Why gender diversity matters for businesses
In 2022, only 8% of CEOs of FTSE 100 Companies are women, while men outnumber women 2:1 in top roles and positions of power.
Yet, companies with higher levels of gender diversity are, on average, more successful, profitable and ethical than those that are less diverse.
We caught up with Dr. Joanna Berry, Associate Professor at Durham University Business School, to chat about why gender-diverse businesses tend to be more successful, how gender diversity benefits businesses and how organisations can better support people who identify as women in the workplace.
How does gender diversity benefit businesses?
“First and foremost, there is no doubt that a more gender-diverse business leads to a much stronger bottom line,” Joanna explains.
And research backs that up. Companies with higher levels of gender diversity are 25% more likely to outperform less diverse companies on profitability. While firms led by female CEOs are, on average, more profitable.
“Eighty-seven per cent of Fortune 500 companies with a female CEO had above-average profits in 2021,” Joanna says. “There are only a handful of women on the list, but most of them have got above-average bottom lines, so that leads to above-average profits.”
But why do more gender-diverse businesses tend to see more success? Part of that is likely because women are generally less willing to make risky decisions than men.
“The notion of risk for men is different than the notion of risk for women,” Joanna explains. “It’s not that women aren’t prepared to take risks or aren’t brave. It’s that they frame risk in a very different way.
“Women are generally more prepared to test. They’re much less comfortable with uncertainty or untested environments, whereas men are perhaps slightly more comfortable in those spaces.”
As a result, women are more likely to encourage businesses to make investments in secure schemes or test financial investments more rigorously before investing, for example.
Lastly, more gender-diverse businesses are generally more creative, have higher consumer interest and demand, and have much higher levels of innovation, Joanna says. This is as well as being more ethical, more empathetic to their employees, and much better at retention.
“So, there are a very wide variety of reasons why gender diversity is a good thing for business.”
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How can businesses drive gender diversity home?
It’s one thing to say that we need to increase gender diversity in the workplace, but another completely to actually implement it.
With women making up only 28.2% of board members, is introducing quotas to set diversity goals and measure progress the way forward for businesses?
“Quotas are such a useful tool that you have to implement them. Even if they feel restrictive and wrong,” Joanna says.
“If you don’t have a metric of some sort to shoot for, then you have no way to establish whether you’re winning or losing. Even if it’s a quota you fail to reach, at least then you can analyse why.”
Joanna adds that some suppliers might actively look to work with companies that are more gender diverse. Even if businesses don’t have equal numbers, showing that they have a quota in place can prove that they’re at least trying to diversify their teams.
In-house training
Another thing that businesses can do is set up in-house training that targets unconscious biases, as well as mentoring and coaching to show that there’s a clear path for women to progress.
“People talk about what happens at work,” Joanna says. “If employees have been doing diversity training, they will go home and talk about it. The voices of your employees are very loud, and the things they talk about in bars and cycling clubs count.
“Meaningful training also identifies where you can have mentoring and coaching. It also allows you to prove that you have sets of training opportunities for women so they can see there’s a way through the organisation all the way to the top.”
Create safe and welcoming environments
Lastly, businesses need to create spaces where women feel welcome and safe.
“Think about things like the onboarding policies you’ve got, catching people when they start to use the wrong sort of language, flexible working and creating private spaces where women can breastfeed if needed,” Joanna suggests.
“Also, things like reconfiguring male toilets to be female or gender-neutral toilets if you’re starting to bring women into your workplace for the first time.”
Even things that might be considered minor, like being forced to wear ill-fitting uniforms designed for a man’s shape, can make women feel uncomfortable and completely out of place in the workplace. “Making adjustments to little things like that make a huge difference.”
Gender diversity is just the tip of the iceberg
“Gender diversity is only one sort of diversity,” Joanna says. “If you are a young, black, working-class female, you have a huge variety of issues facing you that we haven’t even started to touch on in this conversation.”
Although issues related to gender can play a significant role in an individual’s day-to-day experience, it’s important to recognise that employees face a wide variety of issues relating to diversity (or lack of diversity) in the workplace.
As well as gender, we should consider ethnicity, sexuality, socioeconomic status, disability, religion, age, and much more when talking about workplace diversity.
“What we’ve talked about opens up a few conversations, but there are so many more conversations to be had,” Joanna says.
“It’s just the tip of the iceberg.”
Learn more
Thanks to Dr. Joanna Berry for taking part in this interview.
If you’d like to learn more about how gender diversity benefits businesses and how organisations can create more diverse, welcoming and safe environments for people of all genders, Joanna recently led a Vistage webinar that looked at these in further detail.
Watch the full webinar ‘Demystifying the Business Case for Gender Diversity here.
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