Part 2 – Possible Solutions
The idea that there is still gender disparity in compensation and opportunities in 21st century American business may seem ludicrous to some. After all, there are some very powerful women leading some of the world’s biggest companies. Mary Barra is CEO of General Motors. Ginni Rometty is CEO of IBM. Indra Nooyi is CEO at Pepsico. Marilyn Hewson is CEO of Lockheed Martin. Safra Catz is CEO of Oracle. And beyond Fortune 500 companies, there are female trailblazers such as Arianna Huffington, founder of the Huffington Post, Sheryl Sandberg, COO of Facebook, Jill Abramson, Executive Editor of the New York Times and Oprah Winfrey, creator of O Network. These women are not just successful, but the companies they lead represent a cross-section of business sectors from aviation to automotive to technology and beyond. But the real story is in the numbers. While the 2016 Fortune 500 list shows that 21 companies have women CEOs, those are fewer than the 24 female Fortune 500 CEOs in 2014 and 2015. More importantly, of the 29 companies that were added to the Fortune 500 list this year, only one had a female at the helm. The decline in female CEOs in the Fortune 500 this year is due to retirements, mergers and other factors that had nothing to do with gender or the quality of their leadership. But, with so few females to begin with (just 4-5% in all), any loss of female representation at the top is more noticeable.
The real problem is that while some women have moved to the top of their fields, they are few and far between and there aren’t many other females following in their footsteps. This lack of female leadership is found not just in business, but also in government, sports, judiciary, higher education/universities, and beyond. And this imbalance can be found at every level and bleeds into compensation practices and workplace policies that are unfair or unfriendly to women. There are steps businesses can take to rectify these issues and create workplaces that are fair and equitable to both genders.
Female-Friendly Work Environments
Companies can begin with a little painfully-honest introspection. Here are some questions to ask. How many women are there in mid-level, upper-level and c-suite management positions? Are women paid less within the company and if so, by how much and why? Are the women in the company less aggressive when it comes to asking for and demanding more compensation? Do female employees know how much their male counterparts earn? Do women, who already earn less, miss out on top positions that pay best because they start from below-average salaries which make them look like subpar employees? Are there opportunities for women to advance to the highest position in the company? Are women even being considered for promotion? Look at the company’s numbers.
Beyond introspection and self-examination, there are other ways companies can make workplaces female-friendly. Here are just a few important steps.
1. Equitable pay, no salary history and compensation transparency
Some states are considering legislation for these issues already. A bill filed in the Massachusetts Legislature last year aimed to address this issue by prohibiting employers from seeking job candidates’ salary histories. The bill would have also required companies to disclose an advertised position’s minimum pay and permit employees to discuss their salaries openly. Such practices would help reduce the gender wage gap by addressing the problem at the beginning, before a single job candidate is interviewed. Since women’s earnings are historically lower than men’s, revealing their salaries typically puts them at a disadvantage and allows employers, when hiring, to offer lower salaries than they might otherwise.
Similarly, in January 2016, the Department of Labor implemented President Obama’s Executive Order to ban pay secrecy in federal contract workplaces, allowing millions of workers who want to ask about, disclose, or discuss their pay to do so. Pay secrecy is seen as a tack some employers use to pay women less than men. Also at the federal level, the Paycheck Fairness Act — which has been introduced in Congress several times without success — aims to strengthen the 1963 Equal Pay Act, which prohibits gender-based wage discrimination, by increasing pay transparency, accountability for businesses to justify pay grade differences, and affords protections for employees who report wage disparities.
2. Greater opportunities for growth
Companies can also help grow female leadership at the top (and at all management levels) by increasing women in Boardrooms, encouraging sponsorships, and encouraging business education. In particular, studies show that when there are more women in the Boardroom, the number of women execs in the company also increases. Female board members not only encourage more women to pursue executive positions, but also facilitate change in companies that want to help women advance. With women holding almost 20% of board seats in the U.S., their growing presence is an encouraging start. But more are needed.
Career success and advancement for women also requires mentoring. However, studies show that corporate mentoring programs don’t work for women as well as they do for men. For females, sponsorship is a more effective tool, which entails not only coaching women to take on complex projects but also advocating for them to compete for higher level positions. Sponsors help women to identify opportunities, increase self-esteem, and realize their potential.
These strategies cost companies nothing and do a lot to help increase productivity and morale among female employees.
3. Greater flexibility and accommodations
Women often want/need flexible work schedules to deal with the demands of not only child-rearing but also aging and sick parents. They want somewhat flexible work schedules that hold them accountable for what they produce instead of for sitting at their desk during regular hours. But it turns out that surveys of Gen Y workers reveal both genders want flexibility, the option to work remotely, to dip in and out of full-time, and find their work meaningful. This is no longer just a work policy that is friendly to females. It is desired by most employees, especially Millennials and Gen Y employees.
If these policies sound costly to businesses, think again. Flexible hours, telecommuting, and job-sharing are low-cost, high-ROI options. In 2006 Best Buy rolled out Results Only Work Environment (ROWE). At the time, ROWE was a radical flex-time policy allowing all their employees to choose where, how and when they worked, provided their performance results justified their means of achieving them. Checking the program’s results in 2011, two University of Minnesota researchers found ROWE reduced employee turnover at the corporate headquarters by 45%, while boosting productivity. That equals two ways to the bottom line.
For companies wondering why they should worry about creating a female-friendly workplace when that may cost more and the bottom line pulls in the other direction, consider this. Companies with more women in the upper echelons of management are more successful where it counts: the bottom line. McKinsey’s Organizational Health Index (OHI), a broad-based measurement of top-performing companies, determined that companies with three or more females in top level positions do better than their competitors with less female leadership. Studies by Columbia Business School and University of Maryland also confirmed this. And Catalyst, a nonprofit focused on expanding opportunities for women in business, found a 26% boost in return on invested capital in companies with lots of women on their Boards over those with no women on the Board.
In fact, the marginalization of women is at odds with the current needs of businesses. Many studies indicate that female voices and perspectives would enrich dialogue, improve decision making and ensure that businesses remain in step with the times. Economists agree that female empowerment – extending opportunities to make women in leadership a far more common sight – should be a mission-critical goal for firms that want to equip themselves with the value they need to survive and thrive for the next 10 years… and beyond. According to the McKinsey Global Institute’s research, advancing women’s equality and minimizing gender gaps could add a massive $12 trillion to the world’s gross domestic product by 2025; 11% more than would be added under a “business-as-usual” scenario.
If those reasons aren’t enough, consider this. Last year saw the biggest increase the number of new female entrepreneurs in nearly 20 years, rising from 220 in every 100,000 to 260 in 100,000, an increase of 19%. This is compared to the number of new male entrepreneurs, which went from 410 in 100,000 to 420 in 100,000, an increase of just 2.5%. This rise in new female entrepreneurs has been a major driver in rising start-up activity levels. So companies that choose to underpay, underutilize and undervalue female employees may very well find themselves competing later against new businesses owned by those same women who opt to strike out on their own. It might be more cost effective to create an equitable workplace than to face them as competitors down the road.
Quote of the Week
“No country can ever truly flourish if it stifles the potential of its women and deprives itself of the contributions of half of its citizens.”
Michelle Obama, First Lady of the United States
© 2016, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.