Recent studies reveal the growing incidence of women heading businesses in Latin America. According to the World Bank, over 70 million women have joined the labor force in Latin America over the past 20 years, playing pivotal roles in both micro and small enterprises – indeed women are huge participants in both the formal and informal economies across the region, to key positions in the corporate world.
This is not limited to the business world. Latin American women have been empowered for decades, playing critical roles in reducing poverty and influencing decision-making at every level. Latin America, for example, elected female presidents long before other regions did –nine since 1974. The ‘feminization’ of business has also taken place in the past few years in the region, with a flurry of female CEOs and among the top management of both local and multinational corporations in South and Central American countries.
Gains in women’s involvement in society, politics, and business can be attributed to better access to education, especially at a tertiary and graduate level; maturing democratic processes, and the cultural changes of the role of women. This has offset, to a large extent, the region’s traditional culture of ‘machismo’, especially among the middle and upper income segments. However, there are still many challenges to overcome through the region in order to narrow the gender gap in all things business.
When Female Entrepreneurs Conquer…
The Women’s Entrepreneurial Venture Scope 2013, Commissioned by the IDB’s Multilateral Investment Fund and carried out by The Economist Intelligence Unit, published in July, measures the prevalence of entrepreneurs in twenty countries across Latin America and the Caribbean. The study ranked twenty countries across Latin America and the Caribbean in terms of security and stability, business climate, access to finance, capacity and skills, and social services.
According to the study, women lead 23% of small businesses (SMEs) in the region, showing an abundance of ‘opportunity-driven’ female entrepreneurs, that is, those who seek to form a small business because they see opportunities . Among the key findings of the study –countries with more women entrepreneur-friendly environments are also more competitive as a whole.
According to the results, Chile, Peru, Colombia, and Uruguay are the top 5 countries (in that same order) in terms of environment for female entrepreneurs, with healthy macro environments, strong supplier diversity initiatives, prevalent government support for SMEs, and with strong female enrollment in higher education. Mexico grants some of the best financing opportunities for women entrepreneurs in the region; and education and training is especially strong in Peru and Colombia. Property rights gender inequality is more accentuated in Central America (with the exception of Guatemala) than in South America.
The obstacles are there, of course. Informality, according to the results, is the first. Informal sectors in the region are huge, and women-led SMEs have a hard time entering the formal sector (55% – 91% of women’s entrepreneurial activity in the region is in the informal economy). This pretty much excludes these enterprises from financing opportunities, limiting opportunities of expansion, innovation, training, etc. Low access to credit is also very common in the region for women entrepreneurs, and those who do have some sort of bank financing generally lack access to more sophisticated financial products. Public sector supplier-diversity is still a novelty in most countries, and private-sector supplier-diversity initiatives are rare.
At the Corporate Level
In a study called “Women Matter: A Latin America Perspective”, released earlier this year, McKinsey studied 345 listed companies in Argentina, Brazil, Chile, Mexico, and Peru, looking for a correlation between the gender composition of its top management, and the companies’ financial results. The results: there is a link between high-performance companies and the gender composition of their executive committees. Indeed, field work revealed that average ROE and EBIT margins were higher when there was at least one woman participating in the company’s executive committee.
Although it might be that women are attracted to seek employment in higher-performance enterprises, it begs the question if there is in fact a difference between the gender skills that favors higher results. Some of it, according to McKenzie, is demographics. Women account for over 50% of consumers in Latin America, which gives them valuable insight into consumer behavior. Also, most college graduates are women (also around 50%, regionally), so companies are bound to hire female recruits as often, or even more often, than male ones. Figures supporting this are clear – in 2010, over 52% of all tertiary students in the six countries in the study were female. These results coincide with the WEVenture Scope, which also found that most countries in the region score well in terms of educational opportunities and business skills training for women.
Despite this empirical evidence, other research performed by McKenzie and presented in the same study points to a persistent under representation of female executives on top management in corporations across Latin America. Up to 2011, women held just 5% of board positions and 8% of seats on executive committees in the companies included in the analysis, which is similar to average levels in Asia (6% and 8%, respectively), but much lower than Europe (17% and 10%) and the US (15% and 14%).
The view from the ground seems to be the same. According to Carolina Du-Breil, who has managed Human Resources at PricewaterhouseCoopers Dominican Republic for 11 years, “Women come a long way in the professional executive market, but still the statistics show that the top executive positions are mostly directed to men. In our market, women seem to thrive as entrepreneurs and leading family-owned businesses. Our anecdotal experience is also supported by our own PwC DR Salary Survey (SEIS), which also indicates a salary bias that favors men in top executive positions.”
In this sense, Du-Breil adds, “we also have to note that the salary gap has shown a decreasing trend in the last decade. As part of a regional and global network, I can also tell you that we have seen very similar trends in other countries in the Latin American region.”
By country, the business case shows that in a country by country basis, Colombia had the highest female representation in top management, followed by Peru, Chile, Brazil, Argentina, and last among the studied countries, Mexico.
What is holding Back Latin Women?
The study finds that the problem is not that Latin women are still choosing to remain at home, but rather that most countries in the region have yet to implement the structural reforms that will enable them to better access labor markets. Wages, for example, are still far from being equal to men’s: according to McKenzie, Argentina had the narrowest gap in 2010-2011, when the ratio of women’s to men’s wage was 82/100 (although this was up from 72/100 in 1989-1991). The lack of government-sponsored child support and other such services is also a factor in most of these countries.
Furthermore, the surveys conducted for the study indicates that worldwide, the polled man and women perceive the “double burden” syndrome (since women have to carry most of the weight in terms of domestic responsibilities) and the “anywhere, anytime” performance model (the expectation that senior management must be available 24/7 for work related things) as the main barrier for breaking the glass ceiling. Gender diversity measures are not pushed in strategic agendas, it seems, and their implementation are limited.
“As long as the role of women in our societies is viewed first in terms of their child-bearing and family needs, they will never be able to devote the amount of time required or be considered equal as men, even in those cases where women present higher technical and behavioral capacity”, says Carolina Du-Breil. “Nonetheless it is encouraging to see how companies in more developed markets have come to realize the great value in providing for benefits and in-house facilities to support mothers in their workforce. Therefore, we foresee companies in our markets where the labor pool at the executive level is more limited, starting with those with a global presence, gradually embracing these benefits to maximize the return on their human capital.”
But we still have a long way to go. According to the Latin Business Chronicle, only 1.8% of the Latin 500 companies are run by women (the same source points out, however, that this is not too far from US and Europe, where only 12 of the Fortune 500 companies are headed by women). There are top female executives in the upper management in 77 of the 500, though, a sure sign, if the empirical findings above are true, that those companies will outperform their all-male-led peers.
This, says Du-Breil, will help breach the cultural divide between women’s professional and family roles going forward.