The White House convened United State of Women Summit (USOW) held June 14-15, 2016 in Washington D.C. brought together many of the movers and shakers from government, non-profits, corporations, the entrepreneurial ecosystem, and yes, of course, Hollywood, to talk about the current condition of gender equity. The summit’s speakers included President Obama, Vice President Biden, Oprah Winfrey, Michelle Obama, Warren Buffet, Mariska Hargitay, Amy Poehler and many, many more household names.
The USOW message was clear: national and global cultures have made great strides in the last decades but there is still a long, long way to go in shaping a better present and future. Considering that women are half the population walking the earth and nearly half of the workforce, the topic is finally emerging as a global economic imperative. For business leaders, the pressure is on to understand how and what has to change in order to ensure the power of harnessing the other half of the population can be realized.
The struggle is real
“When we started the 2020 Women on Boards campaign in 2010, women held board positions in just over 14% of Fortune 1000 companies. In 2015, women held almost 19% of the board seats in the companies on our Gender Diversity Index,” says Malli Gero, Co-Founder and President of Women on Boards 2020, a non-profit dedicated to research and education in the drive to get women on 20% of board seats.
Although advances have been made, most would argue that the impact is not fast nor broad enough. “Progress, what progress?” asks Sharon Vosmek, CEO of Astia, a global organization that enables and funds high-growth start-ups with women on the founding teams. (Disclosure: this author sits on the board of Astia and is an active Astia Angel investor.)
Vosmek has a point that is backed by data, some quite obscure. For example, men with the names John or David have a greater chance of being CEO than all of the qualified women in the workforce. A 2015 study by Execucomp found that 5.3% and 4.5% of 1500 Standard & Poors (S&P) index companies were named John and David, respectively, as compared to women, who represent 4.1%. Let that sink in for a while.
Large corporations are not the only gender-challenged organizations. While research shows that start-ups hold significant economic impact potential in the form of new revenue, jobs and innovation, the entrepreneurial ecosystem is not a friendly place for women-founded high-growth businesses. “Venture Capital is heavily male and pale. It’s hard to believe that the proportion of female VC partners in the U.S. has fallen from 10% to 6% in the past 15 years,” say Adam Quinton, Founder and CEO of Lucas Point Ventures.
According to Ernst & Young and Babson College’s The Diana Project report, with only 5% of venture money going to female-founded businesses, perhaps the problem lies in investors only wanting to invest in entrepreneurs who look like the people they see in the mirror, or what Quinton labeled a “mirrorocracy.” “Investors tend to disproportionally back people they are comfortable with and who seem lower risk, i.e. what they see in the mirror,” says Quinton.
Economic imperative
The economic power women have is becoming harder to ignore. Women are responsible for 70-80% of consumer buying decisions and are the majority of internet and social media users on major channels such as LinkedIn, Twitter, and Facebook. Women will earn $18 trillion in salary in just two more years. It’s not really hard to believe that women’s role in the economy continues to grow, making inequity among the genders a hard pill to swallow when half of PhDs, half of business school applicants, 67% of college graduates and more than 70% of valedictorians, according to the Jacquelyn and Gregory Zehner Foundation, a non-profit focused on women’s rights.
While it’s another hard pill to swallow that research is still sought to justify the impact of gender diversity on business performance, the impact of women continues to be clear. In a study of 22,000 public companies in 91 counties, the Peterson Institute for International Economics and Ernst & Young found that an increase of 30 percent from zero in top leadership positions was associated with a 15 percent rise in profitability.
When it comes to the technology industry, the industry with the most impact on how we work and how we live, women continue to leave in droves. According to the Anita Borg Institute, women leave technology jobs at twice the rate of their male counterparts and 56% leave by mid-level, citing working conditions and lack of advancement, professional and personal life integration, lack of engagement and corporate culture as the reasons for transitioning to non-technical careers. The costs to business, and therefore to the economy, are great: turnover costs are estimated up to 200% and the loss of knowledge, innovation, and productivity stunt potential growth.
Changing the conversation
The wheels of change turn slowly, especially when a cultural transformation must occur. Research indicates that women will not be on par with men in terms of representation and access to leadership positions until 2085. Fed up with the lack of real change in the status quo, many are starting to take action rather than continue to talk about the problem. Indeed, there is a movement from the “why” to the “how” and the “what” of solving gender equity.
Vosmek and her fellow Astia Angel investors, a national angel investment network managed by Astia, stopped talking about the importance of financing women and decided to actively invest in female-founded high growth start-ups.
Given the disheartening numbers in technology, it’s great to see enterprise technology giant SAP just announced its participation in the inaugural White House Tech Inclusion Pledge. The goal of the pledge is to fuel American innovation and economic growth by increasing the diversity of the technology workforce. Progress will be accelerated by CEOs committing to incorporate diversity and inclusion into corporate goals, publish related data and progress metrics on the diversity of its workforce and invest in partnerships to build a diverse pipeline of technology talent. SAP is well on its way with gender diversity, having achieved an industry leading 33% of women in managerial positions in North America.
What to do when 69 years is too long to wait for change
Instead of waiting until 2085 for gender parity, many are looking at the Nordic countries, France, and Belgium where quotas have garnered significant results. The Catalyst global index showed the highest percentage of women on boards in those countries with government-mandated targets. Topping the Catalyst report as having the highest representation of women on boards are Norway (35.5%), Finland (29.9%), France (29.7%), Sweden (28.8%), and Belgium (23.4%).
While no one wants to have change mandated to them, sometimes a forcing mechanism like quotas enables change. At the 2014 World Economic Forum in Davos, Christine Lagarde, Managing Director of the International Monetary Fund, deemed quotas “unfortunate but necessary” in moving the needle for achieving change. It’s no wonder that many USOW participants couldn’t help but toss the emotionally-charged “q” word around as a legitimate solution to a seemingly permanent problem.