Business Case, Gender Equality

The Economic Upside of Gender Equality | Vikram Mansharamani | LinkedIn

https://www.linkedin.com/pulse/economic-upside-gender-equality-vikram-mansharamani

The Economic Upside of Gender Equality

Persistent gender disparities in business are an enormous problem, from both ethical and economic perspectives. Achieving gender equality would unleash tremendous economic upside.

While growing in visibility since the publication of Sheryl Sandberg’sLean In, the issue has not received the full attention it deserves. But this is starting to change. The McKinsey Global Institute has been addressing it head-on and noted in a recent report that achieving gender equality in the workplace could add $4.3 trillion to America’s GDP in 2025. 40% of this GDP uplift, the report notes, comes from higher female participation in the labor force, 30% from narrowing the gap between men and women who work part time, and 30% from changing the mix of sectors in which women work. 

Although ongoing, progress on this issue has been uneven— particularly in the two key areas of representation and compensation. Female representation has grown in fields like medicine and law over the years, but in computer science itdropped off sharply in the mid-1980s, as tech firms began to market personal computers as toys for boys. The 2014 Athena Factor 2.0 report on women in science, technology, and engineering cited “hostile macho cultures” and “scarcity of effective sponsors” as key drivers of the continued gender imbalance. Today, women compriseonly 22% of coders.

Shortfalls exist in specific fields, but across them all, underrepresentation increasessharply on higher rungs of the corporate ladder. According to the World Economic Forum, the tech sector experiences one of the biggest drop-offs in female representation from junior to senior positions—but it’s not alone. Across all industries, “there are just 66 women for every 100 men in business-leadership and managerial positions,” a McKinsey report noted

These shortfalls drive compensation gaps. According to Harvard economist Claudia Goldin, disparities are minimal early in careers. But the gender wage gappersists because, later on, social expectations lead women to seek out jobs offering “temporal flexibility”—manageable hours associated with lower compensation.

In one study, Goldin found that while Chicago MBA alums of both genders earned comparable salaries after graduation, a decade later, the women earned 43% less. In addition to the expense of temporal flexibility, unconscious bias and inequality in salary negotiationsmay also be to blame. The latter forces in particular may help to explain the much-discussed slights to successful women such asJennifer Lawrence and Robin Wright.

Countries and companies are using a variety of strategies to resolve inequities in business. Some, like Norway, have mandated seats be reserved for women on corporate boards. Evidence suggests this isworking. Others, like companies in Silicon Valley, are increasinglytransparent about disparities and are setting explicit goals to address them.

Policies encouraging both parents to take parental leave also help. A 2010 Swedish study showed that “a mother’s future earnings increase on average 7 percent for every month the father takes leave,” according to the New York Times. In the US, Silicon Valley companies have been particularly proactive inpromoting parental leave policies. 

We have a long way to go to achieve parity both in representation and pay. In some of the most unequal professions—like finance and medicine—women make only 60% of what men make. And among S&P 500 companies, women only hold20% of board seats. We need bold public and corporate policies to resolve these issues.

One factor may incentivize us to get there: gender equality is also good for business. Bloomberg recently released a gender equality index for large companies, signaling a newfound interest among profit-hungry investors.  And with good reason: gender balance drives earningsMonique Morrow, Chief Technology Officer and Evangelist for Cisco’s New Frontiers Development and Engineering,points to a recent study showing that companies were 15% more profitable when women filled roughly a third or more of key leadership roles.

And the benefits will accrue beyond individual firms.  As the McKinsey report suggests, gender equality will boost the economy as a whole.  Warren Buffet put it succinctly: “We’ve seen what can be accomplished when we use 50% of our human capacity. If you visualize what 100% can do, you’ll join me as an unbridled optimist about America’s future.” 

Achieving gender parity isn’t just ethical. It’s also good for business. 

Women also add innovation capacity to the firms in which they work. A 2010 study of science challenges found that women performed better than men, postulating that female participants, being more socially marginalized in scientific fields, were less burdened by the conventional wisdom that governed their male peers. On the software repository GitHub, researchers found that women’s contributions to open source projects were more likely to beaccepted than men’s—but only if the women’s gender was hidden. Barring better representation, the technologies we design may bedoomed to myopia.

In the end, both moral and business imperatives will drive gender parity. How will we know when the task is complete? As Morrow has put it,we’ll know we’ve succeeded “when we don’t have to talk about it anymore. When we don’t need special conferences around the topic.

 

Vikram Mansharamani is a Lecturer at Yale University in the Program on Ethics, Politics, & Economics and the author ofBoombustology: Spotting Financial Bubbles Before They Burst (Wiley, 2011). To learn more about him or to subscribe to his free mailing list, visit his website.  He can also be followed on Twitter @mansharamani or by liking his Facebook page.

33 comments

    5d

    Gregory Baxter, CPA

    Controller

    The real culprit here is the lack of wage transparency. Companies have a vested interest in keeping wage levels low and use secrecy and individual negotiation in order to do this. Being on the inside of corporate accounting, I have seen time and time again as to the fact that women are offered less compensation for the same work. As long as it is not directly measured itSee more

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    Kat Matheny

    Publications Specialist at Hazen Research,…

    Thanks for the insight.

    6d

    Andrew Adams

    Professor of Information Ethics at Meiji University

    Thanks for this thought-provoking article. I have had some related thoughts, working as I do in Japan. Here, it’s a problem for everyone that working hours are stupidly long. It’s well known that these long hours are, for almost everyone, counter-productive. Over time one’s productivity drops not just per hour but in absolute terms when one works over 45 hours a week (the eSee more

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    6d

    Joao Marrucho

    Spiritual Healer/ Psychic Medium/ Clairvoyant at…

    In my experience, women work hard to create a more just and equal society — when they are given the chance. If that was more often the case, and women were not simply called in to do the cleaning up when the men have made a mess of things, I think the world would become a better place.

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    Peter Patroni

    Navigation/Communications Electronics Engineer

    Yeah….. where would the world be today without all the great female innovative minds of the past. I mean they invented everything we use today, even if it was a man, we all really know there was a woman behind it. Joao, maybe next time you should try not being so macho or “patriarchial” with your comments.

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    Haitham Ahmed

    Workforce Planning & Analytics

    We will never achieve gender equality and should aim for gender equity. Each of us has different challenges that cannot be addressed by an equal policies. Actually equalizing may limit women opportunities when considering men as an equal beneficiaries. We should ensure policy and practice equity that allow women to capture equal opportunities.

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    Michele Bryant

    Oracle EBS Architect Financials

    Its just an excuse anyway I have been available for long hours and all that stuff since my twenties and it has made no difference. Many more women are doing like me and not becoming mothers but it makes no difference to our careers its just an excuse to for some to hold on to power and keep the status quo. Its all a lie! Why is Hilary Clinton being investigated again becauSee more

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    There are 28 other comments. Show more.

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