Making the Business Case for Gender Initiatives

5 min read

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Since the 1970s, many companies have understood and taken action on the business case for gender initiatives, made progress and reaped benefits. Others are still questioning whether this topic warrants their attention. In a recent interview for an upcoming TV biz news interview I was asked about this:

  1. Q: It’s been over 40 years since large numbers of women started entering the workforce with college degrees and career aspirations and yet the statistics about women in leadership positions are grim across most industries. Why do and why should companies consider this to be a problem and invest money to solve it?
  •  I answered: Investing money to move more women into all levels of management is important because for decades every single study has found a correlation between the % of women in management and higher financial performance.

For example, a Credit Suisse study of 3000 global companies found a 52% higher Return on Equity for companies that had 15% or higher women in senior management compared to those where women represent less than 10% of the top management.

(For other examples of credible and consistent research and findings look here.)

No one can definitively say that women at the top cause stronger financial performance because of different strengths or perspectives, although some studies seem to indicate this. Nor can we definitively say that better run companies get more women to the top though there is also evidence of this.

At this point, it doesn't matter. The evidence is clear - it’s important for organizations to rise to the challenge of closing the leadership gender gap.

Diversity and Innovation

Extensive research reported by Rocio Lorenzo in her TED Talk found strong bi-directional correlation between innovation and diversity.

Rising to the challenge of closing the gender gap at the top means changing "the way we do things around here." This makes sense. After all, if companies keep doing what they've always done, they'll keep getting what they've already got in terms of percentages of women throughout the organization.

The idea of changing things gets met with several responses, the most frequent of which is...

...Isn't this Reverse Discrimination?

And while men often get "concerned" about the idea that a gender initiative might give women special advantages, most simply do two things:

  1. Remove barriers caused by gender dynamics. In other words minimizing the adverse talent actions and decisions that are based on the mindsets that managers have about women and men, careers and leadership. For example, by persistently giving opportunities to people who ask for them, more men advance than women because men are more likely to ask for opportunity while many women wait for opportunity to come to them on the basis of their good performance. By bringing this research to managers, they are able to change their behavior and identify the humble high performers who warrant development on the basis of their results.

We often make the point that no matter how gender-neutral an organization's talent processes are, the mindsets of managers are likely to undo their designed equality.

A colleague recently told me a story about a rigorous assessment center exercise that ranked 10 candidates for promotion. Women were among the top 3 candidates. But, the 4th ranked candidate received the promotion because he had "chapness, you know, he seems like a good chap."

I kid you not!

These are examples of why companies that are serious about closing the gender gap include initiatives that require managers to examine their mindsets and commit to changing behavior.

  1. Equalize the advantages that men receive. As a result of gender dynamics, many men receive career-enhancing treatment that few women get. For example, as a matter of course men are more likely to receive informal mentoring and earn sponsorship. Most women don't receive any informal mentoring or, if they do, it's not the kind of mentoring that will earn the sponsorship behaviors that take them to the top. With informal mentoring, more men than women are privy to informal conversations about and opportunities to develop business, strategic and financial acumen (The Missing 33%™). That's why one common initiative is to implement mentoring programs that help women earn sponsorship. This isn't "fixing" women, nor is it discriminating against men, it is leveling the playing field.

When actions such as these are not taken, the subtle barriers also mean that selection processes aren't tapping the entire talent pool.  Therefore, the best people might not be getting to the top and the company isn't a true meritocracy. because certain groups are playing by different rules. The opposite is also true. Companies that work to weed out bias and put a premium on making talent decisions on the basis of proven performance over "style," comfort or "chapness," generally have a proportional % of women in management.

And this can explain the correlation between the % of women at the top and improved financial performance. The less bias in talent decisions, the more women get to the top and the higher performing the organization.

As long as these and other important steps are not taken to close the gap, companies will have a talent development problem.

Companies that smugly think that their processes are fair will keep failing at gender balance. Changing the percentages of women at all levels requires rigorous review of  talent and performance systems AND rooting out gender dynamics that create a playing field that is anything but level. Time won't solve the problem! The sensibilities of the Millennials won't solve the problem! It takes concerted effort to open doors and create a level playing field.

At the end of the interview, I was asked:

  1. Q: If you had one piece of advice to give to a CEO, what would it be?
  • I answered: As a CEO (executive or board member for that matter) if women aren’t proportionally represented at all levels in your organization, you don’t have a “women’s issue” you have a talent development issue with business performance implications. So my advice is to meet the challenge with as much personal commitment and organizational accountability as you would bring to any business issue.