By Susan Clancy, PhD
As one Wall Street
In the office, not so much.
Today, although women make up more than 50% of college grads and firm talent pools, they represent less than 10% of C-level leadership teams and boards of directors. Organizationally, those that “take control” are almost always men; talented women face work life and bias barriers that hold them back.
Most men don’t care.
According to recent global survey results from organizations like McKinsey and Deloitte, helping women overcome the leadership barriers they face is not even a top three priority for most business executives. “This is because guys don’t want the competition” one of my female MBA students said last week during a class on Leadership and Diversity taught at INCAE Business School. Although the male students laughed dismissively, Warren Buffet might have agreed with her. When asked the secret to his success during an interview, he replied that one reason was because “I only had to compete with half the population.”
As long as talented women, even those who graduate from top business schools, continue to get pushed and pulled out of leadership tracks, ambitious men have a clear advantage. Still, as a scientist, I think there’s a better, more parsimonious, answer. From a business perspective, people don’t see why women should be on top. Data from multinationals, across diverse business industries, consistently show the same thing: neither gender sees the link between gender diversity in leadership and firm financial performance. They are more likely to consider the issue one of fairness than of competitiveness.
Sheryl Sandberg is not only a global role model for professional women, she is also widely admired by the men they work for. People listen to what she has to say. Here is how she concluded her wildly popular TED talk aimed at encouraging gender diversity in leadership: “I have two children. A five year old son and a two year old daughter. I want my son to have a choice to contribute fully in the workforce…and I want my daughter to have the choice.” Why? Beyond a vague claim that “the world would be a better place,” no explanation was provided.
This is a big problem. Fairness and equality are laudable goals, but they don’t drive change in the private sector. The point of business is to make money.
For women who want to get on top, and HR departments tasked with the mission of getting them there, I recommend you stop talking about equality and start talking about competitiveness. A large and growing body of data, perhaps best illuminated by Scott Page, professor at University of Michigan in area of Complex Systems, Political Science and Economics and author of the seminal book The Difference: How the Power of Diversity Creates Better Groups, Firms, School and Societies, indicates that diverse groups outperform non diverse groups.
In the real world, this data can perhaps be best summed up by the head of one CEO in pharmaceutical industry. During a recent talk to his global leadership team in Miami, he said, “Given the diverse market we serve, when I look at a top decision making table filled with only white guys, over fifty, I know we are screwed.”
The financial impact of gender diversity in leadership has been quantified by organizations like Catalyst. Their reports, based on publicly available financial data, unequivocally show that the those Fortune 500 companies, across four business industries with high levels of diversity in leadership teams, outperform those with low levels, in terms of ROE (return on equity) and TRS (total return to shareholders).
Why do women on top result in financial performance?
It’s because the world is not the same as it was 30 years ago (when most current business leaders entered the talent pipeline). As a function of stunning global changes in education and workforce participation, women now make up more than half of college graduates (any firm’s talent pool) and, according to Nielson reports, 80% of most family consumer decision makers. Globally, between 2008 and today, 7 trillion dollars of female generated income came online. Economists refer to it as the biggest emerging market in the history of the world, bigger than China and India combined.
Obviously, organizations that provide both talented men and women opportunities to rise to decision making tables will have an advantage. Not only have they been able to capitalize on their entire talent pool (rather than half), they have 1) managed to get women to help them develop and market the products and services that women consumers will pay for and 2) harnessed the competitive power of diverse decision making teams. According to a recent literature review (Journal of Organizational Change Management), what is the best predictor of firm change regarding diversity? Having leaders (to date, 90% men) who champion these change efforts.
For those men who like women on top in bed, but not in the firms they work for, I advise you to go back to the Charles Darwin.
What is the key to species survival? It is not a function of how strong the species is, or how smart, or how successful it has been in the past. The key to species survival is a function of how easily it can adapt to environmental changes. If you lead an organization that wants to survive in the 21st century, I suggest you pay attention.
In today’s world, you don’t just want women on top in bed. You want more of them on top in the boardroom. Not because it is right, or fair, or turns you on, but because it is key to remaining competitive in the future.
Susan Clancy, PhD in Experimental Psychology from Harvard University, uses her applied research background to help private and state owned firms maximize the leadership potential of their entire workforce.
