In 1983, Lubna Olayan became the first woman to work for her father’s business—Olayan Financing Co. (OFC), a sprawling multinational conglomerate based in Saudi Arabia.

It would be 18 years before she got her first female colleague.

By then Olayan was running the company, and she’d had time to consider her singularity. “I was privileged to be a woman CEO of a large family business,” she says. “I recognized there is something wrong with this—I can’t be the only woman.”

With her family’s support, Olayan began a quiet, measured effort to expand the ranks—consulting colleagues and embarking on at least one stealth persuasion campaign to win over an especially resistant OFC partner. After months of careful planning, woman No. 2 was finally brought onboard.

That the arrival took so long reflects the difficulty of making changes in a profoundly conservative country where tradition had long kept women out of the workforce almost entirely. But the fact that OFC now employs some 400 Saudi women—including 56 who bustle alongside Olayan and their male colleagues in the Riyadh head office—shows how far the company and Saudi society have come since then in bringing women greater economic power.

Gradual though it is—those 400 women account for just a bit over 3% of Olayan’s 12,000 Saudi-based employees—OFC’s integration is a testament to the persistence and tactical savvy that have earned Olayan respect as a business leader in the Middle East and beyond. A Davos regular, she’s a corporate board fixture and perennial member of Fortune’s international Most Powerful Women list. She has steered her 30-company conglomerate through a period of significant expansion; headcount has almost quadrupled since 2001. (Outside estimates put Olayan Group’s annual revenue at upwards of $7 billion; the company declined to discuss its finances.) And while Olayan takes no credit for it, her drive for diversity has put OFC at the leading edge of a historic shift that has brought hundreds of thousands of Saudi women into private-sector jobs over the past five years. OFC’s share of that total is modest, but the example Olayan sets as a rare female business leader in the region has had a profound influence.

Olayan, a matter-of-fact 60-year-old who shuns publicity, would be the last to label herself a pioneer. Her efforts are grounded in pragmatic beliefs: that meritocracies are better for business and that letting talented women find employment is better for the economy. “I’m all for diversity—but diversity for deserving people,” she says. Even as she helps guide Saudi women into roles they’ve never held before, from factory work to sales and management, she’s careful to respect Saudi Arabia’s deeply religious culture and traditions. Tom Linebarger, CEO of Cummins CMI , one of OFC’s longest-standing international partners, has worked with Olayan to hire Saudi women into engineering jobs. “She makes a constant push toward modernization and empowerment of women—from inside the system,” he says. “She is one of the most courageous people I’ve ever met.”

Saudi women “are very productive, very conscientious, and very much on time. I think it has been a very successful endeavor. We’re looking for more.”
Asadullah Sherazee, General Manager, Coca Cola Bottling Co. of Saudi Arabia

When Olayan first sought to integrate OFC in 2001, there was no playbook for a company like hers to hire women—and plenty of obstacles to doing so, since labor law and social customs left a lot of room for interpretation and confusion. In deeply conservative Saudi Arabia, women are expected to be covered in an abaya (a long robe) and a head scarf in public, and they don’t traditionally mix with men they aren’t related to. Cultural norms like these had largely limited female employment to the few industries that were clearly open to women: health care, education, and banking, all industries in which they theoretically would interact only with one another.

OFC’s activities didn’t fall into such neat buckets. It’s a sprawling holding company, whose activities run the gamut from investing and real estate to the manufacture and distribution of foreign-brand cola, cookies, computers, and heavy equipment. (It includes wholly owned businesses and joint ventures: Nabisco, Xerox XRX , Colgate Palmolive CL , and Burger King BKW are among OFC’s Western partners.) None of its companies was equipped to provide the required degree of segregation: Women would need their own restrooms, canteens, prayer rooms, and workspaces, not to mention transport to and from the job, since Saudi women aren’t allowed to drive.

With so many factors to weigh, the hire Olayan truly needed was a woman who could hire more women. Ultimately she chose Hana AlSyead, a computer scientist and systems engineer who trained in Boston and rose through the ranks in the (relatively coed) Saudi subsidiary of Citibank C . AlSyead embraced the challenge, and within a year OFC had 21 female employees. Most of them were disadvantaged women whom OFC hired to sew surgical gowns at Enayah (its joint venture with Kimberly-Clark KMB and another Saudi firm). These seamstresses made history: They were Saudi Arabia’s first female factory workers.

Since then a transformation has swept through the kingdom: In shops, offices, kitchens, and manufacturing plants, women in Saudi Arabia have flooded into private-sector work, their numbers rising from 23,000 in 2004 to 48,000 in 2009 to over 400,000 in 2014, according to Saudi government statistics. The growth has been driven by mass education (women dominate the kingdom’s ranks of university graduates), economic necessity, and gentle nudges from the government.

Still, overall only 19% of Saudi women work, according to the World Economic Forum. Many of the jobs recently opened to women are ones that bafflingly didn’t belong to them to begin with—like tending the kingdom’s lingerie shops. Numerous professional roles, including a majority of those at OFC, remain largely unavailable to women (or “ladies,” as managers at OFC often call them) because the jobs demand driving, heavy lifting, or frequent public interactions with males. According to the WEF’s most recent Global Gender Gap report on economic opportunity for women, Saudi Arabia ranks 137th of 142 countries—despite all that recent progress.

To understand how Olayan rose to power in such an environment, it helps to know the story of her father and mentor, Suliman. Born in a small Saudi trading town, Suliman learned English, which proved indispensable when Western firms arrived to tap the region’s oil riches. He spent some successful years at oil giant Aramco before realizing he could do even better business by providing such firms with equipment and provisions. In 1947 he founded the company that became the Olayan Group, which gained a reputation as a favored “local partner”—a requirement at the time for all foreign companies.

Lubna grew up in cosmopolitan Beirut, the youngest of four siblings, three of them girls. Suliman was a stern but invested father who closely tracked his daughters’ academic performance and imparted lessons of financial management. Lubna spent nine years in the U.S., a period to which she credits her freethinking ways. She studied at Cornell University and then at Indiana University, where, alongside her sister Hutham, she earned an MBA. (Hutham is now CEO and president of Olayan Group’s U.S.-based investment arm.)

Lubna went on to work for J.P. Morgan JPM and met her husband, John Xefos, a lawyer, before moving to Riyadh in 1983 to continue her banking career. Suliman was living there by then as well, and he happened to need an executive assistant. The two worked closely together for almost two decades; in 1986 she was named CEO of OFC, which was then Olayan Group’s industrial holding company; her responsibilities expanded in 1999 when the company merged with the group’s Middle East consumer arm. (Suliman died in 2002.)

Saudi business woman Lubna Olayan speaks during the Egypt Economic Development Conference (EEDC) in Sharm el-Sheikh, in the South Sinai Olayan speaking during this year’s Egypt Economic Development Conference. Her arguments for encouraging women to work are based in pragmatism: letting talented women find employment is better for the economy. “I’m all for diversity—but diversity for deserving people.”Photograph by Amr Dalsh—Reuters

As an executive, Olayan has made her gender almost a second thought among her peers. “Even my most chauvinist of Saudi friends and clients have great admiration for the way that she manages her companies,” says Bernd van Linder, CEO of Saudi Hollandi Bank, the first Saudi-listed company to include a woman on its board. (That woman is Olayan.) “She is respected as a person rather than as the first Saudi woman to do this or that.”

Olayan dislikes being the center of attention. It’s telling that in OFC’s 150-page networking directory, in which a page with a photo and biography is devoted to each manager, Olayan’s entry falls in the middle of the book, per alphabetical order, on page 80.

It was also telling that when I traveled to Saudi Arabia in late July to interview her, Olayan was not there. (She had traveled abroad to attend the birth of her first grandchild, a hitch in planning that she apologized for repeatedly.) We ultimately connected via videoconference—a screen and thousands of miles between us. That we were having a meeting at all, she joked, was my good fortune for having contacted her while her longtime colleague Serene (“She says no to everything”) was on vacation.

When Olayan discusses gender issues in her own career, she focuses on the light and superficial. Hardship? There were the visits to the company’s factories, which had no women’s bathrooms. Not being allowed to drive or mix in public with men? That may have been a blessing, especially for a working mother with three daughters: “Everyone had to come to me. Time was my most important asset.”

Asked whether she felt respected as a female leader, she seems taken aback. “Respected? In Saudi society, women are extremely respected. I never had an issue with that at all.” She really didn’t think in gendered terms, she says; she was “more concerned about being the daughter of the founder and therefore needing to perform better than others so as not to give the impression of nepotism.”

Still, Olayan has a complicated relationship with her home country. In 2004 she became the first woman to give the keynote address at the Jeddah Economic Forum, a high-profile Saudi conference that drew luminaries like former President Bill Clinton and Turkish Prime Minister Recep Tayyip Erdogan that year. To a gender-segregated audience, Olayan delivered “A Saudi Vision for Growth”—a 15-minute speech calling for a prosperous, diversified economy that included “more jobs and career opportunities for women.” Yet her message was quickly overshadowed: Her head scarf had slipped slightly during her speech—a cultural affront, however inadvertent, that riled the country’s conservative elements and -dominated national headlines for days. Olayan looks back on the event with disgust and a sense of loss. “I was so proud of that speech,” she says, noting that it still holds up.

Today Olayan lives in that world—but also apart from it—in Al-Bustan Village, a gated compound on the outskirts of Riyadh that OFC built to be a premier oasis for Western expats. (Such compounds are common in the kingdom.) Here, women can swim outdoors, exercise in coed workout facilities, and walk around the sprawling campus without an abaya. Olayan, who is waiting for her home in Riyadh to be refurbished, temporarily resides in one of the community’s 608 villas and is often seen biking around its campus. As we drove up, my OFC host explained, “Beyond this gate, it’s like you’re in another country.”

Thirty-five minutes away in central Riyadh is OFC’s headquarters, a discreet multistory structure with minimal signage. Today it teems with more than 300 head-office employees whose diversity is staggering by any standard, a mix of men, women, Saudis, and foreign nationals representing 23 different countries. Men and women participate in meetings together; some women work in their abayas and head scarves, others in conservative Western dress. English is the working language, and employees of all ranks are addressed by their initials, a time-saving practice that dates back to the firm’s early days. Olayan is known as LSO.

By all accounts Olayan is a caring but demanding boss. She wakes early, travels often, and likes to sleep on decisions, which she makes by consulting as many people as possible—she talks with some of her managers several times a day. That she is encyclopedic in her knowledge of OFC’s manifold holdings and extremely detail-oriented is both dazzling and wearying to employees. (She even had a hand in choosing the pool furniture at Al-Bustan.)

Those qualities also show up in her considerable board and philanthropic work. Rafael Reif, the president of MIT, sits on the Schlumberger SLB board with Olayan and marvels at her mastery of individuals and personalities alongside the big geopolitical picture. That mental nimbleness is “an asset and a gift that few people have,” says Reif. “Lubna reminds me of nobody.”

Even my most chauvinist of Saudi friends and clients have great admiration for the way that she manages her companies. She is respected as a person rather than as the first Saudi woman to do this or that.”
Bernd Van Linder, CEO, Saudi Hollandi Bank

Reif also remarks on Olayan’s ability to lead quietly—to direct and drive the conversation not by dominating it, but by chiming in with important ideas. That distinction seems particularly important to Olayan. When asked about her relationship with power, she says the term has a negative connotation for her—she prefers “influence,” which she describes as more important than power and as a sort of currency earned. “The more challenges you face in life, the more of life you experience—this lived experience gives one the ‘influence’ to impact others’ lives,” she says.

Plenty of challenges loom for OFC. Foreign companies can now operate independently in the kingdom without a Saudi partner. And a booming economy—between 2010 and 2014, Saudi Arabia’s non-oil sectors grew at an average annual rate of 7.2%—with a rich and relatively young population has made the country a magnet for Western firms facing slow growth at home. All this means the environment has grown far more competitive for OFC.

The company also faces workforce changes that go beyond gender diversity. For years, Saudi firms like OFC imported most of their talent; roughly 85% of the kingdom’s private workforce is foreign, while many Saudis remain unemployed. The government wants to reverse the situation through “Saudization,” which requires companies to meet quotas in local hiring. Though OFC exceeds its quota, managers at the firm consider it to be their greatest challenge: For many jobs, hiring Saudis—who often require training and who by law are paid considerably more than expats—is expensive.

By 2011, OFC had introduced female workers into its consumer-goods businesses, food service, packaging and distribution, even construction. Still, total female headcount hovered around just 1% of OFC’s workforce. Eager to make faster progress, Olayan launched the Olayan Women Network, an internal group designed to “keep an eye on all issues females were facing” and help nurture their careers. She eventually set a new target: Olayan wanted 1,000 women employees by 2016, in all 30 of OFC’s companies, at all levels of the organization.

This was not universally welcome news. Asadullah Sherazee, the general manager of OFC’s Coca-Cola Bottling Co. COKE of Saudi Arabia, recalls that when Olayan approached him about hiring female employees—“Coke says the workforce should be 40% women. You’re at zero,” she told him—he had all the typical concerns: the cost of women-only spaces, fears about legality, how they’d fit in.

But orders were orders. Sherazee, a Canadian of Pakistani origin, worked with his staff to set up the accommodations that have been installed across other OFC companies—the female prayer room, and the partitions in offices and on factory floors to give women privacy in line with labor regulations. Three years later his business has 30 female employees, including 18 who work on an all-female bottling line, many in burkas. He’s tickled with the results, which he tells me about over mid-morning Cokes with his female HR manager, Ghadah AlSous. He now sees a strong business case for hiring women: “They are very productive, very conscientious, and very much on time … We’re looking for more.”

Genuine delight and surprise about what Saudi female employees could do was a reaction I encountered more than once at OFC. “We’re living a social experiment,” says Khalid Alkhudair, CEO of Glowork, a female recruiting company in the kingdom that has helped place 26,000 Saudi women in jobs since 2011. AlSyead says that issues arise only occasionally: Once, for example, a male job applicant walked the other way when he encountered one of OFC’s female HR recruiters. She also says that Saudi managers are often more comfortable dealing with female talent than are expats, who tend to fear violating cultural norms.

There are now women at all but two of the conglomerate’s companies. Though AlSyead says reaching Olayan’s 1,000-woman goal in 2016 is statistically impossible, she touts the company’s milestones: It has hired the first-ever female worker in the Saudi city of Yanbu, for example. And she’s especially proud of having placed a Saudi woman in a sales role for a distributor of Scania—a company that makes long-haul trucks. She’s now focused on keeping OFC’s female talent—many firms try to poach, she says—and helping them develop their skills.

Olayan too remains very involved, regularly asking about her female employees’ concerns and challenges and inviting candid feedback. AlSyead tells a story about a time when Olayan got input of a less amenable kind, when a handful of ladies requested more vacation and reduced working hours. When Olayan asked them about their goals, they assured her they were ambitious: They wanted to be managers and executives. Olayan was bemused, but also a bit exasperated, and finally asked her colleagues, “Well, with all those vacation days, how do you expect to get there?” 

Women at work for Olayan

Until 2001, Lubna Olayan was the only woman working for the OFC conglomerate. Today there are more than 400, at 28 of its 30 companies, including these:

Enayah (joint venture with Kimberly-Clark)
In 2002 this medical supplier hired 18 seamstresses to sew surgical gowns; they were Saudi Arabia’s first female factory workers. There are now about 100 at the company.

Saudi Xerox Agencies
In 2014, Saudi Xerox won OFC’s Diversity Index award; among its 40 female employees is a marketing executive.

Coca-Cola Bottling Co. of Saudi Arabia
Three years ago this affiliate had no female employees; now they work in IT, finance, accounting, and legal, among other departments.

Nabisco Arabia
The Middle East’s primary supplier of Ritz crackers and Oreos launched a woman-only production line in 2013; it also employs two female machine operators.

To see the full International Most Powerful Women lists, visit MPW: Europe, Middle East & Africa and MPW: Asia-Pacific.

A version of this article appears in the September 15, 2015 issue of Fortune magazine with the headline “Integrating a country, one job at a time.”