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Why Corporates Are Handicapping Themselves by Supporting the Gender Divide

Why Corporates Are Handicapping Themselves by Supporting the Gender Divide

A recent report by LeanIn.Org and McKinsey & Company titled Women in the Workplace 2017 highlighted that women remain significantly underrepresented in the corporate world. The gender divide starts right at the beginning with fewer women hired at the entry level. At each step up the corporate ladder, the representation of women further declines and women of colour face an even further drop-off at senior levels. This is despite the fact that significant research has been done to show that companies with women on the board perform substantially better.

The study is currently the largest study of its kind featuring 222 companies, employing more than 12 million people, and it highlighted a number of key issues that are preventing equality from taking place:

Satisfaction with the status quo

The problem begins with employees who believe women are well represented in leadership when they only see a few women in upper management. They have become comfortable with the status quo and don’t feel any urgency to change things. In addition men are more likely to see the workplace as equitable and believe their companies are doing a good job supporting diversity.

The bar for gender equality is too low

Nearly 50% of men think women are well represented when it comes to leadership positions in their companies – where only one in ten senior leaders is a woman. Unfortunately a third of women also agree that women are well represented when they see the same figures.

The glass ceiling is set lower for women

At the first step of promotion to manager, women start to lose out, being 18 percent less likely to be promoted than their male colleagues. This is the beginning of the gender disparity split in most companies – if entry-level women were promoted at the same rate as their male peers, the number of women in the upper echelons of company management would more than double.

The great salary gender divide

54 years have passed since the United States passed the Equal Pay Act, and yet women in the US and across the rest of the world still face a substantial gender wage gap. Today, on average, a woman earns 79 cents for every dollar a man earns. Bringing it closer to home, the Women in the Workplace research programme in 2017 at the University of Johannesburg showed the South African gender pay gap is estimated to be between 15% and 17%. This means that women need to work two months more than a man to earn the equivalent salary to what he would earn in a year. 

Companies with women leaders flourish

A study on gender diversity by Marcus Noland, Tyler Moran and Barbara Kotschwar for the Peterson Institute for International Economics released early in 2017 showed there is a positive correlation between the presence of women in corporate leadership and in company performance. Due to the gender divide only half of the companies studied had any female leaders at all, but those that did showed that having a woman in an executive position leads to better performance – and as the number of women increases, so too does the performance.

Women on boards lead to better returns

The Women on Boards study performed by MSCI ESG Research showed that companies with strong female leadership generated a Return on Equity of 10.1% per year versus 7.4% for those without. The study suggests that at least three women are needed for their voices to be heard and for the dynamics of the board to change “substantially”. In a study done by Catalyst called The Bottom Line: Corporate Performance and Women’s representation On Boards showed that companies with the most women board directors (WBD) outperform those with the least on return on sales (ROS) by 16 percent. Over a period of four or five years, they significantly outperformed those with sustained low representation by 84 percent (ROS) and showed a 60 percent lead on return on invested capital and a 46 percent lead on return on equity.

Despite the evidence of these and other gender divide studies, the percentage of women in leadership roles is low and doesn’t seem to be changing anytime soon – to these companies’ own detriment. In the words of Sheryl Sandberg, the chief operating officer at Facebook, who sums up the effect women can have on a company succinctly, “Endless data shows that diverse teams make better decisions. We are building products that people with very diverse backgrounds use and I think we all want our company makeup to reflect the makeup of the people who use our products. That’s not true of any industry really, and we still have a long way to go.”

At GG Recruitment we believe in matching the right candidate, no matter what their gender, with a company where they will flourish and develop their career. For more information about our specialist placement solutions in finance, management and IT, contact us today:

 

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