Wake Up: We Need to Fix the Business Case for Women in Leadership

By Melissa J. Anderson (New York City)

Fifteen percent. That’s how many women make up executive committees of American’s top companies. In Europe it’s only 7%. And in Asia – only 3%. That’s what 20-First revealed in this year’s WOMENOMICS 101 Survey.

And while these are all more than… say… zero percent, it’s nowhere near the 30% critical mass so many female leaders have called for, nor the company-specific gender balance approach advocated for by 20-First’s Founder and CEO Avivah Wittenberg-Cox.

What can we do to correct the imbalance? Wittenberg-Cox says it comes down to the framing of the issue. “When women consider themselves ‘diverse’ they are keeping themselves in the minority.” In actuality, women are not in the minority at all. For example, she continued, women make up 60% of Europe’s university graduates and 80% of consumers – both of which are clearly majority percentages. “Until women understand this, we will not convince the guys that gender is a strategic business issue,” she said.

Similarly, a recent survey of board directors [PDF] showed that the business case for women in corporate leadership is failing.

The study, by Heidrick and Struggles, WomenCorporateDirectors, and Dr. Boris Groysberg of Harvard Business School, showed that “More women directors than men felt that three ore more women on a board made it more effective (51% vs. 12%) and that women brought unique attributes to the board (90% vs. 56%).”

The 20-First analysis of Executive Committee gender balance and the Heidrick and Struggles study on board directors show one thing – we’re not getting anywhere fast when it comes to achieving gender parity at the highest levels.

The Business Case: Women Leaders Offer a Clearly Different Viewpoint

The Heidrick and Struggles report showed that only 56% of male directors felt women brought a unique perspective to table, while 90% of women thought female board directors provided a unique outlook. But one of the most interesting findings of the study showed female directors brought clear diversity of thought and a break with traditional ways of doing business – which may be what the global economy needs right now.

For example, Bonnie Gwin, Managing Partner of the firm’s North American Board of Directors Practice, said:

“Women directors preferred increased oversight, including a significant number who supported more regulation around executive compensation and enhancing proxy access. The woman directors seem to express a feeling that the status quo has not worked and that they are open to more aggressive changes to rebuild stakeholder trust in boards.”

While the men surveyed seem to think that everything is just fine, more women felt that big changes are needed to restore trust and improve management.

Even though the Heidrick and Struggles report showed that, overall, women offered differing strategic viewpoints than men, for some reason, many of the male board members couldn’t seem to acknowledge that difference in practice.

By and large, men simply aren’t recognizing the value that female leaders bring to the table. That means is business case for gender balance isn’t working. What else shows the business case is falling on deaf ears? The numbers.

Business Case Falling on Deaf Ears: The Numbers Don’t Lie

The WOMENOMICS 101 survey showed that while in the US, 87% of companies have at least one woman on their executive team (as if managing to have one woman in the executive suite is something to brag about about), the vast majority of Fortune 101 executive woman do not have line P&L roles. Seventy-two percent of them are relegated to staff or support roles. Similarly, in Europe and Asia, women only constituted a tiny percentage of P&L executive positions.

Even though the business case for women in leadership is generally accepted, very few companies seem to be following through.

Wittenberg-Cox, who recently published a new book on the subject, HOW Women Mean Business, offered a her own suggestions on how we can encourage companies to take the business case seriously. First of all, she said, what is needed is a new approach to achieving gender balance. “We’re completely mired in 20th century, ‘fix-the-women’ approaches.”

She continued, “It’s a complex challenge that tends to be delegated to a women’s network – and these networks are usually populated by women in their thirites, who don’t yet necessarily see the political and systemic issues at stake.”

Wittenberg-Cox said that gender balance should be made a business imperative. “We need to push the issue up the hierarchy to the executive committee.”

This approach is supported by data from McKinsey. According to a recent study, companies that put gender diversity high on their business agenda tend to have more women at the top. The study says:

“At companies where gender diversity is a top-three agenda item, for example, 87 percent of respondents report that more than 15 percent of their C-level executives are women; only 64 percent of those whose companies rate diversity as a top-ten item, and 55 percent of all respondents, say the same.”

In itself, it seems obvious enough – of course companies with an executive mandate to improve gender balance will be farther along in the gender parity process. But we’re back to that 15% again. It’s not exactly balance.

Wittenberg-Cox suggested that only when accountability metrics are attached to the gender balance imperative will the business case transform into an action plan. Because, the numbers don’t lie – until the business case for gender balance is taken seriously, we’re stuck at 15%.