Gender balance as smart economics
Kara McGann reviews the benefits to be gained for companies with a gender balance at top-level positions and what IBEC is doing to support this
Globally the importance of improving the gender balance at executive level, on corporate boards and in politics is increasingly recognised. The topic is being discussed by policy makers both nationally and internationally. An economy wide issue, the possible measures required to address the imbalance are being debated.
Earlier this month, the European Union produced a voluntary pledge for business to describe concrete steps that they would take to increase the number of women in top jobs with the aim of achieving 30 percent female board members by 2015 and 40 percent by 2020. In the UK, Lord Davies has just published his report on Women on Boards. The report concludes that significant action in the form of special measures such as gender targets or legislating that companies report or explain the level of gender balance in their organisations in their annual reports are necessary. However it also reports that legislative quotas are not an appropriate step to take at this juncture. In Ireland, the Programme for Government 2011 has committed to taking steps to ensure at least 40percent of each gender on State Boards.
Ireland has come a long way since the days of the marriage bar. In the last decade, with the support of robust equality legislation along with greater awareness and economic development, the employment rate for women has grown significantly to 56.1 percent. While much progress has been made in putting men and women on an equal footing in the workplace, today in Ireland women continue to be under-represented in senior positions in corporate and political life, despite the fact that they represent half the workforce and more than half of new university graduates. This imbalance between men and women in organisations is at its widest at the very top where only 6 percent of companies in Ireland have a female sitting on their board. At a time when organisations are being challenged by the dynamic global economic environment to find an effective method to achieve economic growth and stability, we cannot afford to waste any of the resources at our disposal in our aim to remain competitive and to harness market share. At the glacial pace we are progressing, female executive representation across Europe is unlikely to reach 20 percent until 2035.
The business case for gender balance
Besides the obvious equality and fairness arguments for tapping into female talent in the workforce, it is increasingly accepted that closing the gender gap at the top of organisations is a positive move for all stakeholders. Numerous studies demonstrate strong links between gender balance and financial performance, innovation, competitiveness and corporate governance.
Superior financial performance
Research has found that greater gender balance and the presence of women at the top of organisations leads consistently out perform companies without women in top level positions. Studies outline significant gains in profits, return on equity and stock price growth. The World Economic Forum has correlated closing the global gender gap with increased competitiveness and higher GDP per capita.
The events leading up to the recession show us how homogeneity at the top of organisations can lead to narrow thinking and a lack of proper challenge to decisions made. An organisation that embraces the widest pool of talent, male and female, ensures a diversity of experience and perspective in the boardroom that broadens discussion. Diverse views promote debate and challenge group think. Such diversity is more likely to yield greater consideration of alternatives, risks, and contingency plans and ultimately higher quality decisions.
Harnessing available talent
The rise of talent is a key business issue and all organisations want to source the best talent available. Successful companies are characterised by high creativity and skills and our focus on a knowledge economy is totally dependent on the combined skills of our employees. Today a company’s competitive advantage comes down to its people, and those organisations that harness the innovation and creativity of key talent will be the ones who outperform their global competitors and lead the economic recovery.
While women are often well represented at lower corporate levels, the promotion pipeline does not carry them through to executive and board roles in sufficient numbers. The World Economic Forum has found that, while Ireland ranks first for women’s educational attainment, it is ranks only 29th in women’s workplace participation. In other words, we are failing to harness the return on our investment in the education of women. We are also only achieving a low return on organisational recruitment and training investment by not developing women to senior organisation levels.
Brand and reputation
Institutional investors are increasingly interested in diverse organisations. Although many investors focus solely on financial performance and earnings, increasingly attention is being diverted beyond the balance sheet to factors such as ethics and a commitment to diversity. Similarly, greater diversity at board level has been found to promote a positive corporate image and greater credibility. The complementary skills and styles of men and women impact positively on business by fostering creativity and equipping organisations with better tools to address the needs of a multicultural, diverse, complex and unpredictable global economy.
What is business doing?
The Irish Business and Employers Confederation (IBEC) has been working on various diversity issues including gender for a number of years. For example, they have been developing supporting tools and resources to address the imbalance and the attrition of women at varying levels within the organisation.
Last year, to assist employers in proactively and positively managing their workforce during pregnancy, maternity leave and upon return from maternity leave, IBEC (with support from the Equality Mainstreaming Unit) developed a Maternity and Parenting Toolkit. The focus of the toolkit is on supporting and assisting the expectant mother and the new father to try and make this time of transition less challenging for employee and employer alike.
More recently, IBEC took leadership on the topic of gender balance at executive and board level by hosting a highly interactive debate and networking event entitled ’Should business be doing more to achieve gender balance at the top of organisations’. The event which brought leaders, policy makers, HR managers and senior executives from the business and political sphere, opened the debate on measures to increase the number of women in top jobs.
In addition, progress is being made with many IBEC member organisations leading the way in addressing gender balance in their own organisations. Various supports have been put in place ranging from flexible working arrangements to facilitate a range of work-life balance options; leadership development programmes which focus on self-development; coaching and mentoring programmes for managers; and networking groups which provide support and exchange of ideas.
History tells us that time alone is not going to improve the gender balance at the top of organisations. Today more and more employers are active in promoting the advancement of the careers of both their male and female employee’s. Many have engaged in a range of supportive measures aimed at increasing the gender balance but fundamentally the representation of men and women in key decision-making and leadership roles has not changed to any great degree.
Gender balance at the top means equal success for both women and men. When the talents of women and men are merged in a culture that puts skills, professionalism and results first, the outcome is not necessarily a redistribution of power and resources but a win-win situation leading to a greater outcome for all stakeholders.
Yet the achieving of gender balance requires new thinking and innovative approaches and ways to address the varied obstacles that continue to cause the problems. The equality and business cases for gender balance at the top of organisations are clear. So what should business do now? Significant interest is building around this important issue and there is a need for real structures and measures to be taken by business to address the situation. Should business fail to address the imbalance voluntarily and robustly, regulation and legislation may very well be applied upon them, as has occurred in other countries. What is needed is a business response to what is in essence a business problem.