Five Irrefutable Reasons to Close the Gender Gap

5 Irrefutable Reasons to Close the Gender Gap

…just returned from India where we conducted a leadership development initiative for women executives in a large global company – the experience reinforced a fact that all companies must squarely face now: the radical imbalance between men and women in positions of authority and leadership. The gender gap is real, and at SyNet we believe it is time to close the chasm. There are many good arguments that prove why gender balance makes sense—it’s a matter of finding those that resonate in your company and then taking action to begin advancing women into executive and leadership roles.

The statistics on gender balance in organizations around the world point to an undeniable inequality. Among US Fortune 500 companies, only 5% have female CEOs, and only 19% of their boards are women. Around the globe, women’s share of board of director seats varies from 10% in India to 23% in Britain and Belgium, to 30% in France, up to 36% in Norway.

Nearly everywhere in the world, women hold fewer executive positions in organizations. A few examples: there are 71% fewer women than men in executive positions in Cyprus; 62% in Turkey, 58% in Italy, and 42% in Argentina. Even supposed “progressive” countries exhibit a large gap among women executives, such as 37% fewer women than men in Sweden and Switzerland, 31% in Finland, and 30% in Norway.

Many European nations are choosing to legislate gender balance on boards. Norway passed the first gender quota law in 2008; since then, France, Finland, Belgium, the Netherlands, and Denmark have all implemented some type of quota or goal, though the ratios differ. The UK set a goal of 25% women on boards. Most recently, Germany passed a law in March 2015 requiring its top 100 companies to allocate 30% of their board seats to women by 2016, while 3500 other German companies must develop plans to increase their ratios soon.

It’s clear that the gender gap is disproportionate and cannot be justified in a business world that seeks to honor diversity, respect individuals, and hire and promote the brightest and best talent, regardless of who the person is. Many arguments have been made to prove why closing the gender gap makes sense. These are the most critical ones:

  • More women = Better financial results. Numerous surveys have correlated women in executive leadership positions and on the board with better financial performance. In one 2014 survey from Pittsburgh-based HR consulting firm DDI together with nonprofit business research group, The Conference Board, in companies in the top 20% of financial performance, 27% of leaders are women. Among the bottom 20% of financial performers, only 19% of leaders are women. A study from Credit Suisse reported that companies with more female executives had higher returns on equity, higher valuations, better stock performance and higher payouts of dividends.
  • Diversity leads to better decision-making. An interesting position that is increasingly argued is the notion that the greater diversity among leadership, especially on boards, the better the decision making. It’s a known fact that boards have traditionally been composed of men with very similar backgrounds and experiences. Their mental models are so alike that they make decisions based on a narrow view of the business world—and they share the same blindspots. The diversity argument posits that people from a variety of backgrounds have a wider range of ideas and will make better choices. Women are thus a significant element to adding diversity.
  • Women understand the women who are now the primary customers for many companies. Another critical argument is that any company selling to the general consumer market needs to reflect the diversity of that market. Women leaders and board members are increasingly important given that, according to the World Economic Forum, it is women who now control the bulk of household spending globally,
  • A proactive stance on gender balance affirms your social responsibility. Some advocates of gender balance make the point that increasing the representation of women in leadership is an indication of how seriously a company takes its corporate social responsibility (CSR). Having a climate of gender equality is simply one element of a firm’s overall CSR stance.
  • More women create a higher ethics and compliance environment. A few studies have indicated that having more women in positions of leadership and on boards leads to a higher ethical environment in organizations. One study, for instance, indicated that there is less fraud when women fill CFO positions. Other studies appear to demonstrate that women are more consistent about sticking to company policies on ethics, while men are more lenient about ethics when it comes to their decision making.

In the past, many specious arguments have been put forth to try to explain and even justify why the gender gap exists. Some male leaders have stated that women are not capable of the type of strong leadership and decision making that it takes to run an organization. Others claim that it is women who voluntarily choose to leave the promotional pipeline. They blame the gender gap on the fact that “women don’t want to get ahead,” or they “would rather have babies.” Many studies have disproven these arguments as myths and point out that many women leave the pipeline only because they become disillusioned when less qualified men are promoted over them. Such women often enter the corporate ladder with better qualifications and educational backgrounds, including MBAs, but they lag in promotions and raises after several years.

In their book, Bridging the Gender Gap (Oxford University Press, 2014), Lynn Roseberry and Johan Roos argue that gender imbalances persist in large part because too many of today’s male corporate leaders are misinformed about the significance of gender inequality and do not recognize how stereotypes and myths about women continue to exist that have no basis in scientific fact. Their book dismantles many entrenched ideas about masculinity and femininity that lead to poor governance, and it encourages current male leaders to learn more about their unconscious biases.

If your organization has a gender gap that needs closing or is in the midst of reassessing its policies on promoting women, SyNet believes that your leadership must consider the five arguments above. No modern organization that prides itself on social responsibility, diversity, and high employee engagement should continue to operate while allowing blatant levels of gender inequality to exist indefinitely within their ranks.

Walking our Talk about Gender at SyNet

SyNet is committed to gender balance within our own organization and we are completely transparent about the work we are doing to hire and promote women. Currently, 40% of SyNet’s leadership are women, and we are working towards increasing this ratio continuously. Among our nearly 250+ consultants, 28% are women. As a company, we increasingly work with women clients, who number 15% of our projects.

If your organization would benefit from a “closing the gender gap” consultation, SyNet’s consultants are available to assist.