A father’s perspective on gender diversity

As a father with two daughters dipping their toes into the world of work, it’s tough to know where we are on gender diversity. The sexualisation of young women on Instagram and TikTok is relentless, as is the pressure to conform to stereotypes defined by others. School leaders are concerned about the re-emergence of misogynistic attitudes among school-age boys. Should we be surprised if this spills over into attitudes in the work environment? My eldest daughter’s forays into hospitality have shown the degree to which certain managers and customers talk down or make inappropriate comments to a young waitress.

With so much remaining to be done, a survey commissioned by King’s College London suggests the appetite for change may already be waning: over half of people globally (including, remarkably, 49% of women) agree that, “When it comes to giving women equal rights with men, things have gone far enough in my country.” Here in the UK, support for that view has increased to 38% from 25% just four years ago. On the other hand, the latest update from the UK Office for National Statistics shows the gender pay gap has halved over the last 25 years. FTSE-350 companies met their target of having 40% of female directors three years early and remain on track to hit the same target for women in management positions. Even the finance sector seems to be making progress in response to the UK Government’s Women in Finance Charter initiative. My old firm, PwC, appointed 99 new partners last year, of whom 39% were women – around double the rate when I was made a partner in 2005.

Persistent problems

Yet, problems remain. The most influential roles of CEO and CFO remain the preserve of men. A recent Bloomberg report claimed that “Female Execs are Exhausted, Frustrated and Heading for the Exits”. As Alison Taylor, Clinical Professor at NYU Stern School of Business and Executive Director of Ethical Systems, put it on International Women’s Day: “I also hear so much fading patience and goodwill. We were told there were no barriers and we could do anything. But this is still a world where you accept getting talked over and undervalued, or you treat every day like a fight.”

I hear three things consistently in private conversations with senior women. First, they are put in a senior position but are still too often, metaphorically, expected to make the tea, taking on the “housework” of the corporation rather than leading its key strategic initiatives. This is also reflected in how their contributions to discussions are sometimes still treated in day-to-day interactions with male colleagues. Second, they have to bear the expectation of not just doing their job for them, but doing it for all the women that follow. They need to perform brilliantly and be an agent of change. Third, they struggle with reconciling the way in which senior jobs are constructed with family life.If I want my daughters to have an easier time of it, what needs to change?

Move beyond the business case for diversity

The “business case for diversity” is often invoked to create support for diversity initiatives. The widely referenced McKinsey ‘Diversity Wins’ study on board diversity found that “companies whose boards are in the top quartile of gender diversity are 28% more likely than their peers to outperform financially.” But the study has been criticised for methodological problems by academics who have been unable to replicate its findings. The academic consensus on diversity research is best summarised by Katherine Klein of Wharton: “Rigorous, peer-reviewed studies suggest that companies do not perform better when they have women on the board. Nor do they perform worse. Depending on which meta-analysis you read, board gender diversity either has a very weak relationship with board performance or no relationship at all.”

This matters, because focusing on the business case promotes what Harvard Business School academics Robin J Ely and David A Thomas call an “add diversity and stir” approach: the idea that simply adding under represented groups is enough to fix the problem. Ely and Thomas warn: “Leaders may mean well when they tout the economic payoffs of hiring more women and people of colour, but there is no research support for the notion that diversifying the workforce automatically improves a company’s performance.” Rather than react instinctively against a lack of evidence here, perhaps we should ask why academia has not found such a relationship and what this means.

Randall S Peterson from London Business School contends that “the more diverse the team the more diverse the outcome”. Highly diverse teams may successfully integrate varied information in solving complex problems or could fall apart with no ability to integrate that information into sensible outcomes, the so-called “double-edged sword” hypothesis. Weak (or strong) teams normally have poor (or good) social integration, which is essential to capturing the benefits of diversity. Increasing diversity may help strong teams get better but can make weak teams worse. This could explain why aggregate relationships between diversity and performance at the organisational level are so hard to find.

Furthermore, Kannan Srikanth, Sarah Harvey and Randall S Peterson describe how surface-level diversity can be blamed for problems in teams that are actually caused by deeper-level cognitive diversity. When team members who think about the world in very different ways face coordination problems, they wrongly attribute this to the surface-level differences within the team. This all argues for the importance of inclusion, which typically appears alongside diversity in job titles but receives much less attention in practice; perhaps because it is so hard. Inclusion has to mean more than mentors or networking groups, although both can be helpful. It means ensuring women are treated equally to men and valued fully for their skills and contributions on a day-to-day basis.

As a study on diversity by the LBS Leadership Institute finds, “To embrace diversity is more than to tolerate differences. It is to nurture an environment where individuals feel their ideas and perspectives are valued, trust between members is present and everyone feels psychologically safe to publicly express their views or constructively challenge ideas (as opposed to challenging individuals).” Done well, inclusion helps men as much as women; a recent paper by Alex Edmans, Caroline Flammer and Simon Glossner, ‘Diversity, Equity and Inclusion’, finds that business benefits are more strongly associated with a culture of inclusion than with numerical measures of diversity.

Inclusion cannot be achieved by largely ineffective mandatory diversity training, but is a battle that must be won one manager at a time. As Ely and Thomas emphasise, this isn’t easy: “Firms may have to make financial investments that they won’t recoup, at least in the short turn, and more will be required of top leaders, managers, and rank-and-file employees alike. Everyone will have to learn how to actively listen to others’ perspectives, have difficult conversations, refrain from blame and judgement, and solicit feedback... developing those capacities is no small feat in any context; it is even more challenging for people working across cultural identity differences.” It may be hard, but it’s essential and requires focus, skill and nuance in how it is achieved.

Reform how work is done

Harvard University economics professor, and recently announced Nobel Prize winner, Claudia Goldin has shown that many high-paying jobs are organised in a way that is inherently more attractive to men than women, at least within today’s cultural norms. These so-called “greedy jobs” have disproportionately high rates of pay, contributing much to the observed gender pay gap, but extract a price in terms of their all-consuming nature, requirement to be on call and inflexibility. Think senior executive in a corporation, partner in a professional services firm and so on. Such jobs are fundamentally incompatible with family caring responsibilities. As a result, couples specialise, with one taking the high-paid job, the other – overwhelmingly the woman – running the home. And if they don’t, they face a stressful conflict between work and family priorities.

What are the keys to reducing the impact of such greedy jobs on women’s ability to progress in the workplace? Goldin identifies a number of factors, including better-funded and more widely available childcare, and development of social norms to end the presumption that, within couples, the man’s career wins. But perhaps most urgent is a need to reorganise work itself. A defining feature of greedy jobs is their lack of substitutability: if you’re the lead adviser for an investment-banking client or the head of a major business division, it is you who has to drop everything when crisis strikes; a requirement that many women find incompatible with motherhood – but it is one that can be challenged.

Overcoming inertia

Unilever has addressed the greedy jobs challenge through making job-sharing a normal option at senior executive levels; one of a series of measures adopted to achieve gender parity. But inertia is a strong force and making even such apparently simple changes requires commitment and perseverance against the presumption that any change will be economically damaging. My own role as a board remuneration adviser at PwC was a classic greedy job; on call whenever a CEO was to be hired or fired. As a part-time worker I was fed up with being disturbed on days off by the latest client crisis, so we instituted a “two-partner” model on our major assignments and educated clients to view the partners as substitutable.

At first we faced resistance: clients wanted to speak to the “lead adviser”, there were worries about cost duplication due to combined attendance at board meetings, and even staff sometimes wanted to know “who was in charge”. But in the end, clients came to see the virtue of a model that not only ensured availability but also brought a diversity of perspectives to the table. From the firm’s perspective, this model probably contributed to it retaining every one of my clients when I left to return to academia.

Challenging greedy jobs requires a leap of imagination and a willingness to try what we may have assumed in the past wouldn’t work. If there is one thing we should have learned from the Covid-19 pandemic, it’s that our assumptions about how work needs to be organised and conducted may be completely unfounded.

Encourage women-led organisations

Transforming male-dominated cultures is a big challenge. Sharon White, Chief Executive at John Lewis, has highlighted the challenges of getting men to work for her as she sought to shift a male-dominated company culture to a more gender-balanced one. She received emails saying, “Oh my goodness, there are too many women.” Organisations taking gender equality seriously have to make it a priority, as Unilever’s nine-point plan demonstrates. Existing leadership may be disinclined to put gender equality above competing priorities and dedicate the necessary resources to it. Here, efforts will be farmed out to heads of Diversity, Equity and Inclusion, who frequently seem to be resigning due to lack of senior-level support, with the focus on “meeting my diversity numbers” as opposed to promoting deeper change – but it would be surprising if simply putting more women into cultures and working practices designed, run by and for men is successful.

We also need to support the development of organisations led by women. The UK Financial Times has highlighted reports of women leaving major law firms since the pandemic for smaller, often women-led, firms that offer greater flexibility. Only by observing women-dominated organisations making different choices in how they create long-term value will we truly see what is possible. Institutional investors, who are currently very focused on board- and management-diversity metrics, might give equal attention to improving the currently very weak pipeline of women-led businesses through the venture-capital route.

But we need to be careful that well-intentioned diversity rules do not become counterproductive. The EU recently mandated that boards of all listed companies should have at least 40% of both genders. If extended to management ranks, such a uniform approach to diversity could end up restricting the experimentation needed to unlock the business models that work for women. After all, men have had a couple of centuries of running corporations to be able to figure out what works for us.

Addressing root causes

A target-based approach focusing on diversity quotas has certainly brought about change quickly – give an executive a target and they will often meet it. But there are risks that change is proving unsustainable. There’s a need now to shift to analysis of the root-cause issues that inhibit women’s sustainable progress and promote a culture of inclusion in the way work is structured and performed. We owe it to our daughters to finish the job of creating a fair working world for them. Whether it’s in a long-standing business with leaders committed to change or a business established by women with a new understanding of how to create value, I hope my daughters have options to flourish and be themselves, free of the constraints, assumptions and biases that are still faced by many women in the workplace today.

Tom Gosling is Executive Fellow at London Business School and at the European Corporate Governance Institute