The evolution of diversity in the workplace
If the last few decades have taught us anything, it’s the fact that the business case for diversity in the workplace has strengthened due to the documented results that clearly show that more diverse companies are now more likely to have financial returns above their national industry medians.
Diversity in the workplace is all about appreciating what makes each individual different, but not only that; it’s embracing differences and recognising the benefit different backgrounds, experiences, and identities bring to an organisation. When done correctly, diverse companies are now more likely to outperform less diverse competitors by at least 35%!
What makes people different can vary between visible and non-visible factors such as gender, background, culture, race, religion, and neurodiversity, just to name a few. These different life experiences and circumstances impact who we are as a person and can affect how we respond to different situations; this can likely result in unique problem-solving techniques that could be vital to standing out against the competition.
We’ve outlined the need and benefits of organisations with a diversity and inclusion strategy in Why inclusivity matters for workplace performance – and how it differs from diversity. Since organisations have been incorporating diversity and inclusion into their strategy, progressive strides have been made in dealing with workplace inequality in recent decades. Gender equality, in particular, has made undeniable progress. First off, looking at the UK, the gap between gender employment rates is at an all-time low from when it was first recorded back in 1971, meaning the UK workforce is more gender diverse than ever.
A closer look at gender diversity
Taking a more global outlook at the statistics for diversity, companies who do well when it comes to gender diversity have better performance than those who don’t. For instance, McKinsey’s latest report Diversity Matters, showed that data from 366 public companies across Canada, Latin America, the United Kingdom, and the United States revealed that companies in the top quartile for gender diversity are 15% more likely to have financial returns that surpass their national industry medians.
McKinsey’s report also captured the fact that as customers, women are involved in 80% of consumer goods purchases in the UK, so it makes sense that now more than ever, companies have some incentive to have a greater representation of the gender with more purchasing power. It’s also a great case to include more women in decision-making. This will increase the chance of organisations making more informed decisions that are influenced by the very demographic that will be buying or being part of buying their products.
The case for women in key decision-making roles is strengthened with research from the likes of the Credit Suisse Research Institute, which showed that the higher the percentage of women in top management, the greater the excess returns for shareholders. A recent MSCI global study effectively showed the same results, the companies in its key global index with boards dominated by women outperforming their industry peers.
Women in leadership is something that has been a talking point for the last few decades, with many companies making the change simply to be compliant with diversity and inclusion policies But organisations that have made the change have been reaping the benefits and contributing towards the progress in women’s professional advancement in the 21st century. Companies that have documented the positive impacts of women in leadership have turned the heads of organisations that are less gender diverse, leading to the gender equality gap narrowing over time.
The evidence is there to back up the argument for gender diversity in the workplace. Although progressive strides have been made in dealing with gender equality in a professional capacity, certain things hold back women from achieving the same status as men when it comes to their careers. Just look at the still existing gender pay gap, for example!
In the UK, public, private and voluntary sector organisations with more than 250 employees are required to report on their gender pay gaps annually, making it possible to see that the gender pay gap has been gradually decreasing. Since statutory reporting started in 2017, over 35000 organisations have submitted their gender pay gap data. The median submission has a gender pay gap of 10%, which means for every £1 a man receives, a woman receives 90p. Similarly, the statistics on a global scale also show the same results, that the gender pay gap still exists and favours men. The latest Korn Ferry Gender Pay Index showed that the overall global gender pay gap is currently at 19.3%.
The results for the UK were taken from the CIPD gender pay report and show that although organisations have made strides in recent years to decrease the gender pay gap, that gap still exists and may take some time to abolish entirely. However, contrary to belief, if an organisation reports a gender pay gap, it does not mean that women are paid less than men for doing the same job. Still, it does mean that, on average, men occupy higher-paying roles than women. Despite this,
Our own research at Lumina Learning has found women typically outperform men of 13 out of 16 leadership qualities, yet we still see women under represented in senior job roles. It raises a serious question, what opportunities are being missed for organisations, and women, due to gender discrimination?
Gender equality still has a long way to go
This under-representation of women in higher positions in the workplace comes down to inequality in the workplace, with women making up the majority of the US population and earning 60% of all Undergraduate and Master’s degrees, the expectation would be that the number of women in leadership roles would be higher, but it’s not. Women account for an average of just 16 per cent of executive teams in the United States!
Although gender equality in the workplace may not be down to direct discrimination anymore, this may be down to societal beliefs and cultural behaviours which set women apart from men. For instance, the gender pay gap widened slightly following the challenges of the Covid-19 pandemic, with women more likely to be employed in less secure jobs and typically having to rebalance their careers to assume even greater responsibilities within their families and communities, something that would not be as typically expected when it comes to men.
All this says is that we are still a long way from achieving gender equality in the workplace. With the impacts of the Covid-19 pandemic making inequality even more pronounced, women are still at a disadvantage when it comes to hiring compared to men. The message that a diverse workforce has increased benefits for organisations, particularly when it comes to gender diversity, has not quite sunk in yet.
Benefits organisations can look forward to
The financial gains that can come with improving gender equality in the workplace make a strong enough business case for gender diversity. However, there are many other benefits that companies who are more gender diverse can look forward to, such as:
- Attracting and retaining top talent/ a wider talent pool
- Improved customer orientation
- Increased employee satisfaction
- Improved decision making
- Enhancing the company’s image
Beyond the benefits of individual companies, there are global economic implications for the lack of gender diversity in the workplace. A McKinsey Global Institute report identified that as much as $12 trillion could be added to global GDP by 2025 by advancing women’s equality. This prediction was based on a scenario where all countries could match the rate of improvement of the fastest-improving country in their region, culminating in this 11 per cent increase in GDP. In fact, results pointed to an even higher increase in GDP if women were to play an identical role to men in labour markets.
These predictions make it clear that gender equality is not only a moral and social issue but an economic challenge that could see vast improvements on global GDP if acted on appropriately. This means real growth potential for your organisation. At a time when women make up for 50% of the world’s working-age population, organisations are encouraged to right the wrongs of the past and take part in helping women achieve their full economic potential and in failing to do so could see the global economy suffer.
Conscientious organisations should look at the data and recognise that there is a strong business case for gender diversity in the workplace. As organisations look to the future, more efforts are needed to close the gender equality gap. Organisations need to be more gender diverse when it comes to the hiring process to attain top teams with better understanding of their customers with a larger proportion of purchasing power to influence marketing decisions.
Organisations should also take the same initiative as the CIPD to support the progression of women into a more significant proportion of the higher-paying roles by focusing on areas of policy and practice that are inclusive and non-discriminatory of women.
Here at Lumina Learning, we love diversity, and we know it is key to driving personal and organisational success. The solutions built through our personality assessments and personal development help people to understand the unique value they bring to their organisation and how to work with those diversely different to themselves.
You can explore our gender research here and see how Lumina Spark helps shed light on the unique advantage that typically female-orientated thinking brings to organisations.
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