How Organizations In The Middle East Can Stretch Their Diversity Spend

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1 How Organizations In The Middle East Can Stretch Their Diversity Spend

2 The Boston Consulting Group (BCG) is a global management consulting firm and the world s leading advisor on business strategy. We partner with clients from the private, public, and not-forprofit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with more than 90 offices in 50 countries. For more information, please visit bcg.com.

3 How Organizations In The Middle East Can Stretch Their Diversity Spend Joerg Hildebrandt, Leila Hoteit, Pamela Merlino, and Anna Chiara Tortorella Beatrice Lemucchi, Wieske Heinen Elgun, and Elsa Haddad September 2017

4 AT A GLANCE Diversity fosters creativity. We need to generate the best ideas from our people in all levels of the company and incorporate them into our business practices. Frederic Roze, CEO of L Oreal USA. According to Credit Suisse s Gender report, companies with at least one female director have generated a compound excess return per annum of 3.5 per cent age points for investors over the previous decade. Forbes reached a similar conclusion. They examined the stock performance of the 26 publicly traded companies on its 2010 Power Women 100 list that are headed by women and found that, on average, these companies outperformed their industries by 15% and the overall market by 28%. Further, a number of recent studies indicate that a reduction in the employment gender gap has been an important driver of European economic growth over the past decade, and has the potential to unleash even further growth. Conversely, limiting women s access to labor markets is costly, as poor female labor-force participation hampers economic growth. According to these studies, gender inequality creates an average global income loss of 13.5%, which can be divided into losses due to gaps in occupational choices and losses due to labor force participation gaps. This figure is the lowest in Europe (10%) and highest in the Middle East and North Africa (27%). As the topic of gender diversity is still emerging in the Gulf Cooperation Council (GCC) region where the level of engagement differs across countries, industries, and organization sizes many organizations may be missing out on significant growth potential. 2 How Organizations In The Middle East Can Stretch Their Diversity Spend

5 The goal of this report is to analyze what worked well for GCC organizations in closing the diversity gap and also what did not. How does the workplace look for women in the GCC? Why are some initiatives less effective than others? How can a sustainable change in the landscape of gender diversity be created? How do we overcome cultural bias? To answer these questions, BCG collected insights from 15 prominent organizations in the GCC. GCC organizations have generally been successful recently in creating attractive places for women to work and fostering inclusion in the work environment Large organizations in the GCC have been particularly successful in implementing cutting-edge flexible schemes and arrangements for female employees. Anti-harassment and inclusive culture is the norm in most organizations today. Even in heavy industries such as oil and gas, companies have led significant efforts to attract women to more operational roles. Organizations should now focus on how to grow from a pleasant working environment to a place where women want to stay and build their careers Initiatives are successful only if they tackle the right issues. Successful organizations have invested time and effort in identifying and implementing initiatives that can attract talented GCC women, such as flexible working arrangements and inclusive policies. CEO commitment is key to the success of all such endeavors. However, an effort that is isolated from senior leadership will not be sufficient to attract and retain women in senior leadership positions. Now is the time for organizations to fully embrace gender diversity and set the ambition to develop the female leaders of tomorrow Global business leaders are increasingly aware of the importance of addressing gender diversity. Over 20% of the leaders surveyed in the World Economic Forum s The Future of Jobs report highlight the importance of gender parity not only as a matter of fairness and equality, but also as a reflection of the changing gender composition of their customer base and enhanced corporate decision-making and innovation. This point of view is shared by leaders in the region. In the words of the CEO of a The Boston Consulting Group 3

6 leading national oil company We recognize the value of gender equality and women empowerment, not only because it s the right thing to do, but also because it makes business sense. This sentiment has been echoed by senior leaders of prominent banks in Oman and Saudi Arabia. Nowadays organizations enjoy the opportunity created by full access to global talent pools, and are becoming aware of the increasing speed in innovation generated by more gender diversity. To outpace competitors and drive employee satisfaction, it is now even more critical to be able to attract and retain female talent. To develop and empower the female leaders of tomorrow, CEOs and senior leaders should integrate gender diversity as a core part of the organization s strategic objectives and ensure organization-wide communication and engagement. In particular, the commitment of middle management will be critical, as that is who engages every day with employees, and is responsible for performance assessments and promotions. Retention, advancement, and leadership-building are the key areas on which organizations should focus. Applying best practices in retaining talent, ensuring fairness and equal opportunities, removing any conscious or unconscious bias, and promoting role models are the key tools. While cultural bias and labor regulations can still be an obstacle in some countries, they should not prevent organizations from building a diverse and inclusive environment Cultural bias and, in some cases, current labor regulations are a threat to inclusion and advancement to leadership positions. In many GCC countries, cultural bias still exists, and women are perceived as unsuitable for some jobs or positions. A way to cope with this constrained environment is to set quotas and targets for gender diversity and leadership. Regulations can also represent a barrier to gender diversity despite significant improvements in the past five to ten years. In these cases, it is even more crucial for CEOs and senior leaders to prioritize the push for regulatory change. Some of the organizations interviewed by BCG have managed to overcome this problem by driving initiatives in certain departments only (for example retail banking in financial institutions or support functions). This may however significantly restrict the pipeline of future female leaders, as they will not have been exposed to the core functions of the organization. Particularly in Saudi Arabia, which had the largest gap to bridge, significant progress has been made over the past few years. Over 60% of the employees of an energy company in Saudi Arabia, when interviewed, recognized the progress made by their employer over the last one to three years in improving gender diversity at all levels of the company. The employees of the same company also recognized very limited obstacles are nowadays perceived in the recruitment and retention of female talent. In addition, the recent appointment of two female leaders in Saudi Arabia made the headlines in the region, with the first female chairperson heading Tadawul, the Saudi stock exchange, and the first woman executive director for the Dammam Air- 4 How Organizations In The Middle East Can Stretch Their Diversity Spend

7 ports Company. The UAE has also been promoting female leadership with Emirates NBD Group appointing the first female CEO for its operations subsidiary. Introduction BCG s research spans all six countries of the Gulf Cooperation Council. While each country is different, some rules and observations apply to all. Exhibit 1, below, provides a contextual starting point for each of the countries mentioned in this report. Of all GCC countries, Qatar has the highest percentage of women in the labor force (51% of the female working-age population), almost comparable to Western economies (57% in the US, 51% in the EU). In the UAE, Kuwait, and Bahrain between 39% and 46% of women are part of the labor force. The percentage drops in Oman (29%) and Saudi Arabia (20%). Almost all the GCC countries have experienced a significant improvement in women s participation in the labor force since Qatar and the UAE in particular have gone from (respectively) 38% to 51% and 34% to 46%. In Saudi Arabia and the UAE, the increase in women s workforce participation has been accompanied by an increase in the female unemployment rate. This is partially driven by higher education attainment that was not matched by an increase in relevant opportunities in the labor market. According to UNESCO Institute for Statistics, the share of the female population that completed upper secondary education in Saudi Arabia almost doubled from 23.5% in 2000 to 45.7% in 2014.This suggests that the increase in women s education has successfully brought more women to the labor market, but the opportunities available to them did not grow comparably with the volume and the expectations of a better educated female population and the fields of education chosen were often not the ones most needed by the economy. Exhibit 1 Women s participation in the labor force and employment rate (2000, 2014) Saudi Arabia UAE Kuwait Oman Qatar Bahrain Female population (Million) % 9% 91% 34% 6% 94% 44% 1% 99% 23% 17% 83% 38% 5% 95% 35% 7% 93% % 44% 9% 20% 91% 20% 80% Women participating in the labor force (% of female population) 2% 29% 14% 98% 86% Unemployed (% women in labor force) 51% 2% 39% 98% Employed (% women in labor force) 7% 93% Source: World Bank, World Development Indicators, The Boston Consulting Group 5

8 BCG s research reveals that most organizations in the GCC acknowledge the importance of gender diversity and consider it a high priority. While this trend is gaining momentum across the GCC, there are significant differences across industries and countries. Only a few organizations have explicit and dedicated programs for gender diversity. The strength and depth of the programs also varies significantly. Based on BCG s discussions with local organizations, the financial sector leads the way across all countries. Large organizations (such as oil companies) also show a high level of commitment on gender diversity matters. Our analysis of around 15 of GCC s most prominent organizations reveals how they have succeeded in designing an attractive working environment for women by offering a set of flexible arrangements, supportive policies, and an inclusive culture. It also suggests how organizations can change from a pleasant working environment to a place where women want to build their careers over the long run, by looking at how successful organizations have done so. Most importantly, the analysis identifies opportunities to fully embrace gender diversity by focusing on retention, advancement, and leadership-building. Finally, it reveals ways CEOs and senior leaders can overcome certain cultural biases and regulatory barriers (with a special focus on Saudi Arabia). 1. In the past few years, organizations across the GCC have successfully developed as attractive places to work for women and fostered an inclusive work environment Large organizations in the GCC have focused their gender diversity efforts on creating an attractive place for women to work. Indeed, when asked about successful diversity initiatives, most answers involved flexibility, policies, culture, and involvement in technical roles; and few involved senior leadership engagement and female empowerment, as the focus in the region has been mostly on increasing female participation in the labor force. METHODOLOGY We interviewed CEOs and top executives (men and women) from 15 of the most prominent organizations. Participating organizations spanned several industries (financial services, oil and gas, public sector, and retail) and countries across the GCC (UAE, Oman, Saudi Arabia, Kuwait, Bahrain). Some of the participants have also agreed to submit our survey to their employees. Our interviews covered a wide range of topics to gauge the organizations positioning and the effectiveness of their initiatives aimed at fostering gender diversity: from overall company engagement to successful and unsuccessful initiatives, as well as obstacles and targets. We also gathered views on the organizations commitment in terms of time and resources across 11 types of initiatives covering leadership, culture, recruitment, retention, and advancement topics. 6 How Organizations In The Middle East Can Stretch Their Diversity Spend

9 a. Flexible working arrangements in different forms As expected, many organizations mentioned family commitments and social obligations as potential obstacles to gender diversity initiatives. More than in other parts of the world, GCC women may view their professional lives as a threat to their personal commitments. Initiatives related to maternity are the most common. Some of the organizations provide -- beyond what prescribed for by the law -- one or two extra hours per day of leave for nursing and the opportunity to take unpaid leave. Only a few organizations provide childcare facilities, whether on company premises or externally and this is a powerful tool to attract and retain female talent. In the UAE, the Ministry of Education requires any public sector entity which employs more than 50 women or whose female employees have in total at least 20 children, to offer childcare facilities. Beyond maternity and childcare, many organizations offer flexible working arrangements to both women and men, including: i. Flexible working hours: some hours in the day are set, others are flexible, so that the employee can choose between, for example, an earlier or a later start When asked about successful diversity initiatives, most answers involved flexibility, policies, culture, and involvement in technical roles; and few involved senior leadership engagement and female empowerment, as the focus in the region has been mostly on increasing female participation in the labor force. ii. Opportunity to work from home iii. Opportunity to request unpaid leave These initiatives undeniably contribute to attracting more women (and men), however, they are only truly efficient if: Women can use them without being stigmatized Senior and strong performers who are considered role models use them as well b. Inclusive culture and policies All interviewed organizations confirmed having either policies or clear norms to ensure gender equality in remuneration and in the recruitment and selection process, as well as strict monitoring of their effective application. Most organizations mentioned that they have strict anti-discrimination and anti-harassment norms. Any instance of harassment or discrimination is always escalated to the highest management level and closely monitored. This makes women more comfortable and protected in the work environment. Organizations with zero tolerance policies for harassment introduced additional successful formal and informal communication channels: The Boston Consulting Group 7

10 Formal channels: i. Hotline to report harassment cases anonymously Organizations with zero tolerance policies for harassment introduced additional successful formal and informal communication channels. ii. address for anonymous complaints and recommendations iii. Dedicated specialist in HR to deal with women s issues iv. Women s or gender diversity events and programs to discuss and share issues The most advanced organizations have also created dedicated internal programs or associations where women can exchange views on careers and jobs (for example, Kuwait Petroleum Company s Professional Women Networking and Abu Dhabi National Oil Company s Women Network). Informal channels: Top management/ceo open door policy: In organizations where women are able to speak openly and informally with the senior leadership team, they feel more confident their issues are heard and taken seriously Most organizations BCG interviewed strive for a culture where women are able to speak up, by creating a transparent work environment. For example, in one of the Saudi financial institution, the CEO meets regularly with randomly selected male and female staff members to informally discuss various topics, including gender diversity related topics. In the same institution, a Women Awareness Program has been put in place, in which HR calls different female employees on a quarterly basis in order to explain their rights and discuss their concerns. While most interviewed organizations highlighted their formal and informal channels as very effective and central to their organizations, some said participation remains low and should be encouraged. In addition, most of these channels are not at the same level as other strategic initiatives as reflected by a minimal or non-existent budget allocation. This prevents them from organizing large-scale events with better participation and more speakers. c. Attracting women in technical and operational roles In the organizations with the most inclusive and female-friendly environments, emphasis is put on creating comfortable conditions for working women. The definition of comfort differs across industries and therefore varies in relevance. In heavy industries such as oil and gas, the lack of comfortable conditions is a major obstacle to attracting women to technical and operational roles, as these jobs entail time spent on oil fields which are often located in remote onshore or offshore locations. Some families are not supportive of women working at these remote sites. And some middle-managers are reluctant to hire and promote women to technical roles, fearing they will not be able to work on site and thus will lack exposure to 8 How Organizations In The Middle East Can Stretch Their Diversity Spend

11 operations deemed crucial for a full understanding of the business. Below are examples of initiatives that some of the major oil companies have developed to attract and promote women in technical and operational roles: i. Launch ten-month rotation of women to field positions to earn relevant on-site experience ii. Partner with secondary schools to inspire young girls to pursue STEM (Science, Technology, Engineering, and Mathematics) majors and consider careers in oil and gas Oil and gas companies are ever more aware of the importance of attracting women to non-support roles. Initiatives are still nascent, but the interviewees are confident that they will help create more awareness of and appetite for operational positions, as confirmed by the pilots which have achieved great early results. 2. Organizations should now focus on how to go from an environment where it is pleasant to work to a place where women get the same development opportunities as men and want to build their careers in the long run As mentioned in the previous chapter, in the past few years, CEOs and senior leaders in the GCC have been more and more conscious of the importance of gender diversity in the workplace and have developed various measures to make organizations attractive places for women to work. However, even though these initiatives contributed significantly to attracting talented women, they have, in general, not been sufficient to retain and increase female representation in senior leadership positions. In heavy industries such as oil and gas, the lack of comfortable conditions is a major obstacle to attracting women to technical and operational roles, as these jobs entail time spent on oil fields which are often located in remote onshore or offshore locations. Exhibit 2 compares the share of women in leadership positions in the GCC with international benchmarks. The share ranges from around 6% in Saudi Arabia to around 22% in Bahrain. A wider gap is observed when looking at the number of GCC women sitting on Boards of Directors. All GCC countries lag significantly behind most Western countries in this measure. Many organizations highlighted the presence of conscious and unconscious gender bias in evaluation and performance management, which may also affect women s engagement in leadership positions. As has been observed elsewhere, there is strong reticence to promote women on potential, whereas leadership is often more willing to take a leap of faith with men. In addition, while organizations in the GCC recognize the need to develop their high-potential employees for managerial roles, in most cases they don t offer programs customized by gender. Based on the interviews BCG conducted, there is a general belief that men and women should have access to the same training and development opportunities to ensure they have the same chances of success. The Boston Consulting Group 9

12 Exhibit 2 Participation of Women in Boards of Directors and Leadership positions, GCC and selected countries (2015) Board seats held by women in 2015 (%) 1 Legislator, senior official, and manager posts held by women in 2015 (%) 2 KSA Qatar UAE Bahrain Kuwait Oman Data not available US Germany UK Italy France Norway 1 The CS Gender 3000: The Reward for Change. Credit Suisse. September 2016 Women s careers in the GCC, The Pearl Initiative, The Global Gender Gap Report 2016, World Economic Forum 3. Now is the time for organizations to fully embrace gender diversity and set the ambition to develop the female leaders of tomorrow To develop and empower the women who will be leaders of tomorrow, six actions should be taken: (a) Include gender diversity as a strategic objective; (b) Ensure engagement of the senior leadership and the middle management; (c) Foster retention of high potential women; (d) Promote development of women; (e) Advocate for female leadership through the positive promotion of role models; (f) Ensure fairness and remove any conscious and unconscious biases. a. Including gender diversity as a strategic objective Organizations should make gender diversity a core part of their strategic objectives and keep it at the top of the agenda. Interviewed organizations mentioned these successful efforts: i. Embedding the gender diversity agenda in the organization values ii. Explicitly mentioning gender diversity as a strategic objective iii. Developing specific KPIs on gender diversity to be monitored regularly and reported to the top leadership and/or published in the organization s sustainability report iv. Adding women-related topics to the corporate social responsibility effort, for example, sponsoring a campaign for the awareness and prevention of breast cancer 10 How Organizations In The Middle East Can Stretch Their Diversity Spend

13 b. Ensuring engagement of the senior leadership and the middle management A major obstacle witnessed by many organizations was limited engagement of top management in gender diversity initiatives. Few leaders engage and communicate internally on gender diversity. Consequently, middle management is generally not well informed, creating a disconnect between the intentions of senior leadership and actual operations. This is particularly true in heavy industries such as oil and gas, where promoting gender diversity faces even stronger and more pervasive biases and challenges. In the words of a GCC female manager in oil and gas, Our industry is rough and tough. I consider myself one of the few lucky women who made it to this level. The key is to ensure buy-in from all the layers of the organization. CEOs and Executive Managers are the only ones that can make this cultural change happen. c. Fostering retention of high-potential women In order to significantly and sustainably foster high-potential women pursuing longer-term careers with current employers, organizations should adopt best practices by ensuring the organization is increasingly perceived as an attractive place for women to work. Two initiatives have proven particularly successful: (i) While it is critical to ensure the continuation and extension of flexible working arrangements by removing the stigma associated with them and making them available also to male employees (ii) It is also important to promote an inclusive culture and policies, leveraging both formal and informal channels. d. Promoting development of women Most of the interviewed organizations offer training and development initiatives, but they are generally the same for both male and female employees. Providing trainings dedicated to women, to help them to build on their strengths and overcome potential challenging areas, such as workshops on mental toughness, how to speak up, or build your personal brand have proven successful, as has instituting development programs aimed at women, such as leadership programs and networking events tailored to women. A major obstacle witnessed by many organizations was limited engagement of top management in gender diversity initiatives. Few leaders engage and communicate internally on gender diversity. Consequently, middle management is generally not well informed, creating a disconnect between the intentions of senior leadership and actual operations. e. Advocating for women in leadership through positive promotion of role models The limited number of female role models in certain positions was also mentioned as a major obstacle by interviewed organizations, and women themselves are often held responsible for the lack of role models. Listening to and being inspired by other women is an effective way to gain confidence and increase success and further development. CEOs and top management should push to promote successful women from inside and outside the organization. Without senior leadership support, women will not be encouraged to act as role models. Making successful women from both inside and outside the organization visible can be done through attending global and regional conferences, presenting and representing the organization, The Boston Consulting Group 11

14 and displaying successful women s achievements in press releases. The focus on role models with the promotion of female CEOs and the inclusion of women in governments has achieved impressive results in the GCC. In October 2008, the UAE s first female judge was sworn in. HH Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE and Ruler of Abu Dhabi, said, The involvement of women in Government has been evidenced with the appointment of a female minister, the appointment of women to the Federal National Council, and now the appointment of the first female judge. The decision to appoint female judges helps consolidate Emirati women s growing role in public life. The Dubai Women Establishment reports that, following this appointment, many more applications from Emirati women interested in pursuing this path were received. The same thing happened following the appointment of the first UAE female jet fighter in 2007, also the first woman in the UAE Air Force to lead a mission abroad in f. Ensuring fairness and removal of conscious or unconscious biases CASE STUDY - BANK MUSCAT Aimed at creating a sustainable future for the country, Bank Muscat provides excellent career opportunities and supports all major development programmes targeted at women who are assuming more responsibilities and senior positions. Abdul Razak Ali Issa (Chief Executive, Bank Muscat) Bank Muscat is a committed role model for gender diversity. Its success is due mainly to a good work-life balance maintained by employees (both men and women), a commitment to investing in women s development, and a very clear and strong anti-harassment policy respected by the entire organization. The bank provides a wide range of educational and training opportunities inside and outside the Sultanate for women employees. It prides itself on attracting women without relying on quotas. The bank s attention to women is also reflected in its product offering: Zeinah is targeted to women customers. This feminine touch in the product line also contributes to attracting and retaining women employees. Bank Muscat in numbers: 48% of employees are women holding various positions - 15% in senior leadership positions - 28% as department managers 62% of women are hired through the High Potential Graduate program 51% of women participate in learning and development programs 12 How Organizations In The Middle East Can Stretch Their Diversity Spend

15 Another critical area is addressing the potential unconscious gender bias with leaders and managers in charge of evaluation and performance management processes. Tools to address this issue are: widespread communication of the gender diversity agenda, and organizing and conducting training aimed at male employees, specifically for removing the bias in hiring women and for developing and promoting them. A successful case of women s development and empowerment in the region is Bank Muscat, where the profound (and widely communicated) engagement of senior leadership toward gender diversity and the provision of educational and training opportunities for its female employees have been critical to attracting and retaining female talent. (See Case study Bank Muscat.) 4. Cultural bias and labor regulations can be major obstacles, but should not stop diversity ambitions and strategies The biggest obstacles to professional growth for women in the GCC lie in the areas of cultural bias, lack of supporting environment, and, in some countries, laws and regulations. Those elements represent an undeniable barrier to retaining women. The focus on role models with the promotion of female CEOs and the inclusion of women in governments has achieved impressive results in the GCC. a. Cultural bias and lack of supporting environment Cultural bias is a main obstacle to gender diversity in the workplace across most GCC countries (at different levels depending on the country). BCG s research reveals that there is still a predominant belief that women need to take care of the household and that they do not fit certain jobs, in particular technical and operational roles which require traveling and spending time away from the family. Even the most advanced organizations with sophisticated measures on gender diversity find it difficult to overcome this cultural bias. Organizations that have succeeded best in overcoming this bias are those in which the CEO sets specific targets or quotas for female employees and for representation in senior leadership positions. One financial institution in Saudi Arabia successfully set targets for both recruiting and retaining women. This enabled it to reduce female turnover from almost 30% to 13% in In the same company, all women who took a parental leave returned to work after the leave. BCG found GCC organizations are quite reluctant to set specific targets for women s recruitment and promotions. This goes, for most of them, against a principle of meritocracy. However, in an environment where there is still a cultural bias against women working in specific industries or roles, adopting quotas can be a winning strategy in the short term -- a way to jump the cultural bias barrier by forcing the trend. This should be done hand-in-hand with initiatives mentioned in the previous chapters and is not effective as a standalone initiative. Many of the interviewed organizations view quotas as a way to establish a minimum female presence in the organization and, once a minimum number is achieved, would prefer to remove them. The Boston Consulting Group 13

16 In Saudi Arabia, according to Vision 2030, 30% of women are expected to participate in the labor force in 2030 (today it is around 20%). The perception of working women is also changing among employers and Saudi citizens in general. In addition to organizations, governments have been active in promoting quotas. Norway, for example, introduced in 2003 a 40% gender quota for the Board of Directors of public, limited, state-owned, and inter-municipality companies. Legislated board quotas have been implemented, on listed and state-owned companies, in Spain, France, Iceland, the Netherlands, Italy, and Belgium since then. In Bahrain and the UAE, the debate over legislated board quotas has raised different views. While the UAE Cabinet in 2012 enacted a law requiring listed companies and government agencies to reserve at least 30% of their board seats for women, the Bahrain Business Women Society declared recently that women in Bahrain have made it to leadership, both in public and private sector, without the help of quotas. Still, the Bahrain Business Women Society supports a legislative quota to open even more opportunities to women in the country. b. Regulatory barriers: the case of the Kingdom of Saudi Arabia Saudi Arabia is a perfect example of a country where regulations shape gender diversity initiatives. Some organizations in Saudi Arabia have managed to push this regulatory obstacle as far as possible to improve gender diversity in the workplace. In the past few years, the government has set ambitious targets for women s participation in the workforce and has loosened some of the labor laws related to working women. According to Vision 2030, 30% of women are expected to participate in the labor force in 2030 (today it is around 20%). The perception of working women is also changing among employers and Saudi citizens in general. Context Social media in KSA has been influential in creating role models and awareness of what Saudi women can do this is true for GCC in general, but even more so in KSA. Due to the high penetration of smartphones with internet connections in the country (180 mobile broadband internet subscriptions per 100 people in 2014, according to the World Bank versus 147 in Singapore and 110 in the US), social media became the main communication tool; one that is less regulated and more accessible. Organizations are using social networks to promote their gender programs as well to attract more women. Recent social changes (such as the urbanization of the Saudi society, and an increasing number of couples without children) and the rise of social media have been conducive to attracting more women to jobs. Almost 18% of all women above age 15 are economically active (Exhibit 3), although the annual unemployment rate for women has been increasing at around 3% on average since 2006, as opposed to the declining unemployment rate for men (down 5% since 2006). Saudi women s unemployment rate reached 34% in 2016 compared with 6% for Saudi men. The fact that more and more women have entered the labor force in the last few years in Saudi Arabia, with increasing levels of education, explains the increase in the unemployment rate, as the number of jobs available to women has not kept up with the growth in demand. 14 How Organizations In The Middle East Can Stretch Their Diversity Spend

17 Exhibit 3 Saudi Women Labor Force (15+ years), latest official numbers, Saudi citizens Thousands of Saudi women (age 15 and above) 5,454 81% 1,275 19% % % Total Out of the labor force Labor force Unemployed Employed Source: Labor Force Survey, Q General Authority for Statistics Saudi Arabia Education has not been an obstacle for women in getting a job. Employers in GCC acknowledge that women are adequately educated to perform the required jobs. Students graduating from higher education institutions last year were 50% men and 50% women (KSA Ministry of Education data). Among employees with bachelor s degrees, there were more than half as many women as men, with around 544,000 women (versus 993,000 men) with degrees employed, representing 35% of all employees holding a bachelor s degree. Across all other education levels, the number of employed males dominates the number of women. Part of the problem is the fields of education chosen by or available to women (such as humanities) are not necessarily the ones that provide the jobs needed by the economy. Regulatory barriers In addition to the cultural bias, some regulatory barriers in the Saudi Labor Law may demotivate organizations to hire and retain more women. Those regulations are evolving significantly: cultural changes and mindsets are changing rapidly, and regulation itself is much more open than it was a few years ago. However, in some case, it can still be perceived as a major constraint for gender diversity. The idea of working women is relatively new in KSA and is still emerging. In the past, Labor Laws were very strict about not mixing genders in the workplace. For example, women and men had separate entrances, elevators, hallways, and rooms. This discouraged employers from hiring women because doing so required significant changes in working style and infrastructure. The cost of having dedicated spaces and structures for women was often mentioned as a barrier for gender diversity in Saudi Arabia in the BCG interviews. The Boston Consulting Group 15

18 Another challenge for both women and employers in Saudi Arabia is the lack of transportation options. By law, women are not allowed to drive; existing transportation options are limited and not accessible to all women and their cost often discourages women from working. Most organizations committed to attracting female talent provide a transportation allowance to their employees. This, together with the emergence of ride-hailing services over the past three years (Careem and Uber), provides a viable and safe alternative for women. The situation has evolved significantly, but gender segregation rules remain ambiguous. For instance, some organizations choose to have separate rooms for men and women, but employees can share the same elevator or use the same hallway. Officially, all organizations are required to have a women-only elevator, so that women may choose between that one and the general access one. And women themselves disagree about their rights. Some women feel more comfortable when they are provided with dedicated facilities. Others perceive this as antithetical to an environment conducive to growth and development. In addition to the ambiguous rules on gender mixing in the workplace, the Labour Law in Saudi Arabia imposes other restrictions on working conditions for the organizations that employ women: It is prohibited to employ women in hazardous jobs or industries (such as construction and jobs requiring heavy lifting) Women may not work during the night or for the 11 hours around and including nighttime Women should be provided with space for resting In order to encourage gender diversity despite those constraints, some organizations limit their gender diversity efforts to specific business units or departments as opposed to the entire organization. In those, they adjust the workplace to accommodate women. While this may increase the number of women in entry-level positions, it restricts the advancement of women to leadership positions because of their limited exposure to the full range of functions in the organization. Another challenge for both women and employers in Saudi Arabia is the lack of transportation options. By law, women are not allowed to drive; existing transportation options are limited and not accessible to all women and their cost often discourages women from working. Most organizations committed to attracting female talent provide a transportation allowance to their employees. This, together with the emergence of ride-hailing services over the past three years (Careem and Uber), provides a viable and safe alternative for women. While these regulations are still in place, and given the ambiguity of some questions, CEOs and senior leaders in Saudi Arabia must set realistic yet ambitious targets and, where possible, invest to ensure ambiguity is limited as much as possible. Gender diversity is an important topic for the senior leadership of all the organizations BCG interviewed. In the past decade, most CEOs and decision-makers have focused their efforts on creating an attractive place for women to work. These measures have been successful and have contributed to growth in women s participation across all countries. 16 How Organizations In The Middle East Can Stretch Their Diversity Spend

19 Our study reveals that creating a pleasant working environment is not enough to develop senior female leaders in the long run and to attract the women for whom working conditions are not a key concern. In a cultural and regulatory context that can be constraining, setting targets and quotas could be a successful short-term solution for CEOs. However, to achieve longterm changes at all levels and across all industries, CEOs must be committed to achieving those targets, to engaging with the entire organization, and to employing high-potential women at the top. The six actions identified in the previous chapter could be leveraged by CEOs to achieve their respective organizations ambitions in gender diversity: (a) Include gender diversity as a strategic objective; (b) Ensure engagement of the senior leadership and middle management; (c) Foster retention of high potential women; (d) Promote development of women; (e) Advocate for female leadership through the positive promotion of role models; (f) Ensure fairness and remove any conscious and unconscious biases. In addition, the significant progress made over the past few years and the successful case studies we explored in this report suggest that organizations are able to set ambitious targets and achieve them, as long as their leaders and management are committed to making the change happen. The Boston Consulting Group 17

20 BCG wishes to thank the following organizations for participating in this study: Al Rajhi Bank Bank Muscat Dubai Women Establishment GCAM - General Commission for audiovisual Media GIB Capital Kuwait Petroleum Corporation Majid Al Futtaim Saudi Aramco The Saudi Investment Bank Other participating organizations chose not to be named 18 How Organizations In The Middle East Can Stretch Their Diversity Spend

21 About the Authors Joerg Hildebrandt is a Senior Partner and Managing Director in the Dubai Office of The Boston Consulting Group. You may contact him by at hildebrandt.joerg@bcg.com Leila Hoteit is a Partner and Managing Director in the Dubai Office of The Boston Consulting Group. You may contact her by at hoteit.leila@bcg.com Pamela Merlino is a Principal in the Dubai Office of The Boston Consulting Group. You may contact her by at merlino.pamela@bcg.com Anna Chiara Tortorella is a Consultant in the Dubai Office of The Boston Consulting Group. You may contact her by at tortorella.annachiara@bcg.com Beatrice Lemucchi is a Principal in the Dubai Office of The Boston Consulting Group. You may contact her by at lemucchi.beatrice@bcg.com Wieske Heinen Elgun is a Principal in the Dubai Office of The Boston Consulting Group. You may contact her by at heinen.wieske@bcg.com Elsa Haddad is a Consultant in the Dubai Office of The Boston Consulting Group. You may contact her by at haddad.elsa@bcg.com Acknowledgments The authors offer their sincere thanks to their BCG colleagues Alexander Tuerpitz, Bjorn Evers for their contribution to this report. They also thank Katie Davis for writing assistance, Kim Friedman and Tobias Zoellkau for design, editing and publishing contribution. For Further Contact If you would like to discuss this report please contact one of the authors. The Boston Consulting Group 19

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