Gender Diversity Matters to the Financial Performance of Corporations

Years of climbing up the ranks in corporate America has given me a unique perspective about the legitimate issues women continue to face when trying to advance their careers.  Incorporating a robust Gender Diversity initiative remains a challenge for many corporations, government agencies, academia and nonprofit organizations. The opportunity to change the culture of our workplace and communities is not always easy.  However, the working world we live in today is rapidly changing with more women entering the workplace.  50% of today’s workforce is made up of women, of which 37% are Mid-Level Managers and 26% hold Vice Presidents positions. That number will continue to rise as more women enter the workplace and aspire to advance into higher levels of leadership.  Yet, the discouraging fact remains an issue; women are not advancing!  A Wall Street Journal article recently highlighted a report by Catalyst, Inc. stated that only 11 chief executives of Fortune 500 companies are women, down from 15 in 2010.

Over the past several months, The Wall Street Journal has written two important articles discussing the topic of Gender Diversity and women being held back in corporations. One article was entitled, “Coaching Urged for Women, Inadequate Career Development Holds Back Female Executives, McKinsey & Company says.”  The article discussed the need to focus on developing mid-level management by giving additional leadership coaching and allowing women to hold positions that involve profit and loss responsibilities for an operation.  Another article was released on April 11, 2011, “A Blue Print for Change”, interviewed top business executives examining issues women face and what is holding women back in the workplace.

McKinsey & Company, Catalyst Inc., Heath Care Women Business Associates ( HBA), and many universities have published research analyzing  the correlation between gender diversity on corporate boards and financial performance. McKinsey and Catalyst recently published two separate studies with very similar data on the global results based on three performance measures: return on sales (ROS) return on investment capital (ROIC) and return on equity (ROE) averages for each company across the study time period.  A total of 524 companies in this study reported the following findings:

·  Companies with the most women board of directors (WBD) outperformed those with the least number of women on return on ROS by 16%.

·  Companies with the most WBD outperformed those with the least ROIC by 26%.

·  Companies with sustained high representation of WBD, defined as those with three or more WBD in at least four of five years with sustained low representation by 84 percent on ROS, by 60 percent on ROIC, and by 46 percent on ROE. *

Many qualified women are highly motivated to move up the ranks.  However, there are four reasons why I believe they are held back:

          1. The structural cultural barriers within companies - This includes a lack of sponsorship, role models, mentors and the absence of leadership along with the exclusion from informal networks where connections are made such as golf outings, etc.

          2. The lifestyle challenges and concerns about the 24/7 executive lifestyle and travel obligations related to those high-level positions.

          3. The beliefs held by both men and women throughout the organization that, “everyone knows you can’t put a woman in that role” or “that job can’t be managed part-time.”  The one I find the most concerning is, “If we promoted her and she goes on leave, we won’t make our numbers.”

         4. The barrier of individual mindsets - Research and my professional experience show that, as women age, their desire to move to the next level dissipates faster.

Integrating Woman Leaders, Inc. addresses the issues that surround the challenges of implementing a transparent initiative for Gender Diversity. We consult companies, organizations, nonprofits, universities and government agencies by providing services that help create sustainable Gender Diversity programs. Our team of  consultants has years of experience in Fortune 500 companies holding executive level position in Human Resources, Sales and Marketing Management, Organizational Performance and Operations. We are passionate to improve companies’ organizational and financial performance with diverse leadership. We provide Leadership Development, Management Training, Sales Training and Executive Coaching focused on women and teams.

IWL was asked to be a guest Columists for Indiana Minority Business Magazine June issue. We wanted to share the article with our over 1,500 readers of our Blog.