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Sat 24 May 2008 04:00 AM

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Boardroom blues

The number of women in the workforce is rising across the Gulf but few make it to the boardroom.

The number of women in the workforce is rising across the Gulf but very few are making it as far as the boardroom. Is it time for the glass ceiling to be shattered?

Lubna Sulaiman Al-Olayan became the first female board member of a corporation in Saudi Arabia in 2004 when she joined the top management of the Saudi Hollandi Bank.

Fours years later she is still the only woman on the board of a Saudi publicly traded company, in a country with a population of 27 million people.

Inheritance practices are also a contributing factor with some fiscal environments favouring male succession.

Of the 4254 board seats of companies across the Gulf, just 63 are held by women according to research report Power Matters: A Survey of GCC Boards from The National Investor and Hawkamah, The Institute for Corporate Governance.

That represents just 1.5% of the total. The figure is in stark contrast to the 13.6% female representation in American boardrooms and 22% in Norway.

Better representation of women at board level in the GCC is not just a battle of the sexes. Research indicates that women add a different perspective to the workplace, bringing in new skill sets and adding value to the corporate decision-making process with a direct impact on the balance sheet.

"This is not a gender issue of representation; it's a question of different sets of skills and abilities. Research shows that diversity can add value to boards," agrees William Foster, executive director of the Mudara Institute of Directors.

According to Catalyst, a non-profit organisation focused on women in the workplace, having women in the boardroom can significantly help improve financial performance.

In a study last year of the Fortune 500 companies, the group found that using return on equity as a measure of financial performance, companies with the highest percentage of female board members outperformed those with the least by an average of 53%.

"Women, for example, are better at employee relations and public relations in general than men so they bring a new perspective," agrees Dr Nasser Saïdi, chief economist at Dubai International Financial Centre.

Taking return on sales as a measure of corporate performance, companies with female members on the board outperformed their male-dominated counterparts by 42%. The report also finds that those companies with at least three female directors had notably stronger financial performance.

"It is not clear which way this goes. It could be that women do better financially and operationally or that well performing companies attract women," says Saïdi.

According to McKinsey & Company Middle East, soaring GDP growth across the Gulf region will raise average per capita income by over 80%, from less than US$20,000 to more than US$35,000.

But it's not just men who are benefiting from the regional economic boom. London-based fund management firm, Bramdean, estimates US$40bn of personal wealth in the Gulf is owned by women, up to 60% of which is held in cash.

While undeniably much of this wealth comes from the region's hugely successful family businesses, the number of females earning a high level of income is growing.

High-ranking female business leaders in the GCC include Dr Nahed Mohammed Taher, founder and CEO of closely-held Gulf One Investment Bank in Saudi Arabia, Salma Ali Saif Bin Hareb, CEO of the Jebel Ali Free Zone Authority in the UAE and Sheikha Lubna Khalid Sultan Al Qasimi, the first woman to hold a ministerial post in the UAE.Governments are also taking steps to promote more women in senior positions. In Saudi Arabia last week, the Swedish retail giant H&M announced it would open a female-only store which will be exclusively staffed by women. The move is part of an initiative by the Saudi government to boost employment of women in the kingdom.

Female representation in the government is also increasing. In Abu Dhabi and Dubai female representatives in both emirates account for 22.5% of total government positions, just behind Germany with 26.7% and Spain at 29%.

"The reality is that there are more educated women so therefore more in business," says Foster. But while more women may be taking up management positions, the region's largest corporations remain the exclusive preserve of men.

According to the Power Matters report, just one woman sits on the board among Qatar's publicly listed companies. In Abu Dhabi and Dubai the figure for female board representation is three and in Bahrain it is just four. "Clearly it is cultural," says Foster.

When collectively compared to most other countries with available information on board representation, female representation in big business within the six Gulf states is extremely low. The most notable exceptions are Kuwait which has 30 female board representatives while Oman has 21.

Both fare better than Japan and Italy which have just 0.4% and 2%, respectively.

The fact that Italy, an economically stable country, has such a low female board representation indicates that religion plays a large role in the equation. Around 95% of Italy's population is Catholic.

The GCC has similarly high number of practising Muslims. "In some ways we are finding many similarities between trends in Islamic countries and trends in Christian countries," says Amer Halawi, director of The National Investor. Religion isn't the only factor.

"What you often see in emerging regions is a dominance of family businesses and a patriarchal society similar to those found in Japan and Italy," says Foster.

"The combination of this and the fact that many women in society are only just becoming more common in senior executive positions means there isn't much representation on boards yet."

Inheritance practices are also a contributing factor with some fiscal environments favouring male succession and discouraging the few women who are granted seats through inheritance.

"Women also inherit [but] their inheritance is not translating into a board presence," says Saïdi.

Despite the worrying low numbers of female representation, the small steps being made in the private sector should further encourage publicly traded companies to follow suit.

The representation of women is likely to change as markets become more mature and a greater proportion of women become directors. The results of the Power Matters report only cover listed companies but a closer look at the private sector reveals greater female representation, even in Saudi Arabia.

According to the Khadija bint Khuwailid Businesswomen's Centre at the Jeddah Chamber of Commerce & Industry (JCCI), women own 1,500 of the total registered businesses in the kingdom and 20% of businesses in retail, contracting, wholesale and transferable industry sectors are registered to women.

In the UAE there are over 9000 businesswomen, with women accounting for 18% of the UAE's private sector. The figures are low compared to the US and Europe where women own up to 30% of all businesses but translating greater female representation onto boards is a slow process.

"If more women in the GCC are to make it to board level, attitudes will need to change," says Saïdi.

And that is unlikely to happen overnight.

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