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The Positive Feedback Loop Of Gender Diversity

February 2021
Mala Chawla
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Now, more than ever, companies and their leadership teams need to evaluate – and reevaluate – their diversity and inclusion initiatives and policies. The global disruption caused by COVID-19 has taken a disproportionate toll on women, who comprise two-fifths of the world’s work force and yet have suffered more than half of total job losses in the pandemic, according to a recent report by UN Women. This disparity is compounded by the fact that women have borne the brunt of childcare and household responsibilities to an even greater extent during the past year.

Hiring more women for senior management roles leads to better performance

As executive search consultants, we have observed in our daily work that for more and more companies, diversity hiring has a knock-on effect. The more organizations that prioritize it in the leadership hiring, the more others on the market follow suit in order to keep up. Harvard Business Review terms this a “positive feedback loop” in which “firms that support gender diversity will capture these benefits earlier, leading them to outlast their competitors.”

While women still do not have an equal share of senior leadership roles, positive steps are being taken culturally to reshape the concept of leadership hiring to one which is inclusive – and inviting. Gender diversity has reached a certain tipping point in the workplace and hiring culture of many societies around the world, and while many organizations still have a long way to go toward gender parity, the question of how to attract and appoint more women to senior leadership positions has gained enough traction to be a policy stance that prospective hires can expect when looking for their next role. 

“Companies with gender leadership in diversity outperform their less diverse peers,” Belen Garijo, the Deputy CEO of Merck, told the World Economic Forum. “On average, this advantage is seen in a 48% higher operating margin, a 42% higher return on sales, and up to 75% higher earnings per share.”

“Companies with gender leadership in diversity outperform their less diverse peers,”

Belen Garijo, Deputy CEO of Merck

Bearing this in mind, firms need to go deeper in how they approach their diversity hiring policy. It isn’t enough to just state an intent to hire more women; the goal should also be to attract more women to apply for senior leadership positions. And the lessons of COVID-19 have a surprising upside in this regard.

According to the World Economic Forum, the UK-government-backed Behavioural Insights Team found that nearly 20% more women applied for management positions once the job listings featured gender-neutral language and included key phrases such as “flexible working” and “part-time.”

Nearly 22%

more women applied for senior management positions once the job listing stated ‘flexible’ work

An example of a company that saw this bear fruit is the Zurich insurance firm. Steve Collinson, head of HR there, says his organization reported a 33% uptick in the number of women hired for senior management positions after the firm tweaked their job listings.

Flexibility promotes diversity

Research has already shown that leadership teams that are more diverse are more likely to be innovative and to welcome new ideas. Being flexible on the issue of flexibility – offering remote work and adjustable, practical schedules – improves the likelihood of diversity at the board and management level. And this makes smart business sense in light of how working environments have changed over the course of the past 12 months, with remote work opening up new possibilities beyond the traditional male-dominated boardroom.

Having more women at the top encourages more perspectives – and encourages other leaders to be more attuned to the perspectives of others, which in turn can help in product and service development as people consider the ultimate needs of customers and end-users.

At Stanton Chase, we are proud not only to value gender diversity without our own organization but also encourage clients and their firms to make it a top priority. Together, we can build teams, boards, and organizations that are primed for success by including more women – and more perspectives – from the bottom to the very top.

About the Author:
Mala Chawla is a Managing Partner for Stanton Chase India and Global Practice Group Leader for Diversity and Inclusion.

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