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It’s about time there were more women in senior management.

Fall 2009 By Alison Maitland

At the end of Good Value, his new book on globalization, morality, and human nature, British bank boss Stephen Green turns to a topic he describes as having “overriding importance”: gender.

The chairman and former CEO of HSBC holds out the hope of a better world as women take an equal place to men in public life. This matters not just for women’s progress but for men’s too, he argues. Prevailing stereotypes of masculinity and femininity are dehumanizing and suppress the reality that male and female qualities co-exist in each of us.

This is unusual territory for a businessman and banker to enter. Yet he is not alone: The economic crisis seems to have acted as a catalyst for perceptive corporate leaders to speak out on the need for greater female participation at the top. At the height of last year’s financial turmoil, seventeen heads of multinational companies—all men—wrote an open letter to Britain’s Daily Telegraph urging faster progress in bringing women into the boardroom. Likening the urgency of the matter to that of climate change, they said the economy needed the best available talent, now more than ever.

These developments are encouraging. They suggest a growing understanding at the highest echelons of at least some companies of the need for change in the leadership cadre. There are powerful arguments for this, not least that the crisis has shone an uncomfortable light onto the male-dominated leadership of the corporate sector, and of finance in particular.

Arguments for achieving change, however, have nothing to do with being nice to women—they’re about ensuring sustainable economic growth and long-term business success. International bodies, from the Organisation for Economic Co-operation and Development to the World Bank to the European Commission, now recognize the importance of women as engines of economic growth. In fact, Goldman Sachs has calculated that gender equality in the workforce could boost GDP by 9 percent in the United States, 13 percent in Europe, and 16 percent in Japan.

To achieve that, government policy is important. Countries that help parents to balance work and family by providing various social services gain twice over—from greater economic growth, because more women participate in the workforce, and from higher birth rates, necessary to maintain a thriving economy. The Scandinavian nations are good examples of this effect, while countries like Japan are at the other extreme, suffering from low birth rates and low female participation in the labor force, particularly in management.

You might think the United States would score well on women’s economic opportunity, but a lack of infrastructure to support working families seems to be holding women back in the Land of Opportunity. The World Economic Forum’s gender-gap index, which assesses countries on how well they divide their resources and opportunities among their male and female population, ranks the United States below countries such as Mozambique, Moldova, Tanzania, and the Philippines. America is also the only developed country that does not provide women with guaranteed paid maternity leave.

Meanwhile, women represent a growing majority of university graduates around the developed world; the OECD projects that the average percentage of female graduates will rise to 63 percent by 2025. In the marketplace, women make the vast majority of consumer-spending decisions in the Unites States and many other countries. Companies must respond by ensuring women are fairly represented at all levels, from the showroom to the boardroom.

Indeed, the private sector also has much to do—and much to gain. By promoting women, they can enjoy a substantial bottom-line benefit. Research studies in the United States and Europe show that organizations with more women on their leadership teams are, on average, more profitable than those with few or no women. This stronger financial performance is most significant when women account for 30 percent or more of the executive committee or board—in other words, when gender balance replaces mere tokenism.

Gender diversity also fosters innovation. London Business School research has shown that the most innovative teams are those with a 50/50 gender balance. And a big U.S. study by academics Cristian Dezsö and David Gaddis Ross has found that “innovation-intensive” firms financially outperform others if they have women in senior management. They provide evidence of a collaborative female management style at the senior level that encourages creativity. (Interestingly, they found that having a female CEO—of whom there are, of course, only a handful—produced no similar positive effect.)

Still, while some business leaders are calling for change, are companies actually taking action? Are women gaining a voice commensurate with their numbers?

They are certainly playing an important role in the cleanup of the financial system. They include women like Mary Schapiro, who took the chair at the Securities and Exchange Commission last year, and Christine Lagarde, the French finance minister, who has fiercely criticized banks for returning to “the old ways.” There are others, of course, but it is still too soon to say if these developments herald widespread change inside companies. Several recent appointments to top positions of businessmen closely associated with the financial crisis suggest a deep resistance to fresh faces and new perspectives. In short, the crisis seems to have widened the gap between companies that are leaders on gender diversity and those that pay lip service to it.

But given all the evidence above, it’s the leaders who are likeliest to gain competitive advantage. First, they have truly understood both the wider reasons for change and the case for their own company culture to change. Second, they have led the gender drive from the top and ensured that male, as well as female, leaders are deeply involved in pushing the agenda.

Third, and crucially, they have shifted the focus of diversity efforts. Gender-diversity programs have too often been about getting women to adopt—and adapt to—“male” patterns of behavior so that they can perform better in a male-dominated world. The subtle message is that there’s something wrong with the women themselves that they must fix in order to advance.

It’s tough being a woman leader. A male headhunter recently told me that boards are calling for more women to be included on director shortlists, but what they really want are women who behave like men. It’s no wonder that many women who have achieved senior roles say they feel worn out by not being able to be themselves!

If business leaders truly want the differences that women (in sufficient numbers) bring, then they need to challenge their own and others’ ingrained expectations of what a leader should look like. These expectations are often based on the past, on what corporate leaders have traditionally been like, and in most cases still reflect the white male “norm.” But women must be given the opportunity to achieve power on their own terms, using their own leadership and communication styles. Companies that want to make the most of their investment in women will adapt their cultures to value and nurture these differences. In doing so, they will probably find that they become more attractive workplaces for a lot of men, too. In fact, research at INSEAD showed that women rate equal to or higher than men on most traits of exemplary leadership. (But what did the media pick up on? The only trait—being the lack of vision—on which women scored lower.)

As the author-banker Stephen Green puts it: “If men were to be unchanged by the full participation of women in public life, if women were to participate in public life on the basis of adoption of traditional male modes of interaction, then humankind would have missed a profoundly important opportunity for growth.”

 

Alison Maitland ALISON MAITLAND is co-author of Why Women Mean Business, just published in paperback. She is a former longtime writer and editor for the Financial Times, director of The Conference Board’s European Council for Diversity in Business, and a senior visiting fellow in the Faculty of Management at Cass Business School, London. She can be reached via alisonmaitland.com.