In Latin American Boardrooms, Women are Scarce

The Wall Street Journal (21 March 2016)

Luisa Fernanda Lafaurie PHOTO: OCENSA
Luisa Fernanda Lafaurie PHOTO: OCENSA

Luisa Fernanda Lafaurie, the Colombian chief executive officer of Oleoducto Central SA, or Ocensa, has already been board chairwoman of the oil transportation company and a board member of several other companies, including the airline Avianca SA and the Brazilian company Companhia de Transmissão de Energia Elétrica Paulista, or CTEEP.

At 56 years of age, the executive, formerly Colombia’s Minister of Mines and Energy, has already worked at so many companies that in 2002 she was named one of the 100 most powerful businesspeople in the country by the local press. However, according to a new study, Lafaurie remains an exception in Latin America, where fewer than 7% of board seats are occupied by women.

New research from Egon Zehnder, a global consulting and executive search firm, shows that companies in Latin America are still lagging a long way behind the United States, Canada, and Europe in terms of the presence of women on the boards of their companies, mainly due to a corporate culture that still makes it hard for women to rise to leadership positions.

The “2016 Egon Zehnder Latin American Board Diversity Analysis” reviewed data from 155 companies listed on the stock market with a market value of at least US$1 billion – 10 from Argentina, 70 from Brazil, 22 from Chile, 12 from Colombia, and 41 from Mexico – and interviewed dozens of board chairmen and female directors at 61 companies.

The study reveals that 46.5% of the companies surveyed in Latin America had at least one woman on their board last year, a percentage far below the figures for Europe (88.8%) and the U.S./Canada (80.2%). An equally wide gap was seen in the percentage of female board members: 6.4% in Latin America versus 21.1% in Europe and 15.9% in the U.S./Canada.

Getting more women onto boards is now an important aspect of corporate governance practices throughout the world, and part of a broader effort by companies to boost workforce diversity. Beyond ethics, companies see diversity as a strategic advantage that allows them to benefit from the wider range of perspectives that people with different backgrounds, qualifications, nationalities, and of different gender bring to the workplace.

However, although the number of women on boards has grown rapidly in Europe, the U.S., and Canada in recent years – with quotas imposed by the governments of some European countries – progress in Latin America has been very slow. In Europe, for example, the percentage of board seats held by women increased by 8.4 percentage points between 2011 and 2015, compared to 0.5 percentage points in Latin America.

“Companies in Europe and the U.S. have included this issue on their agenda,” said Cristina Manterola, co-author of the study and part of Egon Zehnder’s Diversity and Inclusion group in Santiago, Chile. “For them, it is a key issue in terms of corporate governance to promote more women who may someday hold a position on the board.”

According to the report, the growing importance of diversity in the developed world means that Latin American companies with global expansion plans and access to foreign capital must do more to increase their number of women in leadership. Other recent studies also show that companies with more female senior executives and directors tend to be more profitable.

According to 41% of those surveyed in the study, the greatest obstacle to advancement faced by women in Latin America is the cultural prejudice that still prevails in the region regarding women’s ability to lead. Another 24% of participants cited the scarcity of policies helping women to balance their responsibilities at home and at work.

Lafaurie says she was lucky that her leadership was never called into question just because she is a woman, but she did face the dilemma of prioritizing her career or her family.

“Waking up every day and leaving a baby to focus on your career is a very hard decision,” said Lafaurie, who has two children. “It’s increasingly important for companies to create an environment that makes both tasks possible.”

The study cites the lack of board independence in Latin America, where the majority of companies have one controlling shareholder, as another obstacle to diversity. Lojas Renner SA, a Brazilian retail chain considered a rare example of a company with no dominant shareholder, has been trying to make its executive leadership reflect the women who form over 70% of its workforce, according to its chairman, Osvaldo Schirmer. “At Renner in particular, there are a large number of women in management and director positions,” he said.

The clothing retailer now only has one woman (it previously had two) on its eight-member board.

The study also shows that not all countries are in the same situation. In Colombia, for example, 67% of boards have at least one woman among their members, compared to 46% in Brazil and 40% in Argentina, which has the lowest proportion among the five countries surveyed. According to the study, the increase in diversity on the boards of companies in Colombia is the result of a policy initiated in the 1980s to appoint women to senior public positions. In Argentina, where companies faced a difficult business environment for several years, corporate governance took a backseat.

Manterola also says that women have to shoulder part of the burden of being ready to join boards. She recommends that women seek out positions of financial responsibility, raise their profile, speak in public, and build a network of contacts.

Lafaurie says that when she was Minister of Mines and Energy in 2001 and 2002, she sat on the boards of various state companies in the sector. This crucially influenced subsequent decisions by private companies to invite her to accept similar positions.

“To increase gender diversity on boards, women have to be visible,” the executive said.

One of the study’s findings is that boards and executives need to help female professionals to gain visibility by putting gender diversity on the agenda and reviewing their selection criteria to prioritize the search for qualified women.

When asked whether Ocensa has a woman on its board, Lafaurie laughed and said: “No, unfortunately not… I’m trying,” she added. “I’m making a big effort.

This article was translated by Egon Zehnder for this reprint. Dow Jones does not warrant the accuracy of the translation.
This article was translated by Egon Zehnder for this reprint. Dow Jones does not warrant the accuracy of the translation.

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Luis Garcia: Pocas mujeres integran las juntas directovas de empresas in América Latina in The Wall Street Journal (21 March 2016).

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