Numbers don't lie. The bottom line is the bottom line. And we've all been there when it didn't look as bright as what was once expected. And yet there's an avenue to financial growth that most organizations are outright ignoring that could increase their bottom line by at least 15%. And it isn't a brand extension or social media engagement it's hiring and promoting women to the top, specifically the c-suite and board positions.
This goes beyond a call for companies to include women in leadership positions for the sake of diversity, but rather for the business case of how this improves profits and operations. Specifically, the diversity of thought (a phrase created by Deloitte) occurs when different kinds of thinkers - strategic vs. detail-oriented vs. creative - come together at a high level. This diversity of thought celebrates the contribution and perspective of various backgrounds, experiences and cultures within an organization. Bringing together leaders who offer the diversity of thought generates innovation, collaboration and results in disruption of old practices, ideals and organizational charts.
A recent report by the Peterson Institute for International Economics and Ernest & Young showed the economic impact of women leaders. It states that companies realize a 15% increase in profits when women comprise 30% of their leadership positions. Yet, as of a year ago, according to a CNNMoney analysis, only 14.2% of the top five leadership positions at the companies in the S&P 500 were held by women, and only 24 of those females held the title of CEO.
Why then when the numbers don't lie do the majority of organizations still fall short in advancing women to their leadership teams?
According The Diversity Advantage by Ruchika Tulshyan, women are earning more advanced degrees than ever before, making them more qualified for these top leadership positions. In 2014, 41% of those who entered Harvard Business School were women compared to just 25% in 1985. However, males with Harvard MBAs are much more likely to get jobs up the chain than females with Harvard MBAs.
Additionally, Pew Research Center reports that women are also more likely to continue their education after college: 12% of women ages 25 to 34 in 2013 had a master's, doctorate or professional degree, compared with 8% of men in the same age group. In 2012, women earned 60% of all master's degrees (up from 46% in 1977) and 51% of all doctorates (up from 21% in 1977).
Simply put, this misalignment is costing companies and it could get worse if we don't drive change. It's expected that by 2025, women will control nearly 70% of all consumer spending. For the same reason demographic breakdowns of focus groups are important in understanding consumer behaviors, companies lacking women within their leadership team are missing out on key insights about their biggest consumer.
Alibaba, the Chinese e-commerce company, recently had the largest IPO to date. Six of its 18 founders are female, and many other women hold high-level leadership positions within the company. This is not a coincidence, it's smart business.
Jack Ma, Alibaba's chairman has said
"Women have intuition and sensitivity, which make them great leaders. You need a mix of human beings to make a company successful and a good mix of male and female leaders to drive innovation."
According to Jennifer Kuperman, Vice President, Corporate Affairs at Alibaba, the company didn't have a strategy to fill leadership positions with women; rather they were aiming to build a team of the smartest people. Mr. Ma points to leadership traits that women possess which present advantages to corporations that value them. He also speaks to the benefit of diversity of thought mentioned previously. While Alibaba didn't set out to be a pioneer in leadership diversity, they have certainly seen the benefits and have become a strong advocate for empowering women leaders and entrepreneurs.
Kat Cole, currently President of Focus Brands, understood the value of diverse leadership about a year into her role as the CEO of Cinnabon. Having worked for many strong female leaders, throughout her career, she naturally built her leadership team to reflect what she knew, women. When she realized that her leadership team was 80 percent female, she knew she must make an effort to hire more men in leadership positions to make it more balanced. Cole is now very intentional about building a culture that values the different contributions that men and women both provide. In all of these cases, it's evident that a balanced workforce and leadership team will benefit an organization via innovation, collaboration and even the bottom-line.
The question remains, when will senior leaders wake up and notice that women's contributions in the boardroom is no longer nice to have, but will be a growing necessity in the years to come. If this is not a business case for more women in the boardroom, then I don't know what is.