True or false: Having a critical mass of female leaders at the top is proven to have a direct correlation with better financial return? According to McKinsey’s 2013 Women Matter study, there was a 47 percent higher return on equity and a 55 percent higher earnings before interest and taxes margin for companies that have the largest share of women on their executive committees. This week, we are looking into the often thorny issue of women in executive positions with Peggy Hazard, a managing principal at Korn Ferry and a leading expert in this subject.
Q: We’re near the middle of 2015 – what is the state of gender diversity in today’s U.S. executive leadership environment?
Peggy Hazard: A most interesting area is why companies who have been working on the issue for many years – even decades – still struggle to “move the needle,” with a significant drop in representation mid-career and continued decline to senior levels.
This is because the solutions implemented to date focus primarily on women, and on developing (aka “fixing”) women to fit into the established norms. It is critical to empower women to clarify their own goals and how best to reach them by navigating the system, and connecting with each other through networks. However, women alone can only do so much in an eco-system and culture built more for normative male styles, preferences and life patterns.
A select few have progressed and there are a few leading organizations that are at the tipping point, where they are realizing the need for what we call a “shared responsibility” approach. Rather than just focusing on “fixing women” they engage managers, and indeed all in the organization, to become more agile and adaptive in how they recognize, motivate, interact with and cultivate individuals and teams. They are challenging the status quo and culture that hinders the contribution and advancement of not only women, but anyone who does not fit the traditional norm or profile, whether in thinking style, company background, race, ethnicity, nationality, etc.
There is not an easy answer, as extreme pressures to hit KPIs and create positive quarterly reports dominate decision making. But forward-thinking leaders realize they must move from neutral to proactive; they are engaging assertively in figuring it out as individuals and as teams, from the CEO on down. They realize the business world has changed, and without agility they won’t thrive. They want to be ahead of the curve, knowing what got them here won’t get them there.
Q: As cited earlier, McKinsey’s 2013 Women Matter study showed how companies with the largest share of women on their executive committees reap the most financial success. What are women doing right that men are not?
Peggy Hazard: The value of women on executive committees is not a result of women doing things “right” or “better” than men. The value is in the mix of perspectives, styles and experiences that encourages more broadly informed problem solving and decision making, which is paramount in today’s increasingly global, diverse and VUCA business world.
Equally important is the value of having a balanced mix of team members. There is also indication that a diverse group tends to make traditional members more likely to question the status quo than they do in a mostly homogenous group. In fact, a study by the London School of Economics indicated that 50:50 gender balance yielded the highest innovation.
Q: Which industries seem to be attracting the best and brightest of today’s women business leaders?
Peggy Hazard: Those organizations that identify and remove the diversity-related headwinds caused by individuals and the culture, and create truly agile organizations that allow for diverse styles, points of view and career paths. They reward a “speak up” culture that challenges the status quo and does not punish risk.
It is worth noting that companies that tend to have worked on this issue longer, and are more ahead of the curve in attracting women as a result, are usually the ones that have had the strongest bottom line drivers: such as CPGs where the customers or consumers are mostly women and/or for companies who have had product or services fail because of lack of insights about women’s needs and preferences, or where turnover of women led to significant costly loss of talent.
The more women visible at all levels of the organization, the more appealing the organization. The visible proof that women are valued and thrive is a great selling point.
Q: Where do women of color stand in this mix? Are they realizing leadership roles, too?
Peggy Hazard: Women of color have not been as well-served by the initiatives for women. There are a few important dynamics to recognize:
>> There are invisible forces that hinder people who differ from the prevailing norm of success in organizations.
>> Some of these are based on gender, so most women of all races/ethnicities and cultures face them. But others are based on other factors, including race, culture and ethnicity.
>> The dominant leadership norm in the US is American-born, non-Hispanic white male.
>> Therefore American-born, non-Hispanic white women may face the gender challenges, but other women face both. Generally, this “double whammy” has not been well addressed in either women’s nor people of color initiatives.
Korn Ferry’s practice on Advancing Women features focused programs that address both the women and their managers, which have yielded our clients significant improvements in retention and promotion of high potential women of color.
Note: while “women of color” is a term now widely used to refer to Black, Asian and Latina women, it is important to clarify that many Latinas/Hispanics in the U.S. are White). Those who work with Latino/Hispanic employee resource groups readily note they experience different challenges depending on national origin and race.
An earlier version of this interview appeared on Business-Superstar.com.
Phil Hall has been (among other things) a United Nations-based radio journalist, the president of a public relations and marketing agency, a financial magazine editor, the author of six books and a horror movie actor. Also, as you will discover, he is not shy about stating his views.