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Why most CEOs are failing to successfully gender balance their businesses

The new millennium is already into its 18th year and yet the representation of women in top decision-making positions remains extremely low. This is surprising when you consider that there is for a powerful business case indicating a range of positive results when more women are found at board level and on executive committees. Back in 2008, the Economist termed empowering women economically as “arguably the biggest social change of our times”.

Gender balancing doesn’t just mean bringing more women into business. Women already comprise a large part of the workforce – over 50% in the US. The number of employed women has been increasing steadily throughout the world. The issue is that they don’t rise to the top of organisations and are woefully under-represented at senior levels.

The business case for having women in top management

The data is now indisputable. All studies show that companies that have more women on their boards of directors outperform their competitors who have fewer women. The percentages vary but every measured statistic, from return on investment, to sales, to profit, improves when there are more women on boards and on executive committees.

Part of the reason for these results may be that women are also the majority of the client-base for most businesses. This situation surprises many men, who still hold the notion that they are manufacturing products and providing services for a largely male market. Actually, women make up between 75 – 80% of total consumer spend worldwide. Even in traditional ‘male’ areas such as IT and motor vehicle sales, women are over 50% of the market.

Every marketing guru will tell you that having an intimate, personalised understanding of your target market is crucial for a company’s success. If women are the majority of customers, it would make sense that having more women in decision-making positions would improve that knowledge, and enhance profitability.

Yet another point in favour of employing women in senior positions is that statistics show very clearly that all aspects of corporate governance are improved when there is a sufficient number of women at an executive level.

Then there’s the question of finding talent. HR executives around the globe bemoan the lack of skills, which consulting firms like McKinsey say is getting worse every year. When you consider that women now represent over 60% of university graduates worldwide, and that the gap between skilled women and men is widening, why are women’s talents not being fully utilised? It surely can’t be because it’s not possible to find skilled and qualified women. Talent is what every company searches for, and women are now the largest talent pool in the world.

So why are CEOs still not capitalising on this guarantee of success?

What is clear is that most CEOs are aware of the powerful business case for having more women in decision-making positions, and claim that it’s a priority. ‘Gender fatigue’ is now setting in, though, as they admit that their programmes haven’t yielded good results. Clearly they’re doing something wrong, but they tend to place the blame at the doorstep of HR or diversity managers, or with women themselves. This is where they need to re-think their approach.

Gender expert, Avivah Wittenberg-Cox, states in the Harvard Business Review that: “The lack of women in an organisation is a management failure.”

What can CEOs do to avoid falling into the traps that cause gender balancing to fail:

Grasp the scope and scale of the organisational change required:

Achieving gender balance requires a significant cultural shift from current practices, and it’s well known that CEOs are integral in driving cultural change in their businesses. Thus, a CEO cannot pay lip-service to a gender-balancing commitment. It should be driven with focused determination from the top.

Stop trying to adopted the approach of ‘fixing the women’:

Many gender-balancing attempts aim to mould women into the traditional male-dominated culture that exists in most businesses. The true objective should be to recognise the value of the different cultural and management styles that women offer, which are often more effective for a 21st century business environment.

Drive Gender balancing with specific targets set from senior management:

In many companies, a directive is given to HR to ‘recruit and promote more women’ and efforts are made at these levels. However, this often means that attempts to balance the genders are lost amongst all other aspects of ‘diversity’. HR has many responsibilities, so is unlikely to focus firmly on the case study for gender diversity.

Often, a CEO arranges for the formation of a ‘women’s group’. There are multiple groups like this in existence and they usually invite various motivational speakers and hold regular meetings. These efforts have not translated into any discernible change in the promotion of women, which is not surprising.

The task of improving their circumstances has simply been ‘outsourced’ to the women. The group rarely has any impact and certainly isn’t able to hold senior management to account, which is what is needed.

 

There needs to be specific training and cultural adjustments for gender balancing to succeed, without a clear mandate, HR may not have time for sufficient input.

The CEO needs to drive the programme with specific targets set from the top – it isn’t an HR issue but a leadership challenge, and line managers should be held accountable.

Meritocracy is not the answer, recruit women into senior roles:

Many CEOs believe that by bringing in enough women at lower levels and treating them the same way as men, they’ll naturally rise into senior positions. The fact that this hasn’t happened in the past several decades should make CEOs see that this is ineffective.

It is crucial to take the differences between the two genders into consideration and to pay attention to the cultural changes that are required in the business. Simply maintaining the status quo is what results in the ‘revolving door syndrome’ as qualified women leave in droves.

Overhaul HR practices:

Women’s importance and value to an organisation needs to be recognized. For example, when women are paid less than men and are given ineffective maternity benefits, it’s little wonder that they leave their jobs. Fortunately, this is being taken out of the hands of CEOs as several countries are recognising this problem.

For example, the UK now insists that all listed companies provide statistics on the difference in remuneration between the genders, with startling results. The country that has the lowest pay gap is Iceland (around 4%), as reporting on salaries has been required for some time. CEOs are thus being forced to demonstrate fairness, after having been content to allow this discrepancy to remain in place.

 

The bottom line

The CEO approaches listed above can achieve significant, sustainable results to increase the number of women at senior, decision-making levels. These steps discourage clinging to outdated, patriarchal business methods in the hope that they’ll achieve different results, but  wondering why the majority of women still find themselves excluded from the corridors of power.

Of course, there are pockets of change that are occurring, where CEOs truly grasp the bigger picture and drive the process of change unrelentingly from the top. In this type of situation, great success has been achieved and the companies’ performances, as well as the overall culture of engagement and job satisfaction, have improved vastly.

When CEOs truly understand that gender balance is a business imperative, they will doubtless start to demonstrate a true commitment. At the end of the day, building gender balance should be approached like any other change management initiative that a company undertakes. Change is always hard, so successful CEOs will learn that you need to get serious about it first.

Julia Anne George

About Julia: Writing professionally for the past 5 years, largely in a marketing capacity but also for several international publications, her true passion is in the field of gender-balancing and she has worked with various companies and candidates to ensure the success of qualified women at every decision-making level. She has written extensively in this field. Her passion is to introduce new models of management that are more consultative, which embrace diversity, and are more aligned with a 21st century business environment.

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