Today, March 8, is International Women's Day, a day for celebrating women's economic, political and social achievements. It also reminds us of the continued gender imbalance in the workplace and the need to be steadfast and diligent in our efforts to eradicate inequality.
Women have made great progress in many areas of society in recent decades. However, one area where significant disparity remains is women's leadership in the workplace.
In some sectors (communications, for example) the number of women and men in junior positions is equal, or are even dominated by women. Statistics such as this are not surprising as women now make up the majority of the Canadian workforce. Women surpassed men in paid employment in 2009.
The statistics showing equality of female participation in the workplace do not translate to senior management. Proportional representation of women in leadership positions continues to lag. Currently:
- the proportion of women on boards of Canada's 500 largest companies is 14.5%;
- the proportion of women who hold CEO positions at companies that rank on the 2012 Fortune 1000 list is 4.2%;
- on average, women earn 25% less than men; and
- women make up nearly 51% of the Canadian labour force, yet only 0.32% hold senior management positions.
These statistics illustrate the fact that action continues to be necessary to balance gender representation in the boardroom.
Why is gender balance necessary and how does it benefit the corporate environment?
Gender aside, board members need to possess the skills of strategic thinking, sound judgment, integrity and business knowledge. But an understanding of their customer needs is also a key element of this skill set. Women account for 85% of all consumer purchases, and yet 91% say that advertisers don't understand them. Having this understanding expressed through and represented by women leaders at the board level can positively impact the bottom-line, particularly for consumer-facing companies. A woman's perspective at a strategic level is critical in the formulation of marketing strategy. Having women involved as key stakeholders and decision-makers ensures that corporations are able to effectively target this dominant consumer group.
Another financial measure is share price performance and a study by Credit Suisse Research Institute of 2,400 companies over six years found that companies with at least some female board representatives outperformed those with no women on the board. The study further confirms that gender diversity benefits a company through ensuring a better mix of leadership skills, wider access to a talent pool and a better reflection on the decision-making consumer.
Balance of gender representation also directly impacts the corporate environment through board diversity. The issue of board diversity is of rising importance in the face of increasing globalization and the enhanced risk oversight responsibilities of boards arising out of the financial crisis of recent years. The changing business climate and rapid evolution of good governance and best practices requires a broader skill set and a wider perspective on the board. Women and men, even with similar backgrounds, offer different perspectives on corporate issues. Board diversity, in particular gender diversity, ensures that alternate views are accessible to the broadest extent possible, enabling the board as a whole to reach better decisions.
Are enforced quotas the answer?
One proposed solution towards increasing women's participation on boards has been the imposition of legislated quotas. Although this seems reasonable on the surface, it does not sufficiently address the fact that, gender aside, the board must be made up of individuals that possess the required skills. There are conflicting views as to whether the population of women executives is sufficient in order to close the gap and whether the quota mentality is effective.
There are strong arguments for and against the imposition of quotas, but the fact remains that the disproportionately low number of women in top executive roles today is largely a result of the promotion and retention practices of the past. Imposition of a quota is one potential solution – but the underlying issues that created the inequalities have to be addressed at all levels of organizations today, in order to ensure an adequate number of women in top executive roles tomorrow.
Balancing gender representation in the boardroom is not a feminist issue. It is an issue of recognizing the business reality of the purchasing power of women in our economy and the fact that diverse boards are a necessity, given the changing economic climate and governance practices. Collaboration and debate among diverse opinions is one of the best ways to achieve solid results and the representation of women at all levels in organizations creates outcomes better suited to corporate and societal realities. The solution lies somewhere between imposed quotas and a forward focus on the recruitment, retention and promotion of women at all levels on the corporate ladder.
Kim Heath is executive director of the Women in Leadership Foundation, Vancouver Chapter – a non-profit organization dedicated to advancing women in leadership roles in Vancouver
