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Why Gender Equity in the Workplace is Good for Business

Research indicates a correlation between gender equity and organizational success, yet it also points to obstacles for women in leadership.

3/27/2020 | Leadership and Management, Featured | 8 minute read

Picture of Mary Sharp Emerson
Written By:
Mary Sharp Emerson

A growing body of research indicates a strong correlation between gender equity and organizational success. Yet, it also points to persistent obstacles hindering the development and advancement of women in leadership.

At first glance, a number of indicators support the idea that gender equity in the workplace is within sight. More women than men are graduating with bachelor’s degrees. Women are no longer leaving the workforce to raise families in larger numbers than men. And women are playing an increasingly visible role in executive leadership. 

In the C-suite, for example, the number of women leaders has increased from 17 percent to 21 percent in the last five years, according to McKinsey & Company's Women in the Workplace 2019 study. The research also shows senior-level women are being promoted at a higher rate than men, on average.

Still, a large gap between the number of men and women in leadership roles continues to persist. 

Moreover, it is increasingly clear that the gap starts early, often at the level of emerging leadership (entry- and mid-level management). Women are 18 percent less likely to be promoted than their male coworkers. This gap only widens further up the management chain: Men hold 62 percent of management positions, compared to 38 percent for women.

In other words, obstacles to early promotion into management create a long-term talent gap, hindering women’s ability to “climb the corporate ladder” into senior leadership roles.  

Successfully addressing this talent gap at the corporate level requires more than simply paying lip service to “diversity training.” Instead, it requires a thoughtful and strategic approach—across all levels of management, from the executive down to the middle manager—focused on ensuring an equal playing field, particularly at the lowest rungs of the management ladder.

Why Gender Parity Matters

In 2020, gender parity is more than simply a buzzword. A growing body of research now demonstrates fairly conclusively that a true commitment to diversity generally—and gender equity more specifically—can have concrete financial benefits. 

Ten years of research by McKinsey and LeanIn.org offers key statistics demonstrating a clear correlation between organizational diversity and financial performance. For instance:

  • Companies with the greatest proportion of women on executive committees earned a 47 percent higher rate of return on equity than companies with no women executives.  
  • Companies in the top 25 percent for gender diversity are 27 percent more likely to outperform their national industry average in terms of profitability.
  • Companies in the bottom 25 percent for gender diversity were significantly less likely to see higher profits than their national industry average.

As McKinsey acknowledges, correlation is not the same as causation. Yet the consistency of the data over the past decade strongly indicates that the link between diversity at the leadership level and financial performance is not coincidental.

The link lies in organizational health. Organizations that actively create and promote strong internal processes dedicated to incorporating a variety of perspectives, experiences, and leadership styles consistently outperform competitors with homogenous leadership teams. 

This is true across many different dependent variables, from problem solving to analytic thinking to communication. And when taken together, success across these different variables adds up to strong financial performance.

Women Continue to Face Obstacles as Emerging Leaders

Unfortunately, emerging women leaders continue to face obstacles hindering their upward mobility. And, perhaps surprisingly, these obstacles exist primarily at the first and second rungs of the corporate ladder.  

The long-term result is a profound gap in the talent pipeline, according to McKinsey's Women in the Workplace 2018 study

Starting at the manager level, there are significantly fewer women to promote from within and significantly fewer women at the right experience level to hire in from the outside. So even though hiring and promotion rates improve at more senior levels, women can never catch up—we’re suffering from a “hollow middle.” This should serve as a wake-up call: until companies close the early gaps in hiring and promotion, women will remain underrepresented.

Thus, a key step in closing this talent gap at the level of the emerging leader is identifying—and eliminating—the barriers to entry facing women eager to move into leadership roles. These obstacles include: 

  • Unconscious bias and discrimination (intentional or unintentional)
  • Fewer opportunities to showcase leadership skills
  • Lack of support and advocacy by immediate supervisor(s)
  • Less opportunity to network up the management chain
  • Failure to recognize the benefits of diverse leadership and communication strategies
  • Lack of advice on career advancement
  • Ongoing assumptions about willingness to remain in the workforce long-term
  • Failure to make diversity and gender parity a true priority at all levels of management

The “hollow middle,” or talent gap at the bottom rung of the corporate ladder, will persist until active steps are taken to eliminate these and other obstacles women face as they attempt to move into management. 

Most critically, change must be driven down from senior leadership to the level where it matters the most: with a commitment to gender equity among middle-level managers who are most likely to influence women’s career advancement.

Harvard’s New Professional Development Program for Emerging and Senior Leaders

Our program Women in Leadership: Dual Program for Rising Leaders and Their Managers invites emerging women leaders and senior management to work together to build the critical skills necessary to promote organizational success by closing the talent gap.

For women emerging leaders (women with 3+ years of management experience who are seeking to move into senior leadership roles), this intensive workshop will focus on communication, networking, navigating organizational politics, and leading with confidence. 

Senior leaders (both men and women) will develop skills to advance their own careers, learn sponsorship tools in order to better advance talent, and make a difference by supporting organizational transformation on a larger scale.

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