Part of being a strong leader is understanding your experience, perspective, and awareness are limited, and that finding ways for your leadership to broaden its capabilities will help strengthen your organization. Consider this simple illustration: If everyone you work with only knows how to use a hammer and they’re suddenly handed screws, what do you think will happen? But, what if one of your leaders had experience with say, a screwdriver. Suddenly your team would be able to identify and use the screws as intended. This is one example of the importance of corporate leadership diversity.
By increasing the diversity of experiences and perspectives within your company – and eventually the leadership of it – your organization gains different points of view on issues and enhanced capability to address new and different challenges. If we go back to our hammer example above, leadership diversity increases the likelihood you may find someone who shows everyone a new tool, a more efficient way to work and better ways to relate to prospects, clients and other employees.
Unfortunately, many companies remain tied to the same old ways of doing business. According to Sapling HR, white men form 68% of C-level executives, while women of color are only at 4%. The McKinsey and Company study “Diversity Wins” states that companies that fall behind in hiring a more diverse C-suite find themselves more likely to underperform their industry median in profitability, coming in at the 40th percentile. As of 2019, an average of 8 percent of executive team members at these underperforming companies were female, while most had no ethnic-minority representation at all.
How Did We Get Here?
Men hold a cultural tradition of leadership in our history. According to a 2017 Scientific American article, only 19 Fortune 500 firms are led by people of color, and only 21 are led by women. Compounding that is that almost 75% of Fortune 500 boards are primarily composed of white men. These long-established social structures have perpetuated inequalities in education, health care, employment, housing, public safety, voting rights and more, not just corporate leadership.
One of the major reasons why white men continue to be hired for leadership positions is the most common way people get hired. Referrals are the most-common source of hiring, especially for senior leadership positions. For most white professional men, their business network is almost entirely comprised of other white men. These are the only people they often network with and refer for positions of leadership, ensuring that boards remain almost exclusively male and caucasian, snuffing most opportunity for corporate leadership diversity and maintaining leadership, as to quote the name of a Forbes article, “Male, Pale and Stale.”
The Business Case for Corporate Leadership Diversity
EWF International is committed to changing the narrative. For over 20 years, we’ve provided peer advisory forums and leadership development programming for women at all career stages. In 2019, McKinsey discovered that companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above-average profitability than companies in the fourth quartile—up from 21 percent in 2017 and 15 percent in 2014.
Gender diversity will become even more important in the future, as enactment and compliance with state diversity laws continues to grow. For example, by the end of 2021, all publicly-held California companies MUST have a company board that is populated by 25-50 percent women.
Why Do Companies Need Female Leadership?
The argument began as a moral one: corporate leadership diversity is the right thing to do. Yet we’re pleased to continue finding reports and statistics that having women in corporate leadership positions makes good business sense. Companies with greater gender parity on their boards and among their leadership teams out-innovate, out-maneuver, out-hire and just plain out-perform their competition.
According to the McKinsey report on “Diversity Wins: How Inclusion Matters,” companies with more than 30 percent women executives were more likely to outperform companies whose percentage of female leadership ranged from 10 to 30. Even more telling, these companies were also more likely to outperform those with even fewer women executives or none at all. A substantial differential likelihood of outperformance—48 percent—separates the most from the least gender-diverse companies.
Recruiting More Women to Your Leadership Team
Recruiting and retaining corporate leadership diversity through talented women requires a concerted focus, as does creating and achieving diversity goals. There are several ways to improve your company’s talent base:
Diversity, equity, and inclusion (DEI) training is an excellent way to begin shifting your company and its culture in the right direction. DEI training should be formal, frequent, ongoing and focused on changing the long-term behaviors of your company towards gender equity.
Beyond shifting the way that your company thinks, feels and acts, you must also commit to devoting the time, resources and energy that it takes to train and empower women to grow into leadership positions. This training doesn’t just improve the lives and careers of your employees, it also benefits your entire organization.
How Do You Attract and Retain the Best Possible Talent?
While you should always strive to hire the best possible talent, regardless of background, Quantum Workplace reports that 61% of employees say diversity and inclusion strategies are important and make them more engaged.
The surveyed employees also report that when they work with and for leaders who look more like them and come from similar backgrounds, they are more motivated and see that moving up the corporate ladder is possible. Today’s employees desire an experience from their work that goes beyond salary and benefits. They’re also seeking feelings of value, inclusion, and connection to their organization so they can feel that they do valuable work and that work is seen as valuable by their employer.
Just as critically, today’s jobseekers don’t fall for empty promises and are experts in recognizing when the culture your organization presents is inauthentic. They’re looking for an experience and workplace that resonates with them and where they feel a sense of belonging.
These benefits can be as important to today’s diverse jobseekers as the dollars and cents on their paycheck:
- Flexibility in work location and hours, along with a work from home/home office stipend
- Physical and mental health/wellness support benefits
- “Build Your Own” work weeks
- And, perhaps most critically, they’re seeking career track autonomy. With decreased dependence on degrees and “traditional” requirements, employees can recognize increased opportunities to make a career change. Enabling them to pursue their passions within your company is an oft-overlooked way to retain the best people.
When it comes to retaining talent, there are three cost-free things your company can do to keep its top people:
Genuine appreciation should be expressed often. The smaller the gap in time between a behavior and the appreciation, the stronger the message.
How do your people prefer to be recognized, publicly or in private? Take the time to find out and do so in a way that empowers them.
Everyone needs it. Throughout your day, find moments to encourage and help your people think more highly of themselves.
As an organization focused on improving gender parity in the workspace, it’s essential to remember diversity encompasses more than race and gender. You must also build a company culture that diverse in many different vectors, such as:
- Disability status
- Educational experience
- LGBTQ status
- Parent/Child caregiver status
- Socioeconomic background
- Veteran status
Does Your Hiring Process Promote Corporate Leadership Diversity?
As you work to help create a more inclusive and diverse leadership team, you should pay close attention to your company’s hiring process and the roles within it. Hiring bias can be a significant factor in who gets hired by your organization. As stated above, it’s one of the primary factors that hurts corporate leadership diversity and leads to the perpetuation of “Male, Pale, and Stale” hiring practices. In hiring decisions, it always comes down to a decision of one person over another and that can be distorted by bias. Even if you don’t believe you’re biased, you can’t avoid it. Bias is just part of human nature, the way we interpret the world, and how we make decisions.
The critical practice to reducing hiring bias is to discover, continually challenge, and reduce the impact of your own implicit bias. Here are a few key ways that you can reduce the impact of bias in your hiring:
- Create a process to remove all resume information not directly related to the position’s qualifications
- Reduce individual bias by including hiring team members of different genders, ages, and experience levels to interview candidates
- Standardize interview questions to keep things on track and reduce side conversations that may trigger additional biases.
Get Your Stakeholders on Board with Corporate Leadership Diversity
No matter how hard you work at building diversity, encouraging female leaders, and hiring and retaining a talented and diverse workforce, you must gain stakeholder buy-in to find long-term success. If they aren’t on board, your corporate leadership diversity attempts will fail. Persuading stakeholders and steering your company in the right direction is critical to being an effective leader and you don’t have to go it alone.
Bring in the Experts at EWF International
Since 1998, EWF has been focused on consulting and supporting career women at all stages of their journey. Our executive peer advisory forums bring together accomplished, savvy women in business in a confidential, supportive, non-compete environment. The structured process ensures each meeting is focused, productive and provides actionable next steps to help solve problems and drive results for women in executive leadership, such as how they can increase diversity in their organizations.
EWF International also provides corporate programming in a variety of topics and applications from speaking engagements to turnkey, leadership development programs for your company. For more information on how EWF can help you, Contact Us and we’ll get in touch with you soon.