More women in business is good for the bottom line


THE research is unequivocal: diversity is not only a moral imperative, but a tried and tested route to profit and productivity.

It should be prioritised as a way to boost resilience in South African business and government, as the country faces a tough road ahead to rebuild the economy and society.

President Cyril Ramaphosa has come under fire for the lack of gender diversity in his new Cabinet, which in many ways is a sad representation of of the situation in the country as a whole. According to a recent analysis from Statistics South Africa, despite women making up just over half of the population they remain relatively unrepresented in positions of authority and power.

Yet research is stacking up that gender diversity is good for people, productivity - and for profit. The OECD reports that an increase of women in public life results in lower levels of inequality and increased confidence in national governments. Figures show that the increased presence of women Cabinet ministers is associated with a rise in public health spending across many countries.

And in business, gender diversity plays a central role in attracting and retaining top talent, as well as helping organisations maintain a competitive edge. A recent McKinsey study showed that companies in the top quartile for gender and ethnic diversity display financial returns above their respective national industry median, while a 2015 study from Bersin by Deloitte showed that diverse companies had 2.3 times higher cash flow per employee over a three-year period, than non-diverse companies did.

This might seem like an attractive prospect to businesses in South Africa staring down the barrel of a recession, yet on the whole they are slow to take advantage of the diversity dividend.

Grant Thornton’s 2017 Women in Business report, a survey of 5 500 businesses in 36 economies, revealed that gender diversity has improved by a scant one percentage point since 2016, with just 25% of senior roles held by women.

South Africa is actually slightly above average, with 28% of senior roles held by women. But this number has increased by just two percentage points in the past 13 years. The dial is moving, but at a glacial pace. So what is holding us back?

Outdated management models and mindsets

A key culprit, say practitioners, is outdated management models and mindsets. Writing in Harvard Business Review last year, Vineet Nayar identified prevailing “hub-and-spoke management structures” where significant decisions are referred to one’s formal boss rather than to whoever is best suited to make the call, as a limitation in today’s fast-moving business world.

Waiting for approval from the boss can curtail the team’s ability to collaborate and solve problems independently. Entrenched command and control structures have also been called out as one of the reasons that diversity programmes are failing in organisations because companies are “doubling down on old approaches that they have used since the 1960s” rather than finding fresh tactics that focus on engagement, not control.

The concepts of the sticky floor and imposter syndrome have also gained traction in recent years. These look at the problem from a different angle, suggesting it’s not only about a lack of opportunity to move up, but a reluctance on the part of women to step up because they are pigeonholed in various roles and tend to underestimate their own abilities.

A survey from the Global Network for Advanced Management (GNAM), a network of 29 business schools around the world, further found that women face a double whammy of conflicting expectations in the workplace.

On the one hand, being available to work around the clock is seen as a highly desirable characteristic and influences promotion decisions; on the other, women are expected to shoulder the burden of childcare and working all hours is frowned upon.

Moving the dial on diversity

To shift such entrenched mindsets on the role of women in society, a special effort is required, argues personal development expert Dr Makgathi Mokwena who runs the Developing Women in Leadership programme at the UCT Graduate School of Business.

A key part of this is helping women to build strong networks of support and also to build their own sense of worth and confidence; what authors Amy Jen Su and Muriel Maignan Wilkins call a signature presence.

However, there is also much that organisations (both public and private) themselves can do. The GNAM study argues that while it might be challenging to take on patriarchal society at large, employers don’t have an excuse when it comes to not taking on the same in their own workplaces. They wield tremendous power when it comes to their ability to exacerbate or relieve pressure on women.

Suggestions from this study include finding ways to reward productivity, rather than hours worked in the office and enabling more flexible working practices that allow women to work remotely without stigma being attached to that.

Why do women still get paid less than men?

Then there is the little matter of equal pay for equal work. Although widely acknowledged in principle and legislated in many countries, women are generally not remunerated as well as men. This is an issue that recently pushed 60 women at Google to consider legal action over institutionalised sexism and pay gap.

There is some evidence to suggest that targeting the pay gap boosts the number of women at the top. Australian firm AECOM saw a 3.5% drop in its gender pay gap after targeting senior female hires and promotions from 2015 to 2016. Its female representation in leadership roles has since risen from 10.4% to 14.7%.

Employers are not ignorant of the advantages diversity offers. According to data from the Top Employers Institute that certifies best practice in HR, the vast majority of employers in Africa (86%) that have been certified by the Institute have a clearly defined and communicated organisation-wide diversity programme. This translates into attention being paid to recruitment, training and development opportunities and creating a supportive work environment for women.

But these organisations are still in the minority. More need to wake up to the rewards – and risks – that diversity poses. The McKinsey study that found that diverse organisations perform better also found that companies in the bottom quartile in these dimensions were statistically less likely to achieve above-average returns.

Diversity is not a cosmetic, nice-to-have. In tough economic times, it could make the difference between success and failure. The evidence is unequivocal: investing in diversity is good for business. And as we celebrate International Women’s Day this week, we need to ask the question: in a country as diverse as this one, what are we waiting for?

  • Linda Ronnie is an Associate Professor at the UCT Graduate School of Business. Views expressed are her own.

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