Generally speaking, women continue to enter the workplace in increasing numbers in most developed countries. With the rise of industrialized economies, both maturing service sectors and public/NGO sectors have created new opportunities for women. However, a critical analysis has revealed a weak pace of advancement for senior female mangers in the corporate world. To illustrate this fact, the US Department of Labor reported that women outnumber men in such occupations as financial managers, human resource managers, and advanced auditors. Thus, at the middle-management level, American women have made substantial progress.
Yet at the senior management level, in 2010, only 2.8% of Fortune 500 chief executives were female. In the FTSE 500 the statistics are even worse – women only lead 1.8% of such companies. There is no economic benefit for this sluggish pace, especially when the proportion of women in university now equal to or is greater than that of men, which indicates general gender parity in education.
In addition, women in the developed world seem to enter the workplace at both the same level and with the same expectations of growth in the corporate world. Yet, as their careers develop the gender parity dissolves into an alarming lop-sided male dominated senior management.
The status quo of a male dominated senior management is inefficient as seen with the shortage of effective managerial talent. Corporations themselves are reporting failure of at least half the current managerial incumbents. Companies are admitting failures of organizations to develop managerial talent. Thus, the corporate world should be interested in developing and using the talents of women. We are not saying women are weak and thus need special treatment. Women face more structural biases and actual barriers than men. This is not efficient, especially when data shows having more women in senior management increases overall performance. It’s about getting the right people for the right job regardless of gender, which currently is not happening.
Supporting qualified and talented women ensures that most managerial jobs are filled with strong individuals. Organizations that show support retain and attract the best people for leadership positions, as they provide senior-level executives experience in working with successful women. Additionally, good human resource management will translate to better organizational behavior practices, as supporting capable women in senior management provides employees with role models for junior managers.
Proof of Bias and Barriers
Catalyst conducted an exhaustive survey in 20 European countries and the USA. They found stereotypes and preconceptions of women’s roles ranked the top barrier to women’s advancement. After analyzing data from 110 US corporations’ Talent Management Systems, gender biases and stereotypes existed especially in the succession planning processes. Further research continues to indicate that talented women at lower levels may not receive the necessary development opportunities compared to their male counterparts. The report Women in Management Worldwide has projected that true equality would be achieved (half the board members are women and half the senior executive jobs are held by women) in 200 years. Women’s advancement and progress had also fallen short of expectations as the International Labor Organization states. It is not enough to merely have faith in the role a women can play in the corporate world, one must highlight failures of management to promote women and provide concrete strategies to solve this issue.
Women in Boardrooms: It’s about talent not “fairness”
Research on the impact of women on leadership teams/boardrooms demonstrates that diversity often eliminates stagnation. The 25 companies with the best record for promoting women to the board, posted returns 18% higher, and returns on investment 69% higher than the Fortune 500 median of their industry. There must be more women included into the boardroom. The Conference Board of Canada tracked the progress of Canadian corporations with two or more women on the board from 1995 to 2001, and concludes that these companies were to be “industry leaders in revenues and profits”.
Yet, despite the clear monetary advantages, few Canadian companies have boards with a range of people with different interests and backgrounds. After some research it was discovered that there are even fewer strategies to address diversity at the board level. The majority of board members continue to be governed by all male, all white board members who share largely the same backgrounds, circles of influence, and views, which leads to stagnation of ideas.
Males are not the issue. If we packed the boardroom with purple dinosaurs we will still have the same issue of creativity and dynamism. This feature on understanding the unique value of women in the corporate board room should not scare males. Rather, you should feel empowered that now the solutions to various business issues has been recognized: more women.
But What do Women do Differently?
The reasons behind these obvious advantages lay with key characteristics businesswomen tend to showcase, if not shutout of senior management. For example, 74% of boards with more women explicitly identify criteria for measuring strategy; only 45% of all-male boards do. Furthermore, 94% of boards with more women explicitly monitor the implementation of corporate strategy; 66% of all-male boards do.
The promotion of ethical conduct as a characteristic is also significant when women are included. 94% of boards with more women ensure conflict of interest guidelines, compared with 68% of all-male boards. Accordingly, 86% of boards with more women also ensure a code of conduct for the organization, compared with 66% of all-male boards.
More female representation on boards converts into better risk management, audit control, and long run strategies. In the next edition of this feature we will go further into what women do differently and provide a basic analysis on the role women played in the financial crisis of 2008.