After decades of gender inequality in the top ranks of business, the push to place more women into senior management positions seemingly has wind in its sails. From the “surrogacy benefits” afforded to female workers at Apple and Facebook to the maternity support programs of Deutsche Bank and Goldman Sachs, business has discovered an appetite for diversity.
News has surfaced over the past few months of progress being made on the gender front.
FTSE 100 firms have reached their target of 25% female boardroom representation. Data from Korn Ferry, the recruitment consultancy, show 39% of first-time FTSE 350 non-executive appointees were women last year, up from 28% in 2013 and 11% in 2007.
Businesses are achieving high levels of corporate diversity. Abbott, the healthcare company, saw 50% of all promotions to the management level go to women last year, according to the National Association for Female Executives. At Procter & Gamble, the consumer goods group, 30% of senior executives are female; for EY, the services firm, 48% of all employees are women.
What has spurred the increase in women rising through corporate ranks? One widely held belief is that placing more women into education will lead to better representation of women at the top — confirmed by a recent study from BNY Mellon and Newton Investment Management.
“Empowering women outside the boardroom is key to getting women into the boardroom and keeping them there — potentially becoming a virtuous circle,” says Helena Morrissey, chief executive officer at Newton.
As pressure has built on business and schools to do more to tackle gender inequality, many have sought to beef up their efforts to train future women business leaders.
Elissa Sangster, executive director of Forté Foundation, which helps women launch business careers, says having business school programs that reflect a diverse corporate American “is critical”.
“Continuing to see a larger percentage of women enrolled is important for future leadership around the globe,” she says. “MBAs aren’t the only way to become leaders, but it’s a key pipeline.”
There have been positive signs. More than 40% of the full-time MBA class at California’s Berkeley-Haas School this year is comprised of women. Northwestern University’s Kellogg School has boosted female enrolment to 43%. And the proportion of women students at Chicago’s Booth School has risen to 41% from 36% last year.
Schools will be encouraged by female MBA graduates who have risen to the rank of chief executive — among them are Stanford GSB’s Mary Barra, CEO of General Motors, and Cornell’s Irene Rosenfeld, the chief executive of global food group Mondelēz.
But while progress has been made on achieving gender parity, there remains much work to be done to bridge a gaping divide. According to research this year from accounting firm Grant Thornton, the proportion of women in senior management posts globally is 22%, although there are wide regional variations.
“There are more women in leadership roles, but we need to ensure the pipeline for women is strong across organizations,” says Dr Shaheena Janjuha-Jivraj, associate professor at Henley Business School.
Many countries have pushed for a higher representation of women in business. Yet approaches vary. In Europe for example, Germany this year decided to enforce quotas. In the UK mandatory targets are still strongly opposed by business and politicians, while in the US too there is seemingly little appetite for boardroom quotas.
Professor Sucheta Nadkarni at Cambridge Judge Business School, who recently authored a widely-cited study on the rise of women in society, says quotas can successfully increase the percentage of females on boards, but do not contribute to keeping them there.
“Quotas are seen as a ‘quick fix’ to force companies to get females on the board,” she adds. “But lots of research has shown that quotas can create a hostile environment for women once they get into the position because they give the impression of preferential treatment towards women and compromise of merit.”
A key question is whether the drive to boost the numbers of female executives is being felt by women at all levels. Susan Vinnicombe, professor of women and leadership at Cranfield School of Management, who has led female FTSE board research since 1999, believes so.
“There are more new women getting onto boards in the UK and countries that have quotas and various companies, such as Lloyds Bank, have become proactive in managing female talent,” she says.
If progress has been made, some sectors such as banking and tech have been ahead of the curve.
But despite hyped initiatives to spur a diversity reboot, Silicon Valley companies including Google, Twitter, and Microsoft have about 30% female employees. Finance too lacks diversity: women account for less than 15% of fund managers at JPMorgan Chase, Pimco and Blackrock for example, according to Morningstar research.
Companies across sectors also fall by the wayside on pay. The gap is widest at the top of the corporate ladder — female directors earn one-tenth less than men, according to the Chartered Management Institute. Michael Page, the recruitment firm, found that male financial managers earn a discouraging £45,000 a year more than women in the same occupation.
This gap is “making women feel like second class citizens and is holding them back”, says Cranfield School’s Susan.
This is despite data that suggest diversity could increase financial performance. Research by Korn Ferry found that almost all the global executives it polled believe diversity and inclusion can boost results.
Industries that have been male-dominated recognise that they have to change, says Henley’s Dr Shaheena. They are deploying initiatives to retain female talent — including at business schools — and increase the speed at which women are promoted.
Alixandra Pollack, director of research for Catalyst, a non-profit seeking to expand opportunities for women in business, says that creating an inclusive culture is extremely important in attracting and retaining female talent.
Recent Catalyst research has shown that when the “culture gap” was narrow, there was a 93% reduction in the percentage of women who indicated that they were likely to leave their current organization.
Driving change from the top is critical, Alixandra says, “but employees need to see that at all levels”.
Yet many studies suggest that unconscious bias holds back women when it comes to hiring and promotion. A June report from recruitment consultancy Badenoch and Clark found 57% of UK women felt that unconscious bias is the greatest barrier they face in the workplace.
Professor Dianne Bevelander, executive director of Rotterdam School’s Erasmus Centre for Women and Organizations, says that stomping out unconscious bias requires guided self-reflection.
Education too is essential, she says. “Business schools must do more to get students to reflect deeply on issues of diversity and bias — gender and other — while also actively supporting their female students develop and appreciate their potential as leaders.”
And even if schools are challenging the corporate boys’ club, education and business still face an uphill struggle.
“In spite of the changes that have occurred in women’s participation in the labour market, we have a long way to go,” says Professor Dianne.