries due to different legal, social and cultural backgrounds and the way corporate governance takes shape.
The Female FTSE Board Report 2015 by Cranfield International Centre for Women Leaders points to three approaches to change:
Voluntary Targets: These targets can be strengthened by a number of supporting actions, namely:
• Voluntary Search Code, whereby recruitment firms agree a set of principles by which they will help to appoint more women directors.
• Changes in Corporate Governance Code, whereby every listed company is required to publish its diversity policy and the numbers of women on its board.
• Required Narrative Reporting by the Government, so that companies need to disclose the number of women at different levels.
• Regular government communications highlighting successes or reminding of the need to change.
• Regular research reports on progress and economic benefits.
Quotas: Over 20 countries have adopted quotas for women on corporate boards. Norway went from nine per cent women on their boards in 2003 to over 40 per cent in 2012. Companies that do not comply face being dissolved, so the penalties are serious. However, this is misleading as analysis shows that most appointments in Norway are at non-executive level.
Corporate Transparency: In several countries, disclosure standards for listed companies include requirements to report on gender diversity policies and numbers of women and how they intend to increase their female executives. Visible targets are needed to review and report gender metrics on a regular basis. Unless companies can articulate their plans for increasing gender diversity in writing it is unlikely anything positive will happen. CEOs have a specific responsibility to lead on this agenda.
WDM does not believe that voluntary targets is the way forward. Board appointments should be made on the basis of business needs, skills and ability. All companies are different. It is in their own interest to set and develop their targets and strategies, so they can implement the necessary change in the most suitable ways.
WDM also does not believe that legislation to increase the number of women on boards in Malta is appropriate as this would increase a sense of tokenism, and that male board members may be replaced by less qualified women. Such action would also be resented by women as appointments should be ideally on the basis of merit.
What actions can be taken?
1. Getting chairmen to champion gender diversity is an important step but CEOs and senior managers must join chairmen in this effort to focus on the executive pipeline. The only way of growing and sustaining the flow of female talent is to change the predominant culture. Culture change can only be led and managed from the top and CEOs need to champion this next stage.
2. Develop a culture where real meritocracy is nurtured. There needs to be continued, consistent, systemic change where female talent is better represented throughout the whole organisation, treated as any other process of organisational and social change. There is need to have a clear understanding of the current situation, to set aspirational goals and targets, to develop a road-map to achieve these (including responsibilities and accountabilities) and to report on progress on a regular basis.
3. Extend greater visibility in the board appointment process and the selection of and interviewing practices used by current boards, despite awareness that these interviews sometimes lack rigour.
4. Executive search firms should draw up a voluntary code of conduct addressing gender diversity and best practice that covers the relevant search criteria and processes relating board level appointments. Written by executive search firms, the best practice code for executive search firms tasked with board level and other senior appointments will help them demonstrate their ongoing commitment to supporting diverse boards, building on and sharing good practice.
5. Ensure women make more headway not only as non-executive directors but as chairs, senior independent directors and heads of nominations committees where they are under-represented.
6. Champions of change outside of business are also needed, such as WDM, the government, media and researchers, to ensure that progress continues.
Michelle Gialanze is president, and Louis Naudi is a committee member, of Women Directors in Malta.