Women on boards investment in gender diversity
A growing number of studies shows that a gender-diverse board can positively impact a company’s performance. OECD, MSCI, and Catalyst reports have shown that companies with gender-diverse executive committees outperformed those without women in senior-level positions, achieving an average of 47 percent higher returns on equity (ROE) and 55 percent more significant gross income. Furthermore, diversity has enhanced internal controls, vital organizational structures, and employee retention and engagement levels.
The boardroom is where strategic decisions are made, governance is applied, and risks are controlled. Globally, there is progress in increasing the percentage of women on boards, from 20.4 percent to 30 percent and 50 percent in 2029 and 2045. Unfortunately, the rate of women on corporate boards in Jordan remains one of the lowest in the world, which means that women are not part of the decision-making process.
Excluding half of the population from economic and social life can be very costly. It has been estimated that the MENA region loses up to $575 billion in regional income due to the current levels of gender representation. Women only generate 18 percent of GDP in the MENA region, compared to a world average of 37 percent. Increasing women’s economic activity to the levels of men could boost regional GDP by 47 percent.
Governments, multilateral institutions, and private-sector organizations should think how private and public finance can better incorporate gender concerns to ensure that those trillions of dollars flow effectively and equitably. McKinsey predicts that reaching gender parity by 2025 could increase GDP by $12 trillion globally and $0.6 trillion in the MENA region alone.
Today, women account for about 70 percent of the global consumer demand and control about $28 trillion in annual consumer spending. For companies to thrive and grow, corporate boardrooms need to reflect the diversity of their consumer base.
The Kingdom’s efforts to economically empower women have made it reach one of the leading regional rankings on the gender gap index (2022). However, Jordan ranks 122nd in global gender equality, with a 125th ranking in women’s economic participation and opportunity, and 66th in education.
UNICEF estimates that an increase in female participation in the Jordanian labor force by 25 percent over the next seven years would help Jordan’s GDP to grow by 5 percent annually.
Despite women accounting for 49.3 percent of the total population, and women between the ages of 15 and 24 boasting a 99.11 percent literacy rate (UNESCO, 2019), women’s participation in the labor force remains low at 14 percent to 15 percent, compared to 54 percent for men (Department of Statistics). Furthermore, women hold just 3.5 percent of corporate board seats in the country (IFC).
Women hold a wealth of talent and resources that companies can tap. By accessing the underutilized talent pool of qualified, competent, and motivated women, effective boards of directors could be created that are crucial to an organization.
All on Board is an ambitious Jordanian stepping-stone that provides a comprehensive database of competent, qualified Jordanian women to help increase their presence in private sector decision-making roles. Encouraging women to assume leadership positions will catalyze and strengthen the economic base, create jobs, stimulate growth, and stabilize markets.
Change is happening, and the global business case for more women on boards and in leadership posts will require a significant shift in corporate culture, attitudes, and behaviors.
Top leadership commitment is critical to creating a sustainable and meaningful change toward increasing women’s board participation. Companies must build a pipeline by attracting and promoting qualified, talented women and developing a gender diversity strategy that fits their and industry’s needs.
Hamzeh S. Al-Alayaniis a board member of a Jordanian public-sector government investments management company and a regular regional energy and industrial commentator.