Female participation in governance positions of a business has been shown to have positive results not only for diversity, but also for income growth. In the GCC the rate of participation remains low, however, a recent survey by Strategy& reveals that improvement is expected in the coming years. This improvement follows, among others, from the higher participation rates in all levels of education.
Around 50 to 60 years ago a boom period for small businesses in the Gulf Cooperation Council* (GCC) area began. With a combination of limited foreign competition and favourable macro-economic conditions, the stage was set to grow businesses that now make up 80% of the regions non-oil GDP. The vitality and future of these businesses is important for the region as a whole, and with many about to be passed to the next generation, changes are abound in the region.
Strategy&, in cooperation with the Al Sayedah Khadijah Bint Khuwailid Center, recently released its ‘Leveraging an untapped talent pool’ report. In this research, the consulting firm focuses on the level of female diversity in the GCC small business environment; it explores the benefits women produce and the barriers they face in their engagement with family businesses. The report builds on research by Credit Suisse that found that large companies with female board members tend to outperform male dominated boards, citing that over the past six year period net income growth was 40% faster in companies with at least one female director on the board.
In terms of the current trend in the GCC region compared to global averages, the participation of females in board or managerial positions continues to be low. Globally there is an upward trend for women gaining access to the highest echelons of business, with women in senior management positions globally increasing from 19% in 2004 to 24% in 2014. In GCC countries participation rate generally remain low, with the UAE out ahead at 14% of managerial positions filled by women, but only 1% of governance positions. Saudi Arabia only has 0.1% female board participation.
The insight and touch of women is particularly strong in ‘emerging markets’, with 43% of senior managers in Russia, 41% in Indonesia, and 40% in the Philippines — ‘developed”’ economies show less prevalence, with 22% in the US, 20% in the UK, 14% in Germany, and only 9% in Japan. In terms of board member representation, there is a reversal, with women more likely to sit in developed countries.
To identify what is holding back female participation in the GCC area, and the potential financial benefit produced by their perspective on the board, the authors** engaged in qualitative interviews of 30 family run businesses across the GCC region. Of the participants, 77% were from Saudi Arabia, 13% from the UAE, 7% from Kuwait and 3% from Bahrain. The majority were second generation businesses and 63% of those interviewed were male.
For female respondents the biggest issues to inclusion in their family’s business were support from family members at 56%, while for males this was only perceived as an issue for women by 17%. Full time dedication to their own family was found to be an issue by 31%, compared to 17% of males seeing this as an issue. 50% of males believed that females are less accepted socially, compared to 31% of females, while 50% of males don’t believe females fit in their sector, compared to 6% of females.
According to Strategy&, there is optimism that women will be able to take a more prominent role in the coming years, while 30% of respondents expect no change, 50% say that conditions for women are set to improve in the coming years. With 35% believing that a significant increase will occur in women’s employment in the family business and 20% believing that there will be a significant increase in women present in the board of governance. In addition, 55% believe that women will drive significant development in family culture and disseminating its values.
Three factors are set to contribute to these developments according to the authors:
• Females have higher participation rates in all levels of education and are taking on more ‘male’ dominated areas.
• The move to third generation businesses is opening up the opportunity for women to take an active and leading role in the future of their family’s business.
• Female participation rates are currently averaging 30% in the region, compared to 70%-80% in developed economies. This is changing however, with the issue placed in the “forefront of national agendas.”
BCG and Dubai
Recently The Boston Consulting Group, one of Strategy&’s key rivals globally and in the Middle East region, was hired by the Economic Council of Dubai to support the emirate with boosting the maturity of family businesses in the region.
* The Gulf Cooperation Council is a regional intergovernmental political and economic union consisting of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
** The research was headed by Strategy& professionals Fadi Majdalani (Partner; based in Beirut), Ramy Sfeir (Partner; based in Abu Dhabi), Patrick Nader (Senior Associate; based in Beirut) and Basmah M. Omair, Executive Director of Al Sayedah Khadijah Bint Khuwailid Center.