7 minute read 26 Apr 2018
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Gender diversity: five perception disconnects that must be fixed

7 minute read 26 Apr 2018

As disruption impacts all industries, gender diversity policies must be adapted. Here are five steps leaders can take.

What are the big disruptive trends shaking up your industry? In life sciences, genomic sequencing is changing how medicines are developed. Robotics are transforming manufacturing. In power and utilities, energy storage and distributed generation are forcing a rethink of the industry’s entire operating model. The automotive industry, where I’ve worked for much of my career, is bracing for the fast approaching reality of driverless cars.

Whatever your industry, wherever your business, change driven by technology and customer demands is transforming how you work, grow, generate revenue and engage with customers. But as boardrooms around the world develop strategies to successfully adapt to these trends, are they missing one critical element?

Boardroom diversity

The changes taking place in our industries today are unprecedented. We need new ideas, creative approaches and fresh perspectives, which can only come from having diverse voices in the boardroom. We need to hear from people with a variety of work and life experiences, cultures and backgrounds. And we certainly need to hear from more women.

Gender diverse leadership is closely linked to an organization’s ability to innovate and to generate profits:

  • 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.

The evidence is clear. Having more women in senior roles helps businesses to innovate and perform better. Improving gender diversity must therefore be central to any business’s strategy to navigate disruption.

But right now, no industry is anywhere near achieving gender parity. The World Economic Forum predicts it will take another 202 years.

Five disconnects preventing gender diversity

A recent EY report reveals that there are five disconnects holding back gender diversity in business. To take positive steps towards gender diversity, leaders need to face up to reality. If we are ignoring some of our best talent, how can we expect to perform at our best?

1. The reality disconnect

This is the gap between how well boards think they are addressing gender diversity, compared to what industry-wide statistical surveys suggest is really the case. According to our survey, 69% said they expect to achieve gender parity within the next 25 years – if they hadn’t already.

That’s a far cry from the World Economic Forum’s most recent forecast. Alarmingly, that figure of 217 years marks quite a drift from the 170 years predicted in 2016’s report – and the 117 years estimated in 2015.

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. Of those that do evaluate progress, the metrics they use don’t effectively gauge 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.

3. The pipeline disconnect

Getting women through the door is one thing. Getting them through the glass ceiling is another. Around 72% of companies 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. And while 55% said they needed 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.

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 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.

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.

Five steps all business leaders can take

These statistics are disappointing, but they reveal an opportunity. So many of the issues impacting our businesses, such as economic and political instability, are beyond our control. But gender diversity is directly influenced by each one of us as business leaders and as individuals. By making a personal commitment to diversity and by championing the issue as a business priority to our boards and senior leadership teams, we can shift the needle on this issue.

In our report, we’ve identified a range of recommended actions to close the gender gap. Some of the most critical steps are below – let’s challenge ourselves to take these now:

  • Own the problem: The facts tell us that gender diversity enhances our ability to navigate disruption and leads to better business performance. The facts tell us we are nowhere close to gender diversity. It’s time to face the facts and accept that our lack of gender diversity is a critical business problem. Solving it must move to your boardroom agenda now.
  • Measure your progress: Would you measure your profit and loss through hearsay and casual observations? Treat gender diversity as the business-critical issue it is by using analytics and formal metrics to measure the proportion of women at each level of your organization, the gender pay gap and how unconscious bias influences hiring and promotions.
  • Create a pipeline: Accelerating women into leadership will take more than good intentions. Put programs in place that identify, nurture and promote your best female talent. Ask women what their biggest barriers to career development are and take steps to break them down.
  • Champion women and diversity: Play your part. Most of us agree that mentoring and sponsoring are strong career enablers and many business leaders are committed to these. But do you unconsciously seek out mentees that are similar to you? Challenge yourself to consider female candidates and encourage others to broaden their sphere of influence. Commit to championing gender diversity – this is an opportunity to create your own personal legacy.
  • Adopt best practice: Our research discovered pockets of good practice from companies accelerating gender diversity. We also found that the banking sector led other industries in recognizing it must improve levels of gender diversity, using formal metrics to measure progress and implementing training and support programs specifically designed to develop female leaders. What practices from other organizations could you adopt? Challenge your business to become an industry leader in diversity – and reap the competitive advantage.
  • We have the power

    None of us can stop disruption from changing the industries in which we operate. But each of us has the power to improve gender diversity, which is proven to help our organizations innovate and perform at their best. We must act now or it will be too late to harness the benefits of a more balanced leadership team. It’s time to make gender diversity a business priority and a central plank of our strategies to successfully meet disruptive trends.

Summary

In order to navigate technological disruption, we must focus on improving gender diversity to create true value and increase performance for our organizations.

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