Gender balance: is your organisation closing the gaps?

No one can argue against the business case for organisational balance and gender parity. The McKinsey Global Institute (MGI) estimates that fully incorporating women into the economy would add $12 trillion to global GDP by 2025 [2]. Yet the gender gap is still vast on many levels and will continue to widen if we don’t stop “trying to fix the women”[1] and address the historical hangover of social engineering that has influenced our corporate culture and environment.

In this blog we explore the three commonly discussed gender gaps and present our view on how best to start addressing these.

The Opportunity Gap

Achieving a more gender balanced workplace boosts productivity, increases organisational effectiveness, enhances employee engagement, meets the diverse needs of customers and suppliers and improves brand reputation [3]. yet organisations are still struggling to close the gender gap and meet conservative targets at all corporate levels.

Under-representation of women is not just an issue for the large corporates, the recent Rose Review stated that up to £250billion of new value could be added to the UK economy if women started and scaled new businesses at the same rate as UK men [6]. Yet research shows that female entrepreneurs are hugely disadvantaged in obtaining access to finance, a major contributing factor as to why only one in five new businesses in Britain are launched by women [9]. Men are 86% more likely than women to be venture capital funded, and 56% more likely to secure angel investment [10]. At recent IWD events we heard from female entrepreneurs their experiences, with one stating that in over 300 pitches 99% were to men [1]. There are vastly more men than women making funding decisions in the UK, suggesting there is an inherent gender imbalance that risks penalising female business innovators.

The issue is not just about setting up for entrepreneurs, it’s about maintaining and scaling business. Dame Stephanie Shirley demonstrated how positioning herself as ‘Steve’ led to significantly more opportunities. As a start-up management consultancy, in an industry dominated by the big-5 who have a privileged advantage of being on clients’ preferred supplier list, WhartonBC find the biggest challenge is large corporates’ appetite for engaging with small unknown businesses with flexible & agile working values. It was refreshing to hear Alison Rose share that Natwest are addressing this by embracing SMEs where ‘their solution meets the business problem’ and not just defaulting to the comfort of the big-5. Yet many organisations are still creating barriers for small businesses to thrive, through archaic procurement processes and perceptions.

A diverse workforce brings depth and breadth to decision making, increasing innovation, competition and economic performance. Engaging with SME’s can bring a fresh perspective and more agile working practices. What is your organisation doing to create organisational balance and encourage SMEs?

The Leadership Gap

In the IMF’s most recent publication, Christine Lagarde states that adding one more woman in a firm’s senior management or corporate board – while keeping the size of the board unchanged – is associated with an 8–13 basis point higher return on assets [4]. Yet currently 100 companies in the FTSE 350 either have no female directors, or have just one – while the remaining 250 companies are not on track to meet their gender diversity targets set in 2016, let alone improvements to sexuality, race, or social mobility [5].

Advancements have been made with campaigns like 30% Club and Everywoman, yet the issue still persists. In the Financial Services Industry, women hold fewer than 20% of board seats in banks and bank supervision agencies [7] and account for fewer than 2% of bank CEOs [8]. Yet banks with a higher proportion of women board members have thicker capital buffers, a lower proportion of nonperforming loans, and greater resistance to stress [8].

In the fast-growing technology sector, women are 15% less likely than men to be managers and professionals and 19% more likely to be clerks and service workers [8]. Yet evidence shows a more diverse workforce improved innovation and greater alignment to customer needs.

Speaking with several chairmen over the last few weeks, there is clear appetite and focus on building parity – yet it’s still a question of supply – recruitment agencies have a limited number of candidates and often it’s the same women on many boards. Should there be more focus on making recruitment agencies accountable for identifying new candidates rather than only positioning those who have board experience? Or, as raised several times at recent The Telegraph’s Women Mean Business event, is it more about self-belief and supporting women to have the confidence to put themselves forward?

As we shared at the World Traders Panel [1] “it’s not just having the seat at the table – it’s about having a voice”. We believe leaders need to actively listen to every voice to bring true diversity of thought to decision making. Boards need to make diversity appointments a priority and support people once on board to thrive. What is your organisation doing to increase gender parity and create the culture of diversity of thought?

The Pay Gap

According to the WEF it may take another 202 years to close the economic gender gap globally [14]. Statistics give us a stark truth: on average women across the world are paid just 63% of what men earn. In no country are women paid as much as men [11].

Many factors contribute to this, from the sectors women historically have chosen to work within (education and healthcare which tend to have more women and pay less [12]) to the smaller proportion of women in higher paying professional and leadership positions. Women have traditionally been the 2nd earner and therefore often required jobs with greater flexibility, which historically has meant more routine or less senior roles.

There is now a new concern emerging, the widening of the gap due to digitisation and AI. The jobs more eligible for automation and robotics are those involving routine and repetitive tasks, in which women are over represented. Therefore, a high proportion of women doing lower paid work are at greater risk of losing their jobs to automation in the digital age [8].

Interestingly, the WEF ranked the UK only 50th out of 149 countries for gender pay, with women collecting 70% of that paid to men; a sad reflection 100 years after suffrage. Without the fundamental step of gender parity in pay, gender differences in society will continue, as families are forced to make decisions around caring responsibilities based on income.

Parity in pay is a moral duty and fundamental step to strive towards organisational balance. What can we learn from countries like Iceland, Sweden and Rwanda [13] whose public policies have transformed women’s opportunities to not only be equally represented in the workforce, with the smallest pay gender gap but also be in senior positions? What is your organisation doing to highlight and address your pay gap?

Closing the Gap

Wharton Business Consulting believe it is not about hothousing diversity groups or programmes. These often only create further division and reinforce the ‘Mindset Gap’ that women need ‘fixing’. The focus should be on:

• Insight – understand the gap at all levels and explore the root cause. Often the focus is on the ‘glass ceiling’ yet it’s important to look at the full employee lifecycle from attraction to exit and understand where your issue is and why.
• Mindset – as Avivah Wittenberg-Cox noted [15] change is about ‘will and skill’ leaders need to understand the benefits of organisational balance and truly believe in it. Build the business case together, so all functions are involved not just D&I or HR. Equip all leaders with the knowledge and skills to embrace diversity and allow the minority voice to be heard. Set a clear example to your workforce that diverse people can and do thrive here.
• Environment – create a culture that enables flexible working focused on output rather than input. Legacy policy and processes are often laced with unintended bias written many years ago by the dominant group. Explore your cultural levers such as recruitment, reward, promotion to eliminate bias, such as using skill-based assessment tasks rather than a reliance on interviews can ensure fairness across candidates.
• Social and Economic Culture – it’s our responsibility as organisations and individuals to make change happen. Hold each-other to account when we show bias at work, home and in society. Engage with SMEs and female entrepreneurs to drive change for our suppliers and in society. Encourage social change by stepping up, embracing diversity and spreading the word.

It is our responsibility to build a #balanceforbetter future, addressing the gaps and unlocking the potential to increase economic performance.

At WhartonBC we are a ‘Results Driven Organisation’ focused on output not input. This enables both our 74% female workforce and our men (of which 46% are working parents) to have flexible working and give our clients the greatest results. If you would like to hear more about how our points of view on closing the gaps please contact Natalie Wharton

References

1. Worshipful Company of World Traders International Women’s Day Panel (Devika Wood, Michael Cole-Fontayn, Dame Fiona Woolf and Natalie Wharton), 7 Mar 2019
2. How advancing women’s equality can add $12 trillion to global growth McKinsey Global Institute, Sept 2015
3. Shaping the Future Women and Work Commission, 2006 Women and Work Factsheet BITC, 2018
4. Empowering women is critical for the world’s economy and people International Monetary Fund, Mar 2019
5. International Women’s Day, Balance for Better Everywoman, Mar 2019
6. The Alison Rose Review of Female Entrepreneurship, Mar 2019
7. Women in Finance: A Case for Closing Gaps International Monetary Fund, May 2018
8. Closing the Gender Gap International Monetary Fund, Mar 2019
9. Female entrepreneurs typically start businesses with half as much capital as men The Telegraph, Mar 2019
10. ‘I was told I didn’t look the part’ The Telegraph, March 2018
11. Global pay gap will take 202 years to close, says World Economic Forum The Guardian, Dec 2018
12. Highlights of women’s earnings in 2017 Bureau of Labor Statistics, Aug 2018
13. How Rwanda beats the United States and France in Gender Equality World Economic Forum, May 2017
14. Closing the Gender Gap World Economic Forum, 2019
15. Gender-balancing Avivah Wittenberg-Cox TedTalk, 2018