The full engagement of women in the workforce and senior leadership positions is the economic imperative of the 21st century. Among Fortune 500 companies, 14.1 percent of executive officers and 7.5 percent of top earners are female. Women are the majority of college graduates, but those percentages consistently fail to be mirrored in executive ranks. Among Chicago’s top 50 public companies, women hold 15.6 percent of director positions – and four of those companies have no female directors at all.
Response to these stats is often, “Who cares?” If women opt out of the workforce or take less ambitious paths, isn’t that a function of lifestyle choice, rather than a consequence of business policy?
The truth is, women are more critical than ever to economic success. When women are empowered, their families, communities and companies all benefit. The productive power of women entering the workforce since the 1970s accounts for about a quarter of our current GDP. Women’s influence and leadership in business creates a different economic and social paradigm, delivering a more balanced, diverse environment – one that intrinsically alters the old “business as usual” mindset.
But today’s picture of women at work is a mixed bag. Women accounted for 51 percent of the U.S. workforce in 2011 and 58 percent of university graduates in 2010. Women-owned businesses saw a 50 percent increase between 1997 and 2011.
At the same time, just 3 percent of Fortune 500 companies have women CEOs. About 15 percent of senior executives are women, while 62 percent of women hold staff positions rarely leading to executive roles. And young women are either stalling in middle management positions or choosing to leave corporate and professional America mid-career before achieving the top jobs for which they’re primed.
And that’s to our detriment, because we – companies and corporate America – need them in those roles. Goldman Sachs, McKinsey, Ernst & Young, Deloitte and others have documented the same fact: companies with women in top leadership roles produce a better bottom line. A key study by Catalyst found that gender-inclusive leadership is a key driver for financial performance. Return on equity and total return to shareholders was 34 percent higher in companies with the highest numbers of women included in senior positions.
Astrid Pregel, founder of Feminomics, hones in on the gap between women’s talent and the number of women in top positions. “The data shows a real imbalance. These highly educated resources are hugely underutilized,” she pointed out at the Womenetics Global Women’s Initiative conference in Chicago last November. “If we don’t align women, our highest educated resources, with the opportunities that drive economic growth in such a way as to maximize women’s contribution to the economy, we are, as Warren Buffett and others have said, only playing with half a deck of cards.”
McKinsey, in a 2011 quarterly called Changing Companies’ Minds About Women, stated, “…Research highlights strong statistical correlations among a large number of senior women, financial performance and organizational health.” The report asked global business leaders what they believe are the most important leadership attributes for success; each of the top four – intellectual stimulation, inspiration, participatory decision-making and setting expectations/rewards – are more commonly found among women leaders. In the words of the McKinsey report, “The bottom line: companies gain hard business benefits from a more diverse senior team.”
Doing Well While Doing Good
In addition to bottom line success, data from successful companies provides evidence that women’s leadership positively alters conditions not only in business, but also in communities.
A new joint study, Gender and Corporate Social Responsibility: It’s a Matter of Sustainability, released by Catalyst and Harvard Business School, reveals a positive correlation between gender-diverse leadership and corporate social responsibility (CSR). In short, companies that promote greater gender diversity at top leadership levels also notably increase the breadth and quality of their CSR initiatives, as well as potential for sustaining growth over time.
Companies with 25 percent or more women in corporate officer positions had philanthropic contributions 13 times higher than companies with no women officers. Every woman added to a corporate board drives annual philanthropic giving up by $2.3 million; each percentage point increase in the number of women in corporate officer leadership positions increases giving by $5.7 million. These are huge indicators of women’s ability to inspire and affect change.
The Revolving Door
The evidence is overwhelming that having women at the table makes good business sense; women are the “new economy.” So if placing more women in senior positions is key to economic success, why don’t we take more advantage of women’s talent?
Anecdotal evidence paints a complicated picture, yet one that’s far too relatable for many women. The McKinsey study reveals that stereotypical thinking in the workplace still holds women back. “When senior leaders commit themselves to gender diversity, they really mean it – but in the heat of the moment, deeply entrenched beliefs cause old forms of behavior to resurface,” the reports states. “All too often…executives perceive women as a greater risk for senior positions, fail to give women tough feedback that would help them grow, or hesitate to offer working mothers opportunities that come with more travel and stress. Not surprisingly…although a majority of women who make it to senior roles have a real desire to lead, few think they have meaningful support to do so, and even fewer think they’re in line to move up.”
Secondly, says Ms. Pregel, “Even though we have these enormous investments in women’s skills and talents, and even though these skills and talents are what are required for global business success, by all accounts women are still the gender primarily responsible for children, for the home, for all that and our jobs – and women feel overwhelmed. When women drop out, businesses say, ‘Okay.’”
But they don’t leave blithely. Catalyst’s 2011 study, Women Leaving & Re-entering the Work Force, revealed, “Most women are conflicted about leaving their jobs and find it very difficult to do so. They have spent much time and money investing in their professional development, and their jobs are a large part of their ongoing personal and professional identification. If they do leave, often it’s because employers are not making available, or not making obvious, a way to conceivably combine work with the rest of their lives.”
Pathways to Progress
So what can be done to keep the brightest and best female talent engaged and better harness women’s abilities? How can we advance these ideas and provide what women require in order to fully participate in the economy? Several things are obvious:
Businesses and policy makers must catch up to the reality that there needs to be greater flexibility in the workplace. According to The Shriver Report: A Woman’s Nation Changes Everything by Maria Shriver and the Center for American Progress, “Government policies and laws continue to rely on an outdated model of the American family. And, despite the existence of innovative practices in corporate America, most employers fail to acknowledge or accommodate the daily juggling act their workers perform, they are oblivious to the fact that their employees are now more likely to be women, and they ignore the fact that men now share in domestic duties.”
If you’re in a position to influence business policy, do so. Whether you personally need them or not, take a hard look at how your company offers family leave, flextime and work-from-home options. Review mentoring, sponsorship and advancement programs. Ask women in your company what they need, then find examples of best practices in other places and share them with your company. Nominate women for directorships in companies where you invest your money.
Listen for opportunities to learn more, speak up and make your voice heard on this issue. Find time to attend gatherings where you’ll meet other women who can help you build strong networks that will positively impact your business and social relationships. Check companies’ websites for executive profiles, then engage and partner with those who are making strides to fully integrate women’s leadership. Lift up examples of women who are leading a life of purpose and who forge new ways to integrate their work and personal lives with the positive impact they can have on society. And be a strong advocate in your company. Reach out to leadership to advocate on behalf of the women in your organization and the value they can bring to your company, clients, stockholders and employees.
Support women-owned companies and encourage others to do so. Many women are choosing to innovate and create more flexibility by starting their own businesses. According to the American Express OPEN State of Women-Owned Businesses Report, between 1997 and 2011, the number of women-owned firms increased at a rate of one and a half times the national average. Consumers can support women entrepreneurs, patronize their businesses, use their services and help them grow their companies.
Finally, take ownership of the issue and educate yourself about progress women are making here and globally. Gender equality is the economic issue of the 21st century. Women’s full engagement is critical for economic prosperity and positive change. The ripple effect promises to be tremendous if we make concerted progress toward that goal.