Blogs / 13 Feb 2022 6 min

Why gender balance is a business problem, not a women’s problem

You could be forgiven for thinking that we are well on the road to achieving gender equality in the workplace. More women than men are graduating from universities. More women are entering STEM industries. And there are more women than ever in leadership roles. As one client said to me recently “Twenty five years ago when I started in this industry there weren’t any women, but things are changing for the better. In another 20 years this won’t be a problem”.

But, according to the World Economic Forum (WEF), my client is wrong. Each year the WEF measure gender parity around the world across four key measures. From that they estimate how long it will take to achieve gender parity. Early 2020, pre-pandemic, their estimate was 99.5 years. Alarmingly, this figure jumped to 135 years in 2021, as the regressive impacts of covid took hold. Globally, women-dominated industries – such as the consumer sector and not-for-profits – have been harder hit by the pandemic. More women than men have lost jobs during the pandemic. And the double-burden of home and work responsibilities – think home schooling and caring for sick family members – has disproportionately impacted women.

Despite progress in recent years, women are still grossly under-represented in positions of power. Across Europe, only 20 per cent of executive roles and eight per cent of CEO roles are held by women. The reality is, we still have more CEOs called Dave* running businesses than women.

So why is this a business problem? In our work with clients across Europe we see the same themes frequently emerging. The winds of change are bearing down on organisations like never before, with pressures from several directions. Here’s what we are seeing.

Reputational pressures

Increasing transparency and public reporting, through everything from GlassDoor D&I ratings by employees, to pay gap reporting and public pledges such as the UK’s Women in Finance charter, mean there is nowhere to hide for organisations not committed to making progress.

And as the focus on ESG intensifies, companies’ social responsibility credentials – including diversity and inclusion – are increasingly under scrutiny. Shareholder activism is on the rise and investors increasingly recognise the benefits of diversity and inclusion and are starting to penalise companies who aren’t taking this seriously. European investment giant Legal & General Investment Management have made it clear they will vote against the re-election of any Chair whose board consists of fewer than 25 per cent women. That’s not good PR for any business.

Client and contract pressures

Even in the last bastions of male-dominated industries, we are seeing pressures for organisations to become more representative of their clients. The world is changing and as workplaces became more and more diverse, the pressures increase on those left behind. A number of our clients report that their clients are demanding change. Stories abound of companies losing bids because the pitch team wasn’t suitably representative of the client. And for those seeking government contracts, failure to meet diversity and equality minimum standards disqualify companies from bidding for this work, in the UK and elsewhere.

Talent attraction and retention pressures

Whether you attribute it to the Great Resignation or not, large and small companies are finding it increasingly difficult to source the best talent right now. Across sectors, there is a very real talent squeeze which means candidates can afford to be pickier, seeking out workplaces where they will feel included and their ambitions nurtured. Within a few clicks, job seekers can test the diversity and inclusion credentials of a prospective employer through sites like GlassDoor, or the various government pay gap reporting sites that exist across Europe. And similarly, disenfranchised employees who may have been sitting tight during the uncertainty of the pandemic, can now test their ambitions elsewhere much more readily than ever before.

Regulatory pressures

Governments around the world are ramping up regulatory pressures on companies. In the UK, the government commissioned Davies’ report recommending non-binding board targets helped spur a doubling of women’s representation on boards in four years.  Equal opportunities and diversity monitoring or gender pay gap reporting is a legal requirement in countries such as Belgium, France, Italy, Spain, Switzerland the UK, and many others.

And some sectors are pushing for change themselves. In the UK, the Financial Conduct Authority is pushing for greater diversity and inclusion monitoring and reporting in an industry largely seen to be a laggard in this space. This increasing transparency shows a direction of travel which is only going to pick up pace.

Business performance

For years we’ve read about the link between gender balanced businesses and organisational performance. Every year McKinsey produce another report showing the correlation between more women at the top and business performance. However, correlation does not mean causation and it has been easy for sceptics to gloss over this data as unconvincing.

Yet, for those still unconvinced by the push factors for change, we now have hard evidence to support this powerful pull factor. Curtin Business School have found that an increase of 10 per cent or more in representation of women in key executive positions leads to a 6.6 per cent increase in market value. Also, the appointment of a woman CEO leads to a 5 per cent increase in company market value and drives a 12.9 per cent increase in the likelihood of outperforming the sector on three or more key business performance metrics[i].

Gender equality is therefore not only a pressing moral and social issue, but a clear business issue too.  Companies have an important role to play in leveling the playing field and enabling more women in leadership. For those who have not started this journey in earnest, the time to act is now as the headwinds of change are picking up pace.

If you’d like to discuss how Shape Talent can support you on this journey do get in touch.

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* This depends on where you are in the world – it’s Peter, John, David, Andrew, Thomas, Lars etc depending on whether you’re in the Netherlands, US, UK, Australia, Germany or Norway.

[i] Cassells, R & Duncan, A (2020). Gender Equity Insights 2020: Delivering the Business Outcomes, BCEC|WGEA Gender Equity Series, Issue #5, March 2020.