Five disconnects preventing gender diversity in the boardroom
Business leaders understand that increased gender diversity can help them navigate disruption, but boardrooms across industries still fail to reflect this. What needs to change?
A few years ago, if you were a woman buying a car with voice recognition technology you’d probably be out of luck – the software developers had calibrated the technology using male voices, and in many cases it just wouldn’t respond to a woman’s voice.
This is just one graphic illustration of the kind of unconscious yet potentially damaging mistakes companies can make when the only voices in leadership are male. Other mistakes are actually impacting on their bottom line.
An analysis of the S&P Composite 1500 found that firms with women at the top were worth on average $40m more than those without. The Peterson Institute for International Economics, meanwhile, found that boards with 30% or more women could add up to 6% to their net margins.
In order for businesses to successfully navigate disruption they need greater diversity of thought and experience in the boardroom to provide diverse opinions and insights into the issues affecting their business. Gender diversity is a key component of this. EY’s Women in Industry report has identified 5 key disconnects that are hindering greater gender diversity (defined as 30-40% female representation) in the boardroom.
1. The reality disconnect
The reality disconnect is the gap between how well boards think they are addressing gender diversity issues compared to what industry-wide statistical surveys suggest is really the case. According to EY’s survey, 69% said they expect to achieve gender parity within the next 25 years – if they hadn’t already. However, according to the World Economic Forum’s 2016 report, full gender parity is 170 years away. Alarmingly, that figure is up from 117 years in 2015’s report – and from 81 years in 2014.
Question for boards: What is your plan to achieve greater gender diversity in your leadership team?
Action to take: Take a critical, realistic view of where you are now and where you need to be to reap the rewards of greater gender equality in business leadership.
2. The data disconnect
Despite considerable evidence of the business value of diversity, less than half of the organizations surveyed have programs to formally measure their progress in improving it. And of those that are measuring their progress, the metrics they are using don’t effectively measure the pipeline of women for leadership roles.
For instance, 76% of companies have metrics on the number of women on their leadership team, but only 32% measure the proportion of female applicants for senior roles and retention by gender. None measure the number of women rising through the ranks who could be considered for future leadership roles. For others, measurement is focused on general gender metrics - 37% measure employee engagement by gender, and 25% have metrics on pay disparity.
Question for boards: How are you measuring your progress toward increased gender diversity goals?
Action to take: Set concrete gender diversity targets and measure the progress toward this goal by using clear metrics across all levels and in all areas of your business, with regular check-ins to adjust your plan and activities as needed.
3. The pipeline disconnect
Getting women through the door is one thing. Getting them through the glass ceiling is another. Around 72% of those surveyed said they were effective both at attracting women to their organization and retaining them once they get there. However, despite these positive intentions, those surveyed believed their organizations were less effective at promoting these women to senior positions.
Only 56% say they are effective at identifying, retaining and promoting female leaders. Meanwhile, while 55% said they need to do more to attract, retain and promote women to leadership positions, only 18% of respondents have formal programs to identify and develop women for leadership.
Question for boards: Once you’ve recruited the best women, what is your plan to retain, develop and promote them to senior leadership positions?
Action to take: Implement formal programs to identify potential female leaders and develop their experience, skills and careers in a way that makes sense to both them and your organization.
4. The perception disconnect
The survey results show that men and women have different perceptions of the lack of diversity in senior positions, and the factors that influence this. While 61% of women believe their organizations don’t have sufficient top-level diversity, only 44% of men think the same. And while almost 43% of men said that one of the biggest problems was a shortage of female candidates, only 7% of women agreed that this was the top obstacle.
This is why leadership teams need to take into account the opinions and suggestions of both men and women when making decisions about how to tackle a lack of gender diversity.
Question for boards: Have you asked the women in your organization what would enable their career progression, and that of other women?
Action to take: Help to create opportunities for open dialogue between men and women about challenges and potential solutions. Actively support the pipeline of female talent by seeking to identify and address potential blockages. Advise and sponsor women at all levels to help develop the best talent, and encourage all executives – male and female – to do the same.
5. The progress disconnect
Lack of gender diversity is a challenge common to all industry sectors, and 92% to 100% of respondents agreed that diversity of thought and experience will be the key to navigating disruption. But sectors differ when asked if they think their own leadership teams are sufficiently diverse in thought and leadership: 63% of respondents from banking and capital markets believe they could do more to bring greater diversity to their leadership teams, compared with just 44% of senior executives in oil and gas.
Question for boards: Is your industry sector adopting leading practice for gender diversity – and could this be a route to competitive advantage?
Action to take: Consider how you and your organization can play an active role in improving your industry’s gender diversity.