This is an era in national history that will surely be dissected and scrutinized in the years to come by historians and economists alike. That is because, in recent years, the state of the economy in the United States has teetered between depression and recession, limping along at an alarming low rate.
Many of the woes & blows that the U. S. economy has been dealt have been attributed to Corporate America and its leadership. Historically, men have dominated corporate leadership positions, from middle management to executive boards to CEOs.Having said that, is it possible that economic recovery lies in the hands of women? Looking at the history of the gender gap is essential to understanding the need for women’s leadership in corporate America today. In 1890, when the first officially recorded numbers of women in the work force were published, only 15 percent of women claimed to work outside the home and a woman’s annual salary was about half of a man’s (Goldin, 2008). At that time, the “gender gap” could be better described as a canyon.
In the 120 years since then, the gender gap has steadily shrunk, if not by concerted effort, then by circumstance and happenstance. World War II and the Civil Rights Movement brought about changes in the workplace that no one could have predicted. In 1960, only forty-percent of all women were represented in the work force… today women represent almost half of the total labor force with almost 80-percent of women working. The numbers really do not paint a clear picture though.
Because the problem lies in the lack of women in leadership as shown in this Catalyst visual:Adding to the inequality, women in their prime wage earning years, ages 30 – 44, are paid on average only 73 percent of men’s salary as noted by Catalyst, a non-profit membership organization committed to expanding the opportunities for women and business. Overall, when considering all ages, Claudia Golden (2008) points out women are paid 77 cents on every dollar as opposed to men. Historically, the gap in earnings has decreased substantially over time, but has been relatively stagnant since 1994. In 1980, the ratio multiplier was only about 0. increasing to 0.
74 by 1994 (Goldin, 2008). This shows that there are still systemic differences in the male vs. female labor market. Why such a disparity in pay when women represent half of the work force, you may ask. Some of the disparity can be attributed to observable factors, such as education, experience, or hours worked.
But, this only accounts for about 33 percent of the 23-cent discrepancy, leaving approximately 16 cents on every dollar that is attributable to worker choice or, possibly, discrimination (Goldin, 2008).Unequal pay, work-life imbalance, opposition to competition, and choosing to avoid the stress of high-level positions, as well as interruptions due to childbearing also limit women’s professional advancement (Matsa & Miller, 2011). Many, indeed, believe that equity begins at the board level and that diversity in the boardroom holds numerous benefits including increased revenues. This idea is supported by a March 2011 study performed by Catalyst.
In this study, titled The Bottom Line, Catalyst explores the idea of an empirical link between gender diversity and corporate financial performance.By comparing the bottom lines of corporations that had the most women representation on their boards against those that had little to no women representation on their boards results showed, unequivocally, that gender diversity at the board level increases financial profits. Referring to the Catalyst diagram below, it shows that companies with three or more women on their corporate board report higher than average results when measuring Return on Equity, Return on Sales, and Return on Investment Capital.
The results are consistent across most industries. Numbers speak – if every U. S.
corporation were to heed the results of this Catalyst study, there would surely be no shortage of female board members. With an increased number of women in the boardroom comes change – from the top down. According to Matza and Miller (2011) there is substantial proof that women board members are more likely to appoint women CEOs & Executive Officers as well as a direct correlation between the number of board seats held by women and increased compensation for women in executive positions and top management.However, the question remains, how do we implement the change that is needed at the highest levels? Mentorship and sponsorships have been used for years, but have recently been touted as a means of overcoming barriers for women in management and executive level positions.
So often, women are lacking access to those networks dominated by men. As noted in the Deloitte International Women Day’s poll (2011), many women see sponsorship and mentoring as an essential component to promoting women, as well as a professional women’s responsibility to mentor up and coming female professionals.A Catalyst study by Foust-Cummings, Dinolfo & Kent (2011) noted: Critical features of the sponsorship relationship include trust, honesty, communication, and commitment. Sponsorship also matters to women because, as research from Catalyst and others shows, women who advocated for themselves can be penalized in the workplace. Because sponsorship involves speaking up on behalf of others, it offers a solution for navigating the double blind women face.Most developed countries throughout the world struggle with the same diversity issues we do in the United States, yet some have made strides in their efforts to advance women and women’s objectives.
In 2003, Norway was the first country to introduce a quota for women on company boards. Norway now boasts a 40% representation of women board members as required by law. (Storvik & Teigen, 2010) Does this mean the U. S.
needs federally mandated quotas for U. S. corporations to get on board? The idea of implementing federal law outlining quotas for women representation in corporate boardrooms here in the U.S. has been highly debated and often opposed. According to a poll of professional women conducted by Deloitte on International Women’s Day this year, “three-fourths of the women believe that targets around female representation in business and government are necessary in order to make significant progress.
However, targets alone are not sufficient. Leadership support and accountability are also crucial” (Anonymous, 2011, p. 359). Deloitte’s Chief Diversity Officer and Global Managing Director, Talent went on to say, “we must look at this issue as more than just a human resources problem.To truly progress, businesses will need to approach investing in women as a cultural shift, one that should be addressed at both the executive and the employee level” (Anonymous, 2011, p.
359). Here, in the U. S. , the Dodd Frank Act of 2010, which was designed as financial regulatory reform, includes within it Section 342. It calls for each federal financial agency to establish an Office of Minority and Women Inclusion to ensure work force diversity. The act is designed as a vehicle for incorporation & promotion of minorities and women, but does not include any penalties or consequences for non-compliance.In other words, it has no teeth.
If history is any indicator, the federal government will not be the catalyst for change in reference to women in the work force. This is just further evidence of the need for cultural change and the need to invest in women. Why invest in women? First, women represent the next phase of sustainable economic growth in the U.
S. If you look at women’s roles in our society, it is extremely naive to underestimate the impact that women have on our economy. Women’s earning power is growing. Women, as consumers, either make or influence up to 80 percent of the buying decisions in the U.S. (Pellegrino, D’Amato, ; Weisberg, 2011).
So often, women are considered a “niche” market despite them being the largest emerging market in the world. Companies fail to understand what women want and how to market to them. In conclusion, it only makes sense that “getting more women into the workplace who understand the buying preferences of women creates a virtuous circle, with the inside reinforcing the outside” (Pellegrino, D’Amato, & Weisberg, 2011).
Second, talent is key to economic competitiveness. Talent in the 21st century is essential to economic success.In the past, natural resources determined a country’s sustainability and competitiveness and companies relied on industrial-age strategies.
Today, companies rely on the intangible assets of people, brand, and intellectual property (Pellegrino, D’Amato, ; Weisberg, 2011). The need to retain talent is essential to every corporation, every country. Because, unlike natural resources or tried and true strategies, individuals with talent can move from place to place taking their talents with them. Women are often an untapped resource in the talent pool, even though women represent 58 percent of all graduates in the U.S. (Pellegrino, D’Amato, & Weisberg, 2011). Pellegrino, D’Amoto, and Weisberg (2011) sum it up well: Much progress has been made in putting women on equal footing with in the workplace. But, progress has stalled around the world, including in developed countries like the United States.
This represents a large-scale underuse of talent that can have serious repercussions in terms of competitiveness both at the national and organizational level. In the talent driven 21st century economy, it is a trend that can ill afford to be sustained and the risks of doing nothing are real.Lastly, retention is also key to taking advantage of the talents women have to offer in the workforce. If we are to really take advantage of the talents of women, we have to make it possible for women to remain in the workplace. Whether the proverbial glass ceiling is at work, work/life imbalance ensues, or career interruptions due to childbearing are the culprits, it is essential that solutions be sought and implemented. Countries that have made it possible for parents to have a family and work are reaping the rewards.High quality childcare, flexible work options, and family friendly workplaces are some of the perks that Nordic countries have used to support and encourage dual income families, resulting in higher birthrates and some of the most stable economies while at the same time lessening the gender gap, according to Pellegrino, D’Amato, and Weissberg (2011). Nevertheless, government is not the only answer.
What many forward thinking companies are promoting is the “business case”. This is in reference to creation of a business model that embraces and implements gender diversity.Time alone will not ensure gender diversity, but a conscious effort by businesses and corporations to diversify their personnel from the top down is essential to the success and viability of not only their organizations, but to our national economy.
While many leading companies have gender initiatives or policies in place, they are failing to actually implement them or they are not moving women into key positions within their company. Companies that put together a business case are most likely to reap the benefits of gender diversity.For many companies, the issue of promoting women through initiatives and policy is simply that, an issue. They view it as an ethical issue rather than a business decision. Those that are modeling their business around gender diversity are seeing the benefits and the results in the bottom line though. Increased profits speak volumes.
The ultimate question is, are they listening? In creating a business case, organizations look at how to attract and retain women. “An organization that understands how to attract, retain and advance women will be in a better position to capture its fair share of talent, reduce the osts of attrition, and generate a robust pipeline to leadership” (Pellegrino, D’Amato, ; Weisberg, 2011). Losses due to attrition can actually cost up to 5 times a knowledge worker’s salary.
A crucial figure that is sure to make a difference in any company’s bottom line. Overall, it is up to corporate America, organizations, and businesses to implement change – change for the better. Gender diversity is the first step to growing our economy. Gender diversity, both nationally and organizationally, must be embraced and then executed to the fullest extent in order to grow.Anonymous. (2011, March 25). Deloitte International Women’s Day Poll: Targes Necessary to Accelerate Advancement of Professional Women. Economics Week , p.
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