The gender gap isn’t just an image problem: our research suggests that it can have real implications for company performance. Some companies have taken effective steps to achieve greater parity.
September 2008 Georges Desvaux, Sandrine Devillard-Hoellinger, and Mary C. Meaney
Women in developed economies have made substantial gains in the workplace during recent decades. Nevertheless, it’s still true that the higher up in a company you look, the lower the percentage of women.
But some companies have moved successfully to increase the hiring, retention, and promotion of female executives. Their initiatives have included efforts to ensure that HR policies aren’t inadvertently biased against women or part-time workers, to encourage mentoring and networking, to establish (and consistently monitor at a senior level) targets for diversity, and to find ways of creating a better work–life balance. Changes like these have a price, but there are business advantages to making them—above and beyond the branding benefit that might accrue to companies viewed as socially progressive.
Research in Europe and the United States suggests, for example, that companies with several senior-level women tend to perform better financially. Hiring and retaining women at all levels also enlarges a company’s pool of talent at a time when shortages are appearing throughout industries.
Why women matter
Few women become executives. Across the European Union, women account for only 11 percent of the membership of governing bodies such as boards of directors and supervisory boards, our research has found. In the United States, fewer than a third of the leading 1,500 companies had even a single woman among their top executives in 2006, according to research from Columbia University and the University of Maryland.1 The numbers are even more discouraging elsewhere: in South Korea, for example, 74 percent of the companies surveyed in 2007 had no female senior executives.2 We believe that such underrepresentation is untenable in the longer term—and not only because it’s unfair.
More workers needed
Many countries and regions face talent shortages at all levels, and those gaps will worsen. By 2040, Europe3 will have a shortfall of 24 million workers aged 15 to 65; raising the proportion of women in the workplace to that of men would cut the gap to 3 million. In the United States, the upcoming retirement of the baby boomers will probably mean that companies are going to lose large numbers of senior-level employees in a short period of time; nearly one-fifth of the working-age population (16 and older) of the United States will be at least 65 by 2016.
Mismatches between training and employment can also cause shortages. In the United Kingdom, male-dominated sectors with a dearth of workers include engineering, IT, and skilled trades—yet 70 percent of women with science, engineering, or technology qualifications are not working in these fields.4
Besides helping companies to fill shortfalls of talent, gender diversity can allow them to attract and retain it and to meet other business goals. One European Commission study showed that 58 percent of the companies with diversity programs reported higher productivity as a result of improved employee motivation and efficiency, and 62 percent said that the programs helped attract and retain highly talented people.
Corporate performance
In recent years, McKinsey has done extensive work on the relationship between organizational and financial performance and on the number of women who are managers at the companies we’ve studied. Our research has shown, first, that the companies around the world with the highest scores on nine important dimensions of organization—from leadership and direction to accountability and motivation—are likely to have higher operating margins than their lower-ranked counterparts do (Exhibit 1).5 Second, among the companies for which information on the gender of senior managers was available,6 those with three or more women on their senior-management teams scored higher on all nine organizational criteria than did companies with no senior-level women (Exhibit 2).7
