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UNLOCKING FULL POTENTIAL OF WOMEN IN
THE ECONOMY - US RESEARCH
Women have been a growing factor in the
success of the
McKinsey & Company undertook this
research over the past three months to understand how women contribute to the
US economy; how their work benefits individual corporations; what prevents
women from making greater contributions to their companies; and what approaches
can help companies unlock the full potential of women.
Creating the conditions to unlock the full
potential of women and achieve our economic goals is a complex and difficult
challenge. At a macro level, there is significant potential to raise the labor
participation rates of women across the country. At a corporate level, where
many high-skill women are employed, the opportunity is to continue to advance
women into leadership positions where they can make the greatest contributions.
Despite the sincere efforts of major corporations, the proportion of women
falls quickly as you look higher in the corporate hierarchy. Overall, this
picture has not improved for years.
We believe, however, that there is an
opportunity to make substantial progress in developing and advancing women on
the path to leadership. Companies have become very good at recruiting
women—many major corporations recruit their “fair share” or more of women.
Moreover, many companies have introduced structural mechanisms such parental
leaves, part-time policies and travel-reducing technologies to help women stay
the course. While the many barriers that remain are substantial, interventions
at critical career points can have outsized impact.
For example, with a focus on middle
management to increase the number of women who advance to the vice-presidential
level, corporations could substantially improve the odds of achieving real
gender diversity in top management. We found that more women in middle
management roles are focused on leading than their colleagues at the entry
level. And they have already demonstrated enough to advance and acquire
managerial skills. Moreover, many are younger women with relatively light
work/family concerns. If companies can win their loyalty at this stage of their
careers, they will be more likely to stay the course. These women are ours to
lose.
What compels bright, highly-motivated women
at middle management levels—and higher—to turn down opportunities for
advancement, look for jobs outside the company, or leave Corporate America
altogether? We reviewed over 100 existing research papers, surveyed 2,500 men
and women and interviewed 30 chief diversity officers and experts to understand
the factors that hold women back. The result is a clearer understanding of what
drives career decisions of women and men—what makes them strive for greater
leadership responsibility and what convinces them to stay put.
One clear take-away: Women don’t opt out of
the workforce; most cannot afford to. They do leave specific jobs for others in
pursuit of personal achievement, more money and recognition—just like men. They
do hold themselves back to pursue greater satisfaction across all parts of
their lives—but not only to fulfill family responsibilities. Indeed, a sizable
percentage of the male college graduates who took our survey reported the same
motivation to gain greater balance.
We looked into the specific barriers that
women cite as factors that convince them that the odds of getting ahead in
their current organizations are too daunting. The reasons why women choose to
remain at their current level or move on to another organization—despite their
unflagging confidence and desire to advance—include: lack of role models,
exclusion from the informal networks, not having a sponsor in upper management
to create opportunities.
In McKinsey’s ongoing Centered Leadership
research, which examined the distinctive strengths women bring to leadership
roles, we found another phenomenon that limits diversity at the top: Women
often elect to remain in jobs if they derive a deep sense of meaning
professionally. More than men, women prize the opportunity to pour their
energies into making a difference and working closely with colleagues. Women
don’t want to trade that joy for what they fear will be energy-draining
meetings and corporate politics at the next management echelon.
Of all the forces that hold women back,
however, none are as powerful as entrenched beliefs. While companies have
worked hard to eliminate overt discrimination, women still face the pernicious
force of mindsets that limit opportunity. Managers—male and female—continue to
take viable female candidates out of the running, often on the assumption that
the woman can’t handle certain jobs and also discharge family obligations. In
our Centered Leadership research, we found that many women, too, hold limiting
beliefs that stand in their own way—such as waiting to fill in more skills or
just waiting to be asked.
These imbedded mindsets are often
institutional as well as individual—and difficult to eradicate. A CEO’s
personal crusade to change behavior does not scale. A diversity program by
itself, no matter how comprehensive, is no match for entrenched beliefs.
Targeting behavioral change generally leads only to an early burst of
achievement followed by reversion to old ways.
Our evidence points to the need for
systemic, organizational change. Companies that aspire to achieve sustained
diversity balance must choose to transform their cultures. Management needs a
powerful reason to believe such as the potential competitive and economic
advantage from retaining the best talent.
How women contribute
to the economy
Between 1970 and 2009, women went from
holding 37% of all jobs to nearly 48%. That’s almost 38 million more women.
Without them, our economy would be 25% smaller today—an amount equal to the
combined GDP of Illinois,
GDP growth is driven by two factors—an
expanding workforce and rising productivity. Back in the 1970s when women and a
huge cohort of baby boomer men were entering the workforce, 65% of GDP growth
arose from workforce expansion. Today, nearly 80% of growth is related to
productivity increases, according to the McKinsey Global Institute (MGI).
To sustain the historic rate of GDP growth
of approximately 3% and maintain the
How women contribute
at the corporate level: The business case for diversity
What do women bring to Corporate America?
How do women leaders contribute to a company‘s competitive edge? These
questions have been the subject of much debate and research. The central
challenge in proving a link between gender diversity in top management and
improved corporate performance is sample size: Too few companies have had
enough women in senior roles to provide statistically significant results.
However, there is a growing body of work that compares financial performance to
gender diversity at the top. Catalyst has just released its most recent
comparison of large industrial companies, pointing out the correlation of
financial performance and more women at the top. The 2009 McKinsey Women Matter
global survey on gender diversity highlighted the link between the
characteristics of women leaders and organizational health. McKinsey’s 2010
Centered Leadership research found that many women bring an approach to
leadership well suited for the challenges that major organizations face today:
What holds women back
As has been well documented, Corporate
America has a “leaky” talent pipeline: At each transition up the management
ranks, more women are left behind. According to Sylvia Hewlett, founder of the
Center for Work-Life Policy, women represent 53% of new hires. Catalyst
estimates that at the very first step in career advancement—when individual
contributors are promoted to managers—the number drops to 37%. Climbing higher,
only 26% of vice presidents and senior executives are female and only 14% of
the executive committee, on average, are women. At this point women are doubly
handicapped because, as our research of the largest
While our data shows that women—even
mothers—retain strong conviction about their abilities and a desire to advance,
when they look at the odds of making it through the pipeline, many make a
well-reasoned decision: They stay put, look for a job elsewhere that will
fulfill their ambition, or seek careers outside large corporations. We found
four kinds of barriers in their way:
What our survey showed most clearly is
that, no matter how they feel about their current situation, women never lose
their belief in their abilities. Indeed, age, motherhood, and seniority did not
materially change the high response on this question. Women are ambitious and
believe they have the qualifications—they want to make a contribution to the
success of the organization. Over time, however, the barriers seem to get
larger and women’s belief that there is opportunity ahead diminishes—and along
with it their willingness to keep pushing.
A path to solutions
Knowing what we know about the role of
women in driving macroeconomic growth and how women can contribute to
corporations, it is clear that the
Having survived the first cut in the talent
pipeline—from individual contributor to manager—women have already demonstrated
superior capability. They retain their ambition and confidence and are quickly
acquiring skills and know-how. They also have a better understanding of what it
takes to succeed than when they entered the workforce—and have a stronger
belief that opportunities for promotion exists. A greater portion of middle
management women aspire to top management roles versus entry-level women (31%
versus 16%).
If companies could raise the number of
middle management women who make it to the next level by 25%, it would
significantly alter the shape of the pipeline. More women who make it to senior
management share an aspiration to lead, and more believe that getting to senior
leadership is worth the cost. Advancing more women into these positions would
in time help companies rebalance their executive committees, which in turn
increases the likelihood of sustaining gender diversity at every level to the
very top.
Addressing the barriers that convince women
that they can’t make it is far more complex. As chief diversity officers told
us, there are a thousand reasons for a thousand little leaks in the talent
pipeline. This means that one-off solutions will never succeed. Comprehensive
change is required.
Our conclusion is that this systemic
challenge can be met only through organizational transformation. This is a tall
order. Our research on organizational change indicates that 70% of
transformation efforts fail. However, the same research tells us that the
transformations that succeed have strong leadership from the top and a
comprehensive plan to shift mindsets and behaviors. Getting people to think and
act differently is one of the most difficult management challenges, but it can
be done:
Our interviews revealed that many companies
have made real strides in removing structural barriers for women, by adopting
more flexible work routines, implementing career off-ramps and on-ramps, and
policies that enable women to survive the dual responsibilities of family and
work. The next leg of this long journey requires something much harder to
achieve—genuine transformation.