Gender Equity: The Business Case for Women in the Boardroom
Gender inequality in the workplace is not just a social or legal issue — it’s also a business one.
Recent reports find that by 2025, gender parity could add $12 trillion to the world economy. In the U.S. alone, as of 2010, 47 percent of the nation’s labor force was female. Across the globe, it’s slightly lower at nearly 40 percent, according to the World Bank. While equality is crucial across all levels in a company, it’s particularly important within the C-suite. Studies have shown that companies with greater gender diversity in leadership roles tend to be more profitable.
Other reports show that S&P 500 companies with gender-diverse boards of directors outperform their rivals by 1.91 percent. In the U.S. alone, lost economic opportunities by businesses with heavily male-dominated boards amount to approximately $567 billion — about 3.3 percent of gross domestic product.
Yet women remain underrepresented in leadership roles. And the numbers suggest that it makes financial sense to prioritize workplace diversity. “Greater diversity in the workforce leads to diversity of thought and avoids groupthink,” says Julie Page, Chief Executive Officer, Aon U.K. Ltd. “Diversity drives greater business performance across a number of metrics.”
Cary Grace, CEO, Retirement & Investments at Aon, emphasizes the opportunity: “Women make tremendous contributions every day in our business, civic and personal lives. We have made a lot of progress over the past decade, but there is much more we can be doing to create a truly diverse and inclusive workplace that we can all benefit from.”
What should leaders — both male and female — do to remove the obstacles of advancement?
Gender Equity Issues Can Start Early
Within the workplace, there is a stark difference in the way male and female employees see their careers progressing. Among employees aged 25 or younger, a recent Aon study showed a double-digit lead among men over women who were asked whether they had a favorable impression of their career opportunities.
In addition to not seeing career opportunities as optimistically as their male colleagues, the same study showed that women in this age group were less engaged in their work (53 percent of women, compared with 58 percent of men).
Also, during their first two years of employment, female employees’ perceptions of having influence, autonomy, and a sense of accomplishment all drop at twice the rate seen among their male counterparts.
As women start moving into more senior management roles, that sense of doubt about their prospects persists. The findings show that female executives (typically C-suite leaders) and senior directors (business unit leaders or vice presidents) are significantly less likely than their male counterparts to think that career opportunities go to the most qualified people (11 percentage points less than male leaders).
“How men and women see opportunities within their organization is different — and this becomes more significant as a woman rises through the ranks within an organization,” says Eleni Lobene, PhD in Industrial/Organizational (I/O) Psychology and Head of Products for Aon Assessment Solutions.
Making the C-Suite Attainable for Women Leaders
Having more women in senior leadership roles, particularly within the C-suite, will likely help female employees across the company develop more favorable perceptions about their career opportunities. “This starts with a commitment from executive leadership teams,” says Lori Goltermann, CEO, Aon Risk Solutions, U.S. Retail. “Senior leaders can help by acknowledging the need for mentors and encouraging new or mid-career-stage female employees to take advantage of this resource.”
With younger or newer female employees, Goltermann suggests companies should:
- Encourage and enable more professional/personal growth opportunities for women, such as continuing education and seminars.
- Provide mentorship opportunities from managers — especially women leaders.
A Voice That Matters: Increasing Women’s Sense of Influence
Lobene suggests businesses can also build greater gender equity by improving decision-making to make the process more inclusive. For example, business leaders could:
- Help women feel more involved or at least informed by ensuring a clear decision-making process.
- Meet regularly with their teams to discuss new ideas, and encourage them to share their opinions and unique perspectives.
- Foster a culture that encourages new ideas and appropriate risk-taking.
- Conduct focus groups and forums for discussion in which employees can share their thoughts, fears and suggestions — especially when change is imminent.
- Engage both men and women actively in discussions of their work, and about how and where to make improvements.
Create Flexibility for the Entire Workforce
The desire for flexibility isn’t one that is strictly tied to gender. As more generations converge in today’s workforce, organizations should consider how to best implement flexible schedules for their entire staff, which can go a long way in not isolating a specific group.
“In addition to millennials, most women highly value workplace flexibility because of their commitments outside of work and desire to live a more holistic life,” says Joann Hall Swenson, Partner, Strategic Advisory, Aon. “For example, having the flexibility to set work hours that are conducive to their personal and family life commitments can go a long way in attracting, retaining and engaging talent.”
Whether implementing flexible schedules or formal mentor programs, solving the problem of gender inequality in the workplace begins with leadership. This issue becomes increasingly important when the sustainability of the business is taken into account. Gender parity can help “future-proof the business to ensure organizations are building a business model with creative and innovative thinking that challenges the status quo,” adds Page.
“There is, of course, the ethical question of equality in the workforce, which isn’t debated,” Lobene says. “What really moves this issue forward, however, is the business case — ‘does diversity make business sense?’ And the answer is yes. There is significant data that shows the positive impact it can have on the bottom line.”