Gender Diversity Is Not a Women’s Issue

Gender Diversity Is Not a Women’s Issue

Gender diversity is generally viewed as a women’s issue. It is not.

Research conducted by McKinsey & Company and finds that despite corporate America’s stated commitment to gender diversity, outcomes are not changing. Moreover, the research finds that employees do not believe companies are taking the necessary steps to enact change. The study’s authors contend: “It is time for a new gender-equality playbook. The old one isn’t working. We need bolder leadership and more exacting execution.” While I agree that these are necessary for change, I don’t believe change will occur unless we reframe the issue.

Gender diversity is an economic issue. The McKinsey Global Institute estimates that as much as 26%, or $28 trillion, could be added to annual global GDP in 2025 if women were to participate in the economy identically to men. This is unsurprising given current data.

Companies in the top quartile for gender diversity are 15% more likely to have financial returns above their respective national industry medians. And a review of global stocks finds that companies with higher levels of gender diversity deliver higher returns with less volatility.

Gender-diverse leadership improves performance

Looking specifically at the impact of increased gender diversity in leadership positions, the results are even more pronounced.

Female CEOs in the Fortune 1000 drive three times the returns as S&P 500 enterprises run predominantly by male CEOs. Large companies with a higher proportion of women on executive committees realized a 41% higher return on equity and 56% better operating results than companies with zero women on executive committees. And companies with three or more women board directors significantly outperformed those with sustained low representation by 84% on return on sales, 60% on return on invested capital, and 46% on return on equity — after just five years.

For change to occur we need to reframe gender diversity not as a women’s issue, but as an economic issue. From the top down, companies need to move from commitment to action not to meet quotas, but because a gender-diverse workforce performs better than one that is not diverse.

In an interview I conducted with Cathy Morris, Senior Vice President and Chief Strategy Officer at Arrow Electronics, Morris drew a similar conclusion: “A better organization is not about the numerical statistics related to diversity.  A better organization is about better decision-making. Diversity is essential for companies; diversity enables better decision-making and diminishes group think.”

Until it is recognized that gender diversity is an economic issue, it will be difficult to achieve bolder leadership and to realize more exacting execution, and, thereby, improve gender outcomes.

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