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Why Your Employer Should Want Gender Parity in Leadership

Topics: Data & Research

The theme of this year’s International Women’s Day is #BalanceforBetter, “a call-to-action for driving gender balance across the world.” The goal of the campaign, which will run all year round, is to create a world in which women are equally represented in business, government, media, entertainment — basically in every aspect of public and private life.

Think about it: how many women are on your employer’s leadership team? If your company is like most, not that many.

According to the Center for American Progress, women hold nearly 52 percent of professional-level jobs, but substantially fewer leadership positions. For example, 45 percent of associates at law firms are female, but only 22.7 percent of partners. And although 40 percent of doctors are women, only 16 percent of medical school deans identify as female.

It’s the same in government leadership. Even after the midterm elections of 2018, women represented only 24 percent of the House and 23 percent of the Senate. Only 9 percent of Congress are women of color.

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Why does this matter? For individual women, it matters because representation means having a voice in decisions that affect them, from workplace policies to federal legislation. It’s also a chance to close the gender pay gap, as leadership roles typically pay more than individual-contributor positions.

But gender parity and diversity of all kinds should matter to employers, too — and not just because it’s the right thing to do.

What’s Gender Parity?

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Gender parity isn’t just the ratio of men and women who work at a given company, although it’s also that. It’s a measurement that compares various factors among men and women, from earnings to representation in leadership.

At New America, Haley Swenson explains that a gender parity ratio tells us more than a sex ratio. For example, she writes, it can tell us more than whether women are represented in tech — “not just whether they are there, but also what it’s like for them there.”

She continues:

For instance, a gender-parity ratio tells us that female-led tech companies received just about $1.5 billion in venture-capitalist investments last year, compared to about $58 billion for male-led companies. Women, put another way, are receiving about 3 percent of the investments that men are. We know, then, that not only are there few women in tech, but that the few women who are in the field are attracting a disproportionately low number of investments. Taken together, statistics like these can give researchers a picture of what the conditions are like in a given location or institution, and point to potential areas for advocates and policymakers to intervene.

The Gender Pay Gap Is (Mostly) an Opportunity Gap

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PayScale’s research on the gender pay gap shows that the oft-quoted statistic about women’s earnings relative to men — 78 cents on the dollar — is only part of the picture. When we control for factors such as experience, industry and job level, women earn 97.8 cents for every dollar earned by equally qualified men.

That’s good news, right? Well, not really. The reason that uncontrolled gap is so much larger is that women are underrepresented in higher-paying jobs, including leadership roles. By mid-career, men are 70 percent more likely to hold executive jobs than women. By late career, men are 142 percent more likely than women to occupy VP or C-suite roles.

And the opportunity gap can be self-perpetuating, as men may hire and promote other men instead of women.

“The people [women] are negotiating with are most often going to be men,” says Lydia Frank, Vice President of Content Strategy for PayScale, in an interview with CNBC Make It. “Your boss is more likely to be a man and there is that potential unconscious bias happening where we know from most studies that women and men treat women differently when they initiate negotiations.”

She continues, “I will say when you are looking at apples to apples, so often the onus is put on women to ask more often, be more confident and ‘lean in.’ But I think in order for things to change, we have to stop telling women to do more to get paid more. We have to put ownership on organizations to look at pay equity.”

The same goes for gender parity in leadership. We can encourage women to lean in, but until we dismantle bias and change the professional environment, they’ll always be fighting an uphill battle.

[click_to_tweet tweet=”By mid-career, men are 70 percent more likely to hold executive jobs than women. By late career, men are 142 percent more likely than women to occupy VP or C-suite roles.” quote=”By mid-career, men are 70 percent more likely to hold executive jobs than women. By late career, men are 142 percent more likely than women to occupy VP or C-suite roles.”]

Why Companies Should Want to Close the Gap

Companies that invest in gender-parity in leadership are more profitable. At CIO, Sue Weston writes:

A 2014 study found that moving from a single-gender to blended workplace increases productivity by 41%. (MIT) In 2016 the Peterson Institute identified a significant under-representation of women on corporate boards and leadership positions. They projected that changing board composition to include 30% female representation could add up to six percentage points to a company’s net margin. [This survey included 21,980 firms over 91 countries. Half those surveyed had no female top executives.] (PIIE) There is financial benefit for gender balance.

Research from McKinsey & Company also shows that gender and ethnic diversity on executive teams and boards lead to higher profits. Their data show that companies in the top 25 percent for gender diversity “are 15 percent more likely to have financial returns above their respective national industry medians,” while those in the top 25 percent for racial and ethnic diversity are 35 percent more likely to have higher returns.

“Companies in the bottom quartile both for gender and for ethnicity and race are statistically less likely to achieve above-average financial returns than the average companies in the data set (that is, bottom-quartile companies are lagging rather than merely not leading),” per their report.

How Employers Can Create Gender Parity in Leadership

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McKinsey recommends four actions to employers who want to support gender equality in their organizations:

  1. “Get committed.” McKinsey notes that gender equality was a top strategic priority for only 28 percent of companies in 2010. That seems to be improving, but until companies allocate resources to support gender parity and equality, they can’t expect real change.
  2. “Broaden your action.” Mentoring women isn’t enough. The report recommends sponsorship as well as mentorship. Companies should also plan to mitigate the effects of maternity leave on career paths and pay. They should also ensure that they’re supporting diverse leadership styles when promoting from within.
  3. “Hold challenging conversations.” McKinsey recommends asking several questions, including, “Where are the women in our pipeline?” and “What skills are we helping women build?”
  4. “Sweat the small stuff.” Legacy programs can have a big impact on today’s employees. The report gives the example of a company that classified workers on maternity leave as “over quota, unattached,” and thus mandated that they couldn’t have their computers or phones while on leave. This in turn made it harder to keep in touch about possible flexible work options on their return to work. You company might have similar polices that are going unexamined because “we’ve always done it this way.”

(You can read more about McKinsey’s recommendations in A CEO’s Guide to Gender Equality.)

What You Can Do to Close the Gap

If you’re not running a company yet, there are still things you can do to make strides toward gender parity and closing the pay and opportunity gaps.

  1. Advocate for pay transparency. If you’re a decision-maker or otherwise have clout at your organization, you might advocate for the adoption of pay transparency practices that may reveal a gender pay gap — and thus gender parity issues. That might mean anything from revealing more about the company’s compensation strategy to being completely transparent about how much every employee is paid, from the CEO to entry-level contributors.
  2. Amplify women’s voices in conversation. The phenomenon of “speaking while female” is well-known; studies have shown that women are less likely to have their opinions heard in meetings, and less likely to get credit for their ideas. To counteract this, men and women can boost their female colleagues’ voices in conversation. Female staffers in the Obama administration coined the term “amplification” to describe their method for making sure they were heard during meetings. At The Cut, Claire Landsbaum explains: “When a woman made a key point, other women would repeat it, giving credit to its author. This forced the men in the room to recognize the contribution — and denied them the chance to claim the idea as their own.”
  3. Confront your own bias. Both men and women can have bias against women leaders, women negotiators, women in power or those who seem to want power. The first step toward dismantling that bias is facing up to it. Project Implicit, a collaboration between researchers at the University of Washington, Harvard University and the University of Virginia, has created a series of tests to measure implicit bias in a variety of areas, including women in leadership. If you’ve never spent much time thinking about your own bias, it’s a good place to start.

Tell Us What You Think

Does your employer aim for gender balance on its executive team? We want to hear from you. Share your story in the comments or join the conversation on Twitter.

Jen Hubley Luckwaldt
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This site’s insistence on pushing the false narrative of the “gender gap”, will ensure that it never gets off the ground. You often give short shrift to the fact that the misleading 78 cent number is the “uncontrolled wage gap”. Yet you never point out (possibly because you’re too biased to even realize it) that the reason for it is not due to some imaginary societal bias; but rather the fact that the vast majority of women prioritize certain non-monetary… Read more »

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