Businesses with gender diversity, particularly at the senior level, perform better and see significant profit increase, according to a report of the International Labour Organisation (ILO) Bureau of Employers’ Activities.
According to the report, ‘Women in Business and Management: The Business Case for Change’, more than 57 per cent of the respondents agreed that gender diversity initiatives improved productivity in business. Around three fourths of these companies said gender diversity in their management led to profit increases between 5 and 20 per cent, with the majority seeing increases between 10 and 15 per cent.
Almost 57 per cent said it was easier to attract and retain talent with gender inclusivity policy in place. Over 54 per cent say they saw improvements in creativity, innovation and openness and a similar proportion said gender inclusivity enhanced their companies’ reputation. And 37 per cent felt it enabled them to effectively determine customer sentiment.
The report found that, at the national level, the increase in female employment is positively associated with GDP growth. The finding is based on data from 186 countries for the period 1991-2017.
“We expected to see a positive correlation between gender diversity and business success, but these results are eye-opening,” said Deborah-France-Massin, director of the ILO Bureau for Employers’ Activities, adding, “When you consider the efforts companies make in other areas to get just an extra two or three per cent in profits, the significance is clear. Companies should look at gender balance as a bottom line issue, not just a human resource issue.”
Gender balance in senior management is defined as 40-60 per cent of either gender, the same as the general work force. The report says that benefits of gender diversity begin to accrue when women constitute 30 per cent of the management and leadership positions. However, almost 60 per cent of enterprises do not meet this target and so struggle to reap the rewards. In almost half the companies surveyed, women account for less than one in three of their entry-level management recruits, meaning the channel to senior management may not deliver the required talent.
Almost three fourths of the enterprises surveyed had equal opportunity or diversity and inclusion polices. However, the report says more specific action is needed to ensure women are visible and promoted to strategic areas of business.
The report also identified some key factors preventing women reaching decision-making. Enterprise cultures that require “anytime, anywhere” availability, disproportionately affect women, relative to their household and family responsibilities. On the other hand, policies that support inclusivity and work-life balance, for both men and women, such as flexible working houses and paternity leave, need to be improved.
Another factor is the ‘leaky pipeline’, the tendency for the proportion of women to decline as the management grade rises. The ‘glass wall’ describes the incidence of women managers in HR, finance and administration, roles that are considered less strategic and less likely to lead to chief executive and boardroom positions.
Less than a third of the enterprises in the survey have achieved the critical mass of one third women board members. Around one in eight reported they still had all-male boardrooms. More than 78 per cent of the respondent enterprises had male CEOs, and those with female CEOs were more likely to be small enterprises.