A case for more females up the corporate ladder! (part 3)

By Patrick Mayoh

At last! This is the ultimate part of my series on gender diversity in top management positions. There is a strong case to articulate around the need for major corporations to make it much easier for female workers to climb the corporate ladder in major corporations.

The need to increase the workforce in Europe order to maintain or increase current productivity levels, the increasing roles women play in affecting purchasing decisions across households in Europe and the world and improved corporate images are just some of the main reasons that were highlighted in the previous posts about the need for more women to lead.

This last post is going to reveal that companies that are more diverse gender wise have achieve the following:

· Greater operational performance

· Greater financial performance i.e. Greater ROE, Greater EBIT and Greater Stock price growth

Greater Operational performance

MC Kinsey traditionally measures performance in corporations against the following nine criteria:

1. · Direction: vision, mission statement, sense of purpose in general
2. · Accountability: evaluation and proper reporting of results as well as clear guidelines to assess individual responsibilities
3. · External orientation: interactions with customers, suppliers and other external stakeholders
4. · Capabilities: the process of creating and sustaining competitive advantage
5. · Environment and values: organizational cohesion and understanding of shared values by employees
6. · Motivation: Inspired and driven employees
7. · Innovation: thinking ahead of the competition and the industry in general
8. · Coordination and control: evaluating performance
9. · Leadership: how leaders shape and encourage employees to achieve

MC Kinsey posits that organizations that achieve high scores on the following criteria equally achieve greater profitability and market capitalization. But more interestingly was the survey carried out by the organization to assess how much gender diversity affects performance within a specific organization. Out of the 101 companies from America, Asia and Europe and out of the 58,240 respondents it was found that organizations that achieved the highest on each organizational criterion outlined above had three or more females on their corporate boards than those who had fewer females on their corporate teams.

Greater financial performance

In conjunction with Amazone Euro Fund MC Kinsey conducted a study on 89 listed European companies to investigate the effect gender diversity had on the financial performance of companies. The companies were selected on the following criteria:

• · A market capitalization of €150 million
• · The share of women on the executive committee (CEO or CFO)
• · The presence of more than two women on the corporate board

Results indicate that companies that have higher proportions of women on their committee outperform their competitors and have financial performances above the industry’s averages. The Average ROE for the companies selected in the survey was 10, 3% while company with higher proportions of females on their corporate boards achieved an average ROE of 11.4%; this is equally the case with EBIT of 5.8% versus 11.1% and stock price growth of 47% versus 64%.

Conclusively although higher performances in the companies identified in the study cannot be directly attributed to having more females on the executive team, the correlation appears to be quite striking in this case and should therefore be taken into consideration by CEOs and change management professionals within organizations.

Best practices for Gender Diversity

MC Kinsey to conclude the study outlined four best practices that companies could implement to encourage and create gender diversity in their organizations. The case for more corporate female leaders in this series has been made quite clear, and the data as well as the information made available by MC Kinsey are compelling enough. Therefore the following four points are necessary to generate gender diversity:

• · Gender diversity KPIs
• · Measures to facilitate the work-life balance
• · Evaluation of the HR management process
• · Support to leadership

Gender diversity KPIs

This is assessing or investigating the proportion of women within an organization against the following performance indicators:

• · Pay levels
• · Recruitment
• · Turnover
• · Training
• · Satisfaction
• · Promotion

How many women as opposed to men have been promoted in your organization say on a yearly basis? And how does it affect gender diversity in your organization?

Measures to facilitate the work life balance

Measures to facilitate the work life balance should revolve around the following:

• · Work flexibility: how the organization adapt its culture and work environment to be more supportive of females
• · Career Flexibility: the support given to female workers before, during and after their breaks say like Maternity leaves

Those two central elements could be progressively modified to encourage and help women to climb the rungs of the corporate ladder.

Evolution of the HR management process

The HR management process to encourage gender diversity should be articulated around the following:

• · Making sure recruitment sessions both have female candidates and female interviewers
• · Ensuring the neutrality of the appraisal process within HR department
• · Supporting and individualizing career management
• · Making sure women are equally shortlisted for promotion
• · Caring and helping high potential achievers (both males and females)

Support to leadership

This will take place through the following:

• · Mentoring
• · Coaching and training
• · Networking
• · Role modelling

I started this series with the conviction that females were necessary and could be the future of business. I still hold the same belief and I hope more corporations will increasingly see the need to appoint female CFOs or CEOs. Of course this is not to say we don’t need men anymore. I advocate for balance, an equilibrium that could change many organizations across the world.

References

Georges Desvaux, Sandrine Devillard-Hoelinger and Pascal Baumgarter (2007) Women matter: gender diversity, a corporate driver