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U.S. Companies Lack Diverse Leadership

by Lori Armstrong Halber and Rick Grimaldi
To paraphrase James Brown, this is a man’s world, but it would be nothing without a woman. ... Interesting lyric when applied to leadership positions at publicly traded companies, where there is a dearth of women.

A new report released on Feb. 8, 2016, found that nearly a third of the 22,000 firms studied in 91 countries have no women whatsoever on their boards or in any C-suite jobs. The research, conducted by the Peterson Institute for International Economics, also found that 60 percent of those firms had no female board members, 50 percent had no female top executives and more than 95 percent did not have a female CEO. A 2015 study from McKinsey & Company and estimates that, in the United States, at current rates it will take 25 years to reach gender parity in senior vice president roles, and more than 100 years for C-suite jobs.

In contrast, at lower levels more than half of the employees in organizations are female. This begs the question of why more women do not ascend the corporate ladder. One common misconception is that there are fewer women in power because women are more likely to reduce or stop working for work-life balance reasons. However, the McKinsey study, which was based on responses from 30,000 employees at 118 companies, found that women are not actually leaving at higher rates than men. Are American companies making erroneous assumptions about female workers? Is there an unconscious bias that women are more likely to take leave or work reduced schedules and, therefore, considered less invested in their careers and passed over from consideration for promotions?

If accurate, perhaps one solution is to equitize what has traditionally been viewed as “female” responsibilities. If “men’s work” (i.e., work outside the home) and “women’s work” (i.e., work inside the home) are viewed as equally important, the need to balance those responsibilities is less likely to be viewed as an obstacle to success in one’s career if both genders share that common experience. Consequently, they gain understanding and respect for one another. Note that the Peterson Institute study found that paternity leave strongly correlated with a higher representation of women on corporate boards. The 10 countries with the most gender-diverse corporations—including Norway, Latvia, Finland and Sweden—offered 11 times more paternity leave than the bottom 10 countries (Australia, Pakistan, Canada and Japan, among others.)

In fact, the McKinsey study identified several issues that impede the ascension of women into leadership roles, including that fewer women tend to be in roles that lead to the C-suite (e.g., women are more likely to occupy non-revenue producing roles such as administration, human resources, IT and legal), women express less eagerness than men to ascend to a top executive spot (OK, Sheryl Sandberg, we hear you on leaning in), and women’s professional networks tend to be all female or mixed whereas men tend to network with other men. While women bear some responsibility for marketing their value to their organizations (and there is value, as discussed below), if companies believe gender diversity is important, they need to do more than pay lip service. For example, they should track key metrics such as promotion and attrition rates, enhance professional development programs and consider whether unconscious biases impede success.

Companies that do not engender themselves to gender diversity may find themselves being left behind. To quote another music legend, the times they are a-changing. Research into leadership styles suggests that companies are moving toward a more “transformational” style emphasizing emotional intelligence and interpersonal skills, qualities typically associated with women. A 2014 study conducted by Caliper, a Princeton, N.J.-based management consulting firm, found that the women leaders studied were intellectually stimulating, encouraged employees to take ownership of company goals and provided inspirational motivation.

At the end of the day, money talks. James Brown may have something—according to the Peterson Institute study, companies where women accounted for at least 30 percent of their executives typically had higher profits.

LORI ARMSTRONG HALBER AND RICK GRIMALDI are partners in the law firm of Fisher & Phillips LLP. Follow them @LoriRickHRLaw. Listen to Rick on Talk Radio 1210 WPHT.

Published (and copyrighted) in Philly Biz, Volume 1, Issue 3 (February, 2016).
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