What the science says about the economic benefits of gender equality

In a normal world, we wouldn’t really ask about the business case for women in leadership positions. After all, we would expect anything fair, moral and highly functional nation to have little reason to exclude half of its citizens from being fully active members of society, or to restrict economic opportunities to only 50% of the population (which, alas, does not stop 104 countries in the world to do so).

Also, there doesn’t seem to be a clear business case for having so many Men in the direction. Indeed, everywhere in the world, men tend to occupy 65-95% leadership roles, yet:

  • 65% of employees would gladly refuse a raise as long as they could replace their boss
  • 75% of people quit their job as a direct result of their boss, making managerial incompetence the number one cause of turnover worldwide
  • Meta-analytical studies report that toxic bosses have a pervasive negative influence on employee turnover, pay, and productivity, and that people “leave their boss rather than their job”
  • 84% of workers report persistent problems with stress and anxiety caused by their bosses
  • Less more than 20% of advice feel confident to effectively solve their leadership problems
  • Up to 70% of executives fail within 18 months of taking office
  • Even in democratic countries, the popularity rating of heads of state (180/195 are men) generally oscillates around the 40% Mark.

Yet we can understand (if not justify) the perpetual demand for the business case for gender diversity and female leadership, because gender parity in leadership still seems unnatural to most people, not least because that they have become accustomed to the idea that leaders are typically maleAnd in fact male. Those accustomed to privilege may see equality as oppressive, so their denial often manifests in the form of demands, such as the demand for financial benefits or a return on investment, to allow women access. in leadership roles.

Fortunately, a lot of scientific research has tried to answer this question. Unlike data from consulting or human capital firms, this research is published in independent peer-reviewed academic journals, which tends to ensure greater objectivity, as well as more rigorous methodological scrutiny. However, since most people do not have access to scientific journals, the results are often not available to the general public. So what do these studies say?

Here is a brief summary of some landmark studies assessing the impact of increasing gender diversity, particularly in leadership positions, with links for those who wish to dig deeper:

(1) Although having more women on the planks where top management teams drive business performance, some studies suggest that a critical mass is necessary for this effect to occur. For example, studies have shown that unless you have at least 30% female representation, there will be no significant benefits to having more female leaders. Similarly, an analysis of 90 U.S. banks between 1999 and 2015 (a period that included the global financial crisis) indicates that women’s participation on boards boosts company performance once a minimum threshold of women board members has been reached. It also appears that successful companies are much more likely to benefit from higher female representation, as this To analyse of 3,000 American companies between 2007 and 2014.

(2) Even when studies show that companies with a higher proportion of women in management positions perform betterthey report that in these same studies, women gain a lot less only men. The effect may be somewhat mitigated when a critical mass of women reaches leadership positions (according to point 1), but it generally persists. This is proof of the weak link between merit and pay, especially between genders.

(3) One benefits to have more board of directors directors is that they add a new set of skills and diversify the profile of the boards (as shown, for example, To analyse of the top 1,500 S&P companies between 1997 and 2013). Another one advantageas reported by a French study of nearly 400 companies between 2001 and 2010, is a better capacity for control and monitoring.

(4) Women leaders not only improve financial performance indicators, they reduce risk business performance (for example, by reducing the likelihood of lawsuits, reputational scandals and ccorporate crime), and improve CSR and ESG (for example, by reducing the risk of environmental offenses). Companies with more women on their boards are more likely to disclose their greenhouse gas emissions because shown in a study Canadian companies listed on the stock exchange between 2008 and 2014. As the economist noted recentlywomen are generally less corrupt and more moral than men, and since power corruptsand toxic leaders destroy teams, organizations and nations, few traits are as essential to leadership potential as integrity (“corruptio optimi pessima”). For every Elizabeth Holmes there are plenty of Bernie Madoff, Jeffrey Epstein, Adam Newman, Harvey Weinstein and Jeffrey Skilling, etc.

(5) Companies with a higher proportion of women on their board of directors tend to invest more in innovation and to be more innovative. For example, a recent study found that a 10% increase in female representation on boards was associated with a 7% increase in innovation patents and citations. Further analysis of the mechanisms underlying this association found that companies with more women on the board are more likely to have accountability and oversight processes in place to effectively manage innovation. Also, a great study of 18,547 companies in 15 developing countries reported a positive link between the representation of women in business ownership and management on the one hand, and the production of innovation on the other. Research on founders and start-ups indicates that despite the absence of significant gender differences in entrepreneurial potential, women entrepreneurs continue to face more restricted credit availability and higher interest rates than men

(6) The return on investment in equality between women and men was not only assessed “top down” (vis-à-vis the balance of leadership roles), but also “from bottom up” (examining wider access to jobs and gender parity in employment). The Economist and McKinsey Global Institute estimate that “if the gender gaps in participation, hours worked and productivity were all closed, the global economy would be $28.4 trillion (or 26%) richer.”

(7) Beyond the measurable advantages of women in leadership, psychological research points to a female advantage in leadership, which I have highlighted here. For example, women are more qualified than men, they are more numerous and perform better at university. It’s a big reversal from the 1960s, and highlights the higher qualifications and better technical skills that women bring to the table. This means that instead of encouraging women to imitate men (for example, telling them to false confidenceWhere apply for jobs even if they are not sufficiently qualified), the best way to increase female representation in leadership roles is to select leaders on the basis of their skills. Similarly, if we selected leaders based on their humility, self-awareness, emotional intelligence, self-control, and integrity—and weeded out leaders with high psychopathy, narcissismand Machiavellian scores – we would not only end up with better leaders, but also with more women than men.

Note that the above evidence precedes the recent increase in social pressure to increase gender parity, which has effectively merged the moral and business case into one. Today, the most common business case stems from the economic tax or penalties for not caring about gender diversity, which can cost companies not only customer loyalty and public reputation, but also financial support from investors.

In short, if you believe in data and want to increase not only meritocracy but also economic prosperity, you can completely ignore the social equity and justice arguments for gender diversity and just follow the money. . Failure to do so has been the norm thus far, but we can expect organizations (and nations) that realize the realities of women’s potential to outperform their competitors. Unleashing gender diversity is a serious business opportunity on every level. When, in 1970, Milton Friedman noted that the only “corporate social responsibility is to increase profits”, few could have interpreted his remarks as a feminist statement. However, following his advice would be a great way to increase gender equality.

So, to those who react to current gender diversity initiatives by saying “the best person should get the job, regardless of gender”, the answer is “yes, that would be a great idea”.

Source link


MSMS Aspiring Entrepreneurs Participate in a Business Plan Competition


September 13, 2021: Agriculture and Landscape Futures Program Phase 2 Business Case: Accounting Officer Assessment

Check Also