Beyond Lean In: How to Achieve the Very Real Business Advantages of Diversity
by Sallie Krawcheck
In last week's news: The NFL bumbles through its reaction to charges of domestic abuse by its players. The Census Bureau announces that women are now paid 78 cents for every dollar men earn, up a paltry 1 penny from the prior year. Safra Catz takes on the co-CEO role of Oracle, becoming one of just 25 female CEOs of Fortune 500 companies.
It's 2014, and yet we still struggle across the board with issues of gender and how we treat women, and particularly women of color, in the workplace. It speaks volumes to the issue of how we as a society value women's contributions, both in and outside of work.
And it speaks volumes because fully engaging women in the economy can be a significant positive. According to research from sources ranging from Goldman Sachs to the IMF, fully engaging women in the US economy can expand our GDP by anywhere from 5-9%. More people working means more money for them to spend means more people working.
More women working is not just a positive in the aggregate but is also associated with superior results at individual companies. Greater diversity in management has been associated with higher returns on capital, lower risk, greater client-focus, greater long-term orientation and even greater innovation for companies, across a range of research studies. Although we as a society mythologize the lone Steve Jobsian genius, innovation is more often the result of clashing and differing perspectives, resulting in new ideas. And one doesn't have to stretch too far to imagine that the recent financial crisis might have had a different complexion if the big banks had greater diversity of thought within their four walls.
So greater diversity isn't just the right-thing-to-do, but it's also a smart-to-do. But getting there isn't easy. Sheryl Sandberg's Lean In has sparked a global conversation about the professional advancement of women, but having women more vigorously advocate for themselves is only part of the answer. That's because the forces against the professional advancement of women are numerous and complex, with everything from the inertia of complacency to soft (and not-so-soft) biases playing a role. In a recent poll of the members of Ellevate Network, the professional women's network I own, 87% of respondents said that gender discrimination still exists at their companies, with 61% saying it is primarily in subtle, sometimes well-meaning forms.
And thus the solutions must be multi-dimensional, a mix of business and public policy initiatives. Among the ideas: the United States should leave the ranks of Papua New Guinea and Oman as one of the very few nations in the world without paid family leave. We should legislate greater transparency into gender pay gaps at companies and increased relief and remedies when companies fall short. Until that point, corporate Boards of Directors should require their management teams to report to them on these pay and promotion gaps within their companies, and those results should be shared with shareholders. Boards should work with their management teams to establish cultures of "flexibility without shame," in which employees who access flexible work options are not quietly "mommy-tracked" for being "not committed enough or tough enough" to continue to work full-time, in the office, at all points in one's career.
Like the majority of worthwhile investments, these actions will have initial costs but positive pay-offs as women remain in the workforce longer, reducing the high cost of employee turnover (estimated at 90-200% of annual salary for every employee who leaves) and enabling employers to benefit from their experience.
Further, keeping women more fully in the workforce will chip away at the country's retirement savings short-fall. The $250,000 in average additional life-time wages that women are estimated to earn from closing the gender pay gap will also reduce the retirement savings gap between the genders; today, women retire with 2/3s the savings of men, a gap all the more significant because they live six to eight years longer than men, on average. This is a gap that must be filled; the question is whether it is done in a way that can grow the economy or that is a drain on our resources.
The companies that more fully engage women are likely to reap gains. Women and Millennials are much more likely than other cohorts to use their growing economic clout to buy from and invest in companies that align with their values. Women control 80% of families' purchasing decisions and control or directly influence more than $11 trillion -- and growing -- of investable assets in the U.S. According to a recent Center for Talent Innovation study, 77% of women globally report that they want to invest in companies with diversity in leadership. As social media enables more wide-spread awareness and discussion of these topics, buying and investing dollars will likely shift to support companies that support women.
Moving to a more inclusive form of capitalism should enable a more sustainable prosperity; and this shift more fully captures our country's fundamental belief in truly equal opportunity.
Have more questions? Follow up with the expert herself.
Sallie Krawcheck’s mission is to help women reach their financial and professional goals (or, put more bluntly, to get more money into the hands of women), thus enabling them to live better lives and unleashing a positive ripple effect for our families, our communities and our economy. She is the CEO and co-founder of Ellevest, an innovative financial company, by women for women. Ellevest is one of the fastest growing digital investment platforms and has... Continue Reading
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