Women in Leadership: reshaping the global socio-economic debate towards a more gender balanced world

Gender and Corporate Governance

The benefits of promoting women on boards

Promoting gender balance on company boards is good for business because women bring different experiences and perspectives to the table that improve decision-making. Evidence shows that greater gender diversity in corporate leadership brings three main benefits to companies. First, gender balance supports stronger company performance. For example, among 3,000 of the largest global companies in OECD countries of North America and Asia surveyed over the past 3 years, companies with at least 1 female director generated 3.5% higher returns on equity1; companies with more than 15% female senior managers have 50% higher profitability compared to those with less than 10%[1]. Furthermore, gender balance at work also improves company reputation and employee retention[2].

The presence of women in business also has the effect of minimising ‘groupthink’[3], meaning a reduced number of governance-related controversies. Of 2,400 global companies surveyed, those with 3 or more women on the board suffered 24% less governance-related controversies than average[4]. Finally, promoting gender balance on boards induces better ESG risk management. Of 6,566 global companies surveyed, those with an AAA risk rating had on average 4% women on boards compared to 1.5% for CCC-B rated companies[5].

The enduring glass ceiling

Yet, despite the obvious benefits, reaching gender balance is still a distant goal, and the infamous glass ceiling in corporate leadership remains intact. The percentage of women on boards in OECD countries was only 20% in 2016, up slightly from 16% in 2013, and in 2016, less than 5% of CEOs were women compared with 2% in 2013[6]. Despite progress, these figures are still too low, and various hurdles need to be addressed. In particular, two cultural issues stand out: informal workplace practices, which limit the implementation of gender-neutral policies, and the underlying unconscious bias on an organisational and social level, which reinforces these first two problems. A survey of 800 international business managers across a range of industries in 10 European countries has shown that 55% had an implicit bias favouring men in corporate leadership positions.

The role of the board in promoting gender diversity

The OECD can help countries ensure that they foster a national policy framework that is conducive to gender balance on boards; however, boards themselves are the vehicle for change. As stated in the G20/OECD Principles of Corporate Governance, “Boards should regularly carry out evaluations to appraise their performance and assess whether they possess the right mix of background and competences.” A 2017 study by McKinsey & Company[7] reviewing the top performers in terms of gender diversity on boards of S&P 500 companies found that several key policy tools had been used by successful companies. All made a public and visible commitment to diversity, and set new principles for decision making (i.e. include women on every candidate slate). Another measure is the establishment of an expanded board hiring criteria beyond the current CEO and C-suite with the consideration of candidates based on the right expertise, not just prior board experience. In addition, all successful companies maintained an active pipeline by cultivating long-term relationships with perspective candidates.

A growing number of OECD jurisdictions have adopted measures to promote women’s participation on corporate boards and in senior management since 2017, most often via disclosure requirements and regulatory measures such as mandated quotas and/or voluntary targets. In terms of disclosure requirements, 49% of the 49 jurisdictions surveyed in the 2019 OECD Corporate Governance Factbook reported having established requirements to disclose gender composition of boards, compared to 22% with regards to senior management. Of the 49 surveyed jurisdictions, 18% (including Denmark, France, Ireland, Norway and Spain) have adopted mandatory quotas for listed companies requiring a certain percentage of board seats to be filled by women; 16% rely on more flexible mechanisms such as voluntary goals or targets while 6% resort to a combination of both.

The role of institutional investors and asset managers in promoting gender diversity

Institutional investors’ involvement in achieving gender balance on boards is important because of the size of the assets they manage. They have doubled since 2010, to total USD 84 trillion in OECD countries in 2017,[8] thus have enormous potential to drive the kinds of changes the community expects. At an OECD event on Shareholder activism as a tool to increase women on boards (March 2018), various large investors (BlackRock, State Street Global Advisors, Calpers) explained how they have taken important steps to promote greater board diversity, with positive results. Blackrock highlighted that it has voted against the re-election of directors at more than 400 companies who fail to encourage diversity on boards.

The OECD’s two instruments for corporate governance, the G20/OECD Principles of Corporate Governance and the Guidelines for Corporate Governance of SOEs, promote gender balance on boards and in senior management. In fact, the 2019 edition of the OECD Corporate Governance Factbook, launched at the G20 Finance Ministers and Central Bank Governors meeting in June 2019, includes new data on women on boards and in senior management, including on the requirement to disclose statistics on gender composition, quotas or targets for achieving gender balance on boards, and sanctions or penalties for non-compliance with mandated quotas.

Women in Public Life

In 2019, we launched The Baseline Report for the 2015 OECD Recommendation on Gender Equality in Public Life. Within public administration, women continue to be over-represented in both low-level job categories and part-time work – women make up a staggering 75% of part-time workers in the public sector. Moreover, women still represent on average less than one third of senior positions in the civil service and Supreme Court judgeships. Similarly, women made up, on average, only 29% of parliamentarians in OECD countries in 2018 and occupied 28% of Ministerial posts in 2017. It is adequate to say that progress in promoting gender balance is too slow. In legislatures and senior roles in the public service, there has only been a marginal increase (around 2%) since 2012 in the proportion of women in these jobs.

Gender Equality and Family-Friendly Policies

Currently, the average gender pay gap is still almost 13.8% on average in OECD countries, a slow progress considering it amounted to 15% a decade ago. We must promote family-friendly policies, which include subsidized childcare, care for the elderly and paid parental leave for both mothers and fathers. Employers and unions have also made it possible for workers to opt for more flexible and family-friendly working hours. In fact, family-friendly policies have a positive impact on growth. Over the past 50 years for instance, family-friendly policies and associated increases in female employment in Nordic countries have boosted growth in GDP per capita by between 10% and 20%.

On average among OECD countries, full convergence is projected to additionally increase, by 0.6 percentage points, the annual growth rate of GDP per capita, with an equivalent increase in GDP of 12.0% by 2030.

SIGI 2019 shows that globally, women undertake 75% of unpaid care and domestic work. Across the OECD, men spend 2.5 hours on unpaid work daily compared to 4.5 hours for women; in Canada, women spend 3.75 hours daily compared to 2.5 hours for men. This severely limits the ability of women to participate in the labour force. In an effort to get parents to share caregiving more equally, many countries now reserve part of parental leave for the exclusive use of fathers. Since 2007 in Germany, if both parents use at least two months of paid leave each, the household is granted an additional two months of paid leave, which has seen an increase of 14% in the proportion of children with a father that took parental leave. Access to early childhood education and care is also crucial for gender equality, empowering both parents to work when children are young. 

Violence Against Women

Violence against women remains a global pandemic. Worldwide, more than one out of three women have experienced physical and/or sexual intimate partner violence or non-partner sexual violence in their lifetime. The OECD Gender Equality Questionnaire illustrated that governments prioritise this issue as a crucial front in the battle for gender equality – 21 of the 37 governments adhering to the OECD Gender Recommendation listed violence against women as one of the three most urgent gender equality issues in their country. On the 5-6 February 2020, the OECD will host its first ever High-Level Conference on Ending Violence Against Women: Taking Public Action to End Violence at Home. It is time to recognize that violence against women is a widespread problem that has to do with gender-based expectations and perceptions, masculinities, lack of access to justice, and more. In 2018, 27% percent of the global female population still thought domestic violence was acceptable under certain circumstances. It is time to act now, by using our positions as women in leadership to counter violence against women.

What is the OECD doing?

The OECD has worked on a number of contributions that range from recommendations to working groups and support programmes. Our 2013 and 2015 OECD Gender Recommendations provide guidance on how to advance gender equality in education, employment, entrepreneurship and public life. Moreover, the Gender Toolkit offers an innovative path to closing the implementation gap and making gender equality a reality, mainstreaming it into different policies, including trade, investment and the environment. A Working Group on Gender was launched as part of the Network of Foundations Working for Development, or netFWD, chaired by the Fondation CHANEL.

We are also supporting women’s empowerment in Partner countries through our regional programmes. Some programmes aim to incentivise young girls to study STEM careers, like our programme Ni?as STEM Pueden in Mexico, which has successfully organised a number of workshops and events to encourage young Mexican girls to challenge gender stereotypes and pursue STEM education.

Let us not forget SIGI, a proof of the OECD’s commitment to measuring and addressing gender-based discrimination across national, regional and global policy responses, and capturing changes in social institutions and gender roles. Finally, we are also launching the Working Party on Gender Mainstreaming in Governance in March 2020.

[1] Credit Suisse Gender 3000 (CSG 3000) data covers 27,000 senior managers from 3,000 of the largest global companies. Companies are based in 50 countries and cover Telecoms, Finance, Consumer staples, Utilities, Industrials, IT, Energy and Materials. ‘“The Credit Suisse Gender 3000: Women in Senior Management ’The Credit Suisse Gender 3000: Women in Senior Management’, Credit Suisse, 2016.

[2] ‘The Value of Board Gender Diversity vis-a-vis the Role of the Board in the Modern Company’, Kamalnaath, 2015; (MCBI, 2016; Catalyst, 2017; Hunt et. al., 2015)

[3] Groupthink is a term first used in 1972 by social psychologist Irving L. Janis that refers to a psychological phenomenon in which people strive for consensus within a group. In many cases, people will set aside their own personal beliefs or adopt the opinion of the rest of the group.

[4] Women on Boards: Global Trends in Gender Diversity on Corporate Boards’ MSCI, November 2015. MSCI ESG Research identified and assessed the severity of governance controversy cases implicating the 2,400+ companies in the MSCI ACWI coverage universe between 2012 and 2015. For this analysis, they focused on the 3,224 governance-related controversy cases dated between 2012 and 2015 across MSCI ACWI companies.

[5] MSCI ESG Research. (2014). “Governance issue report. Survey of women on boards 2014.” MSCI, Inc. MSCI ESG Research analysed 6,566 companies in 58 countries and 12 dependencies and special areas of sovereignties. This includes the constituents of the MSCI World Index, the MSCI Emerging Markets Index, the Russell 3000, and most of the best known large-cap indices in Europe, North America, and the Asia/Pacific region.

[6] OECD Gender Data Portal, 2017.

[7] Article - McKinsey Quarterly - January 2017, How to accelerate gender diversity on boards: https://www.mckinsey.com/featured-insights/leadership/how-to-accelerate-gender-diversity-on-boards

[8] OECD (2018), ‘OECD Business and Finance Outlook 2018’, Upcoming.