Fixing the ‘broken rung’: gender diversity in the workplace

June 2020  |  FEATURE  |  LABOUR & EMPLOYMENT

Financier Worldwide Magazine

June 2020 Issue

Gender diversity is one of the key workplace issues of our age. Today, women remain largely underrepresented at many organisational levels – particularly in the upper echelons – despite there being a compelling business case for a more gender-diverse workforce.

Indeed, organisations that make a point of gender-diverse management teams have been shown to perform better and be more profitable than those without them. In short, gender diversity should not be viewed exclusively as a women’s issue, but also an economic one.

According to ‘An Institutional Approach to Gender Diversity and Firm Performance’ – a report by Letian Zhang, assistant professor of business administration at Harvard Business School, which features the views of more than 1000 leading firms across 35 countries and 24 industries – gender diversity has a significant impact on innovation and productivity and, consequently, financial returns.

“Gender diversity increases the range of skills, perspectives, knowledge and social networks available to an organisation,” explains Mr Zhang. “It also increases creative capacity and breadth of knowledge, resulting in better decision making, more innovation and higher productivity. Many studies find that organisations with gender-diverse workforces innovate better and thus achieve higher output and better returns.”

A research report by McKinsey & Company – ‘Women in the Workplace 2019’ – asserts that greater workplace innovation and productivity is a direct result of more women becoming senior leaders, with more now being hired at director level and higher than in past years. Furthermore, senior-level women are being promoted on average at a higher rate than men.

That said, for many women, progress toward senior leadership is being constrained by what the report calls a ‘broken rung’ – an obstacle at the first step to becoming a manager. For every 100 men promoted and hired to manager, only 72 women are promoted and hired, reveals the report. Furthermore, the ‘broken rung’ results in more women getting stuck at the entry level, and fewer women becoming managers.

“Many organisations are taking a bottom-up approach to building more diversity – hiring interns and graduates at entry level,” says Katee Van Horn, chief executive of VH Included. “There are two issues with this approach. One, those at entry level may never move to higher level, decision-making roles because of other institutional barriers. Two, this approach will help for the long game but will not have an immediate impact. If you want a more profitable business, create a leadership team that includes gender diversity.”

Fostering a gender-diverse culture

There are a number of steps that can be taken to foster a gender-diverse culture in the workplace and turn good intentions into concrete action. Indeed, an organisation is well-advised to set out its gender diversity policies during a workplace induction, if not before.

In Ms Van Horn view, the initial focus should be on inclusion. “If you start to hire people from underrepresented groups but they do not feel welcomed and heard, they will leave,” she asserts. “This means including women in decision making. It also means creating career paths for everyone who performs well. Give teams the opportunity to move up in the organisation so they feel their contributions are valued.”

As well advocating for gender diversity policies to be laid out for every new hire before day one, Ms Van Horn also believes that organisations should have a promotion process that is fair and consistent for all – one that looks at both what the person has achieved and how they achieved it.

“Women are less likely to ask for a raise or a promotion, so organisations need to have a consistent plan for how promotions will be reviewed and when,” suggests Ms Van Horn. “Men are often evaluated on their performance alone, while women are often evaluated on their style. Also, organisations should not feel they are ‘done with diversity’ by adding one woman to the board or executive team.

“A balance of 50/50 in the boardroom needs to be considered in order to create lasting change,” she continues. “Most importantly, they should think about pay equity when hiring and promoting. So many women, especially women of colour, lose out on millions of dollars over the course of their careers.”

Good for business

Clearly, achieving workplace gender diversity is not just a moral issue – it makes overwhelming economic sense. Yet while progress is being made, achieving real gender parity remains very much a work in progress.

“It depends on what actions organisations are willing to take to fix the issue,” believes Ms Van Horn. “If we try to do this organically, it will take some time. Executive teams need to take action now to increase gender parity at the board and executive level, to continue to drive the right actions and to achieve better business results.”

However long it takes, for now, even the most cursory examination of the available literature can lead to only one conclusion: gender diversity is good for business.

© Financier Worldwide

BY

Fraser Tennant