Why Gender Diversity in the Workplace Matters

by Pat Heim, Ph.D. and Tammy Hughes

Why has the topic of gender diversity become such a hot button in the corporate world? Research is clear that successful companies tend to “look” like their customers. Businesses, especially those that target female consumers, will be more successful when they have more women in leadership positions.  

 

Today many organizations have a fairly even mix of men to women at entry level to middle management. However, in middle to senior level slots there is an increasing disparity in gender numbers. In fact, the number of women in executive level positions has been virtually frozen below 15 percent. The Catalyst 2013 Census of Fortune 500 Companies found that the percentage of women advancing to the top leadership ranks has remained flat for more than a decade. To ameliorate this disparity organizations are developing targets such as: 20 percent female representation in senior-level positions by the year 2017.

 

The Catalyst report also found that “Women held only 16.9% of corporate board seats in 2013, indicating no significant year-over-year uptick for the 8th straight year. And only 14.6% of Executive Officer positions were held by women—the 4th consecutive year of no year-over-year growth."

 

Although there is a lack of gender diversity in upper level positions, much research has focused on the positive financial effect to the bottom line when there is at least one woman on an organization’s board. Catalyst found that companies with more female board directors outperformed those with fewer on three financial measures: return on equity (53% higher), return on sales (42% higher), and return on invested capital (66% higher).

 

Finally, unlike any other time in history, women account for 58% of college graduates and grad students. The pool for available female talent is larger than ever before and women graduates are looking for organizations that will provide them with growth opportunities.

 

Despite the available talent pool, and the positive impact on the bottom line, women are still stymied in 2014. A company’s culture may be the primary factor that hinders top talent from making it to the executive suite. In order for organizations to shift their culture, they need to create a climate where men and women understand each other's differences and are allowed to operate out of their natural strengths. To move the needle, there must be a shift in a company’s mind set to develop a more inclusive, holistic diversity agenda.

Gender

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