In this article, we will look at the concept of ‘womenomics’ and how it is fundamental to Korn Ferry’s goal to accelerate more women into CEO positions globally in this third and last article in my Women and Leadership series.
Women are becoming increasingly important in the global marketplace, not just as workers but also as consumers, entrepreneurs, managers and investors. Studies show that an increase in female workforce participation — or a reduction in the gap between women’s and men’s workforce participation — results in faster economic growth. Otherwise known as ‘womenomics’, this market force has contributed more to global growth than economic giant, China, over the past decade or so. However, many nations are still playing catch-up in terms of providing equal opportunities to men and women.
Though women are better off today, they are still far from being equal with men in the workplace. According to the bi-annual 2016 Credit Suisse 3000 report, it appears opportunities and employment practices remained unchanged when compared to its 2014 report. Evidently, the obstacles to women rising to the top of large-scale organisations remain well-entrenched.
Women’s role in economic development
Looking into the true economic value of women leaders, our research revealed organisations with more female leaders produce better financial results, with some studies finding the earnings margin before interest and taxes are 56% higher for organisations that have the largest share of women on their executive committees.
Several extensive surveys in recent years have also demonstrated the power of womenomics. A 2015 report by Quantopian found that women CEOs in Fortune 1000 organisations drive three times the returns of S&P 500 enterprises predominantly run by men.
It is vital to note that organisations which successfully attract, retain and develop female leaders will benefit from the unique strengths these executives bring to their roles, including being perceptive, having a high degree of emotional intelligence, and being sensitive to the dynamics around them. Studies also indicate women are often better at building teams and communicating.
As such, there is a need to do more to consistently move women into key decision-making and leadership roles. To make this possible, senior business leaders need to lead the charge to understand, identify and address the unconscious and unseen behaviours of all employees in our organisations that preclude women from advancing in their careers.
Attracting investors’ interest through gender equality
While organisations recognise the economic value women can contribute, there is another reason encouraging organisations to promote gender equality – investors are showing a preference for diverse organisations. One good example is the National Australia Bank (NAB). Last year, it raised $384 million from investors committed to gender equality at work. The proceeds from the bond were then loaned to organisations in Australia that are trying to foster greater equality between men and women at work. With this gender equality bond, NAB plays a key role in creating opportunities for women in the workplace. The majority of the participating companies are led by men (72%).
In addition, Bloomberg released its new Financial Services Gender Equality Index (GEI) last year to showcase what the biggest financial organisations are doing to promote gender equality. This index meets increasing investor demand for gender equality data to make more informed investment decisions. The GEI allows investors to compare organisations on dimensions such as the number of women in the organisation and on its board, the length of parental leave, childcare options and return-to-work programs. Shareholders and major investors can now easily identify organisations that promote diversity and likely to achieve superior financial performance.
Larry Fink, the CEO of BlackRock, a $6.3 trillion fund manager and the world’s largest investor, recently wrote a letter to all FTSE 100 CEOs and global business chiefs calling for more diverse boards—genders, ethnicities, career experiences and ways of thinking—with a range of perspectives as well diverse workforces, or risk losing his support.
Leveraging women’s economic potential
It’s clear, if organisations intend to reap the maximum contribution from both genders, they need to understand the economic value women contribute to their bottom line as well as to the global economy. Studies have demonstrated for many years that womenomics—or women’s equal participation in the workforce—contributes substantially to business returns and GDP in developed countries.
There is much we can do to mitigate deeply entrenched behaviours that prevent women’s full participation in our workplaces and engage the power of womenomics to realise superior growth and profit. To achieve this, Korn Ferry recommends five practices to promote diversity in the workplace:
- Actively cultivate an inclusive and harmonious workplace.
- Examine how one’s worldviews would shape his/her beliefs and behaviours when working with others.
- Understand why, how, and when to act as a diversity change agent to leverage differences for shared success.
- Recognise possible bias – where it comes from, and how it affects one’s interactions, decisions, and behaviours.
- Build a talent pipeline comprising both genders to identify the best talents and help them progress to senior management positions.
What this means for organisations
In conclusion and circling back to my last two articles, I can’t emphasise enough on the importance of building a global pipeline of female leaders. Korn Ferry is determined to accelerate the pace of women achieving the top roles in business by taking a bold, action-focused approach to unlock how women leaders achieved their success. In our partnership with The Rockefeller Foundation, we aim to advance 100 women to the highest roles at Fortune 500 companies by 2025.
That said, accelerating more women into CEO roles globally requires all organisations to rethink their game plan. Most importantly, women leaders need to further develop “Results Agility” as the core leadership competency in today’s volatile business climate. To recap, Korn Ferry defines “Results Agility” as a leader’s propensity to deliver outstanding results in new and ambiguous situations. Organisations today need leaders who are not afraid to try new ways of working while delivering results the first time.
Today, women – who account for half the world’s working-age population – have yet to achieve their full economic potential. Hence, there is a compelling need for organisations to identify and put in place the right strategy and actions to promote the advancement of women. By facilitating women’s greater participation in the workforce, organisations will be well-positioned to enjoy more economic value and increased investor confidence, especially now that investors are increasingly showing a preference for diverse organisations. In addition, there is growing evidence that gender-diverse leaders and boards can better meet customer and community needs.
Only when organisations offer equal opportunities to men and women today, they can generate the financial rewards and global growth of tomorrow.