As the CEO of a multinational corporation recently observed, middle-aged white male CEOs will become an increasingly rare breed in the diverse global marketplace of the future. Forward-thinking companies are preparing for this brave new world by making sure they are attracting, retaining, and developing top talent - regardless of gender.
It's clear that the topic of women's advancement to leadership roles is being taken more seriously in public and private sectors
So it’s no coincidence that discussions about how to improve women’s representation on corporate boards are dominating Europe right now. Championed by the EU’s Justice Minister, Viviane Reding, fuelled by the seven European countries which now have quota legislation, and aided by voluntary measures such as those called for in the UK’s Lord Davies Report, it’s clear that the topic of women’s advancement to leadership roles is being taken more seriously in public and private sectors alike.
Senior leadership is now widely believed to function better when it’s more diverse and reflective of its customer base. "It’s not simply about equal opportunity,” David Cameron said after attending a business summit in Sweden this spring. “It’s about effectiveness…companies and countries run better if you have men and women working together at the top.”
Research bears this out. Studies, including several produced by Catalyst, clearly demonstrate the value of having more women in senior leadership positions. Our Bottom Line series shows that Fortune 500 companies with more women board directors and senior officers, on average, financially outperform those with fewer women.
Not only does increasing women’s representation in senior leadership improve companies’ bottom lines; it also enables them to better serve their customers. The majority of global consumers are women, and smart companies have senior leadership teams that reflect the diversity of the marketplace, as well as of their employees and key stakeholders.
Yet despite this growing awareness, the proportion of women on boards across the globe remains staggeringly low. The Fortune 500 figure has stalled around the 14% mark in recent years, while in the EU it hovers at 12% and just over 17% in the UK. Hardly figures to applaud.
The banking sector fares little better. Only 10% of bank governors are female within the world’s largest central banks, including the US Federal Reserve, the European Central Bank (ECB), the Bank of Japan and the Bank of England - all of which are run by men. The ECB’s recent announcement that it will be introducing targets to promote women to senior management is a welcome development, but in order to make real progress we will need deeper changes in organisational cultures to allow talented women to achieve their leadership potential.
Women, to a much greater extent than men, still face barriers to success
We know from Catalyst research that women aspire as often as men to senior executive and CEO-level positions. But women, to a much greater extent than men, still face barriers to success, including lack of access to informal networks, gender bias stereotyping, and a serious shortage of role models in those higher level positions.
Across Europe, hearts and minds are changing. But the barriers to women’s progress can only be swept away by serious culture change within organisations and action, propelled by the realisation that change is essential. That requires moving from awareness to action so that talented women can reach their full potential and contribute as leaders to the companies for which they work.
Often that starts right at the top. The businesses that are most successful at combating inequality, such as Alcoa, Coca-Cola, and Unilever, all of which have Catalyst Award-winning initiatives, have CEOs who set relevant targets and objectives and hold senior leaders accountable for women’s inclusion at all levels.
As Coca-Cola chairman and CEO Muhtar Kent recently explained, “I found a disconnect between our percentage of women in leadership roles and young women executives coming into the company, and the people buying our products.” He went on to explain that women are responsible for seven out of 10 purchases of Coca-Cola products and control $20trn in annual spending around the world. “We cannot be successful if this disconnect continues.” Neither can any other global company.
Catalyst recommends that companies who want to stay competitive, and be successful, take the following steps to help talented women advance:
1. Set business targets with accountability. Shifting demographics demand, and businesses can potentially profit from, women’s leadership.
2. Question whether the skills, knowledge, and experience of employees are evaluated differently depending on a candidate's gender. Catalyst research reveals that women MBAs start at lower positions and salaries and do not catch up to their male colleagues, which disadvantages them and their employers. Catalyst studies also show that women don’t receive the sponsorship of highly influential individuals, which our research indicates is critical for advancement.
3. Disable the “think-leader-think-male” default. Catalyst research has demonstrated that gender-based stereotyping is embedded (often unintentionally) in the very talent management systems designed to identify and develop an organisation’s top talent.
4. Determine whether persistent myths are still in play. Catalyst research shows that women do not prefer a slower track and that they do use career advancement strategies similar to those employed by men. Yet they don’t get the same payoff that men do.
As momentum towards gender-balanced leadership initiatives builds throughout the UK and elsewhere, it’s clear that Europe is poised on the brink of major change. All we need now is to transform shifting mindsets into concrete actions.
Sandra Ondraschek-Norris is director of Catalyst Europe