WUNRN
The McKinsey Quarterly
THE GLOBAL GENDER AGENDA - WOMEN
& MANAGEMENT
Women continue to be
underrepresented at senior-management levels in Asia, Europe, and North
America. McKinsey research suggests some answers.
November
2012 • Joanna Barsh, Sandrine Devillard, and Jin Wang
Source:
Organization Practice
The
progress of women
toward the upper echelons of business, government, and academia continues to
provoke media attention and lively debate. Look, for instance, at the coverage
of Marissa Mayer’s July appointment as CEO of Yahoo! and the diverse reactions
to an article (“Why women still can’t have it all”) published in the
July/August issue of the Atlantic magazine.1
Coincidentally,
this summer also marked the moment when we released the latest phase of a
global research initiative on women in senior management across Asia, Europe,
and North America. This effort involved assembling fresh data on the gender
composition of boards, executive committees, and talent pipelines, as well as
detailed surveys of leading businesses in each region.2
Encouragingly,
the research shows that a growing number of women, both in senior roles and
among the rank and file, are finding their voices and inspiring others to
achieve progress. It also demonstrates that more companies are enjoying the
benefits of gender diversity and that some have found ways to boost the
representation of women at the highest levels of their organizations. From an
admittedly low base, for instance, more women sit on European corporate boards
(though not executive committees) than did so five years ago. Countries with a
clear political commitment to change, in the form of specific quotas or
targets, are achieving significant results. Several major corporations are
emerging as inspirational role models.
Yet while
the vast majority of organizations in developed economies are striving to
unlock the potential of women in the workforce, many executives remain
frustrated that they have not made more immediate and substantial progress.
Firmly entrenched barriers continue to hinder the progress of high-potential
women: many of those who start out with high ambitions, for instance, leave for
greener pastures, settle for less demanding staff roles, or simply opt out of
the workforce. In Asia, cultural attitudes toward child care and household
tasks further complicate the challenges for corporate pioneers. And everywhere
we look, despite numerous gender diversity initiatives, too few women reach the
executive committee, and too few boards have more than a token number of women.
Our research
also offered some clues about the characteristics of companies that make the
greatest advances in gender diversity. Much depends on the stage of the journey
companies have reached. The regional and cultural context matters, too. Still,
we were struck by the global applicability of some core principles. Across
geographies, we find that a wholly committed senior leadership, active talent
management, and more effective efforts to shift mind-sets and change behavior
can transform the gender agenda
Global
challenges
Women hold
15 percent of the seats on corporate boards and 14 percent of those on
executive committees in the United States; 16 percent and 3 percent,
respectively, in Germany; 20 percent and 8 percent, respectively, in France;
and less than 10 percent on both boards and executive committees in China,
India, and Japan. In Scandinavia, the numbers are higher: Norway’s
representation is currently at 35 percent and 15 percent, respectively;
Sweden’s at 25 percent and 21 percent, respectively (exhibit).
The
The representation of women in all regions, moreover, diminishes markedly at
each higher management level. Some female executives, of course, leak out of
the talent pipeline because they are headed for other or better jobs; others
voluntarily draw back from promotions as part of conscious work–life decisions.
But a significant number run into a succession of seemingly immovable barriers
at key career intersections.
We have long
noted the combination of structural obstacles, lifestyle choices, and
institutional and individual mind-sets that hinder the advancement of women.
But only recently have we started to understand how deeply entwined they are.
Men and women tend to be evenly distributed across line and staff roles early
in their careers, for example, but women begin a steady and disproportionate
shift into staff roles by the time they reach the director level. Lacking the
sorts of networks that come more easily to men, many women miss out on
discussions with sponsors who might encourage them to stay in the line. Line
jobs tend to involve more pressure and less flexibility—less appealing to women
forming families or opting for greater control over their lives. Some male
executives, with good intent, do not even ask mothers to consider line
assignments that involve travel and long hours.
Natural
advantages or disadvantages do characterize some sectors, but the situation
varies markedly even within them, and contradictions abound. In European
financial services, for instance, the rate of attrition is particularly severe
by the time women reach middle management. In contrast, our research indicated
that some of the top US gender diversity performers were in financial services.
Finally,
Asia stands out. The relatively low overall rate of female labor force
participation in many Asian countries—though not all of them, for China is a
notable exception—means that it is harder to fill the pipeline at the outset.
Next, the double burden of Asia’s working women, who must juggle families and
jobs, is not only reinforced by cultural factors but also compounded by a lack
of government support in areas such as childcare. In many markets, women wait
until their children are older before returning to work or (in Taiwan, for
example) drop out in their late 20s never to return. Exacerbating matters in
much of Asia is an absence of urgency to change the equation. In our recent
survey of the region’s senior executives, just 30 percent of respondents said
that gender diversity was currently a top priority for their corporations, and
only a third saw it as being one of the top ten priorities on the corporate
agenda in coming years.
These
challenges persist at a time when many companies, particularly in North America
and Europe, are pursuing an arsenal of measures aimed at easing women’s
progress through the organization. Such measures include efforts to make
appraisals objective and unbiased; the adoption of diversity targets; greater
flexibility in remote working; smoother transitions before, during, and after
maternity leave; and executive coaching for high-potential vice presidents. Of
the 235 European companies we surveyed recently, for instance, more than 60
percent told us they have at least 20 gender diversity initiatives in place.
Motivations
vary. A number of studies find a correlation between high-performing companies
and those with strong female representation at the top,3
though correlation does not prove causality. Many CEOs are convinced that mixed
boards and mixed executive teams perform better than those dominated by men. As
one corporate leader put it, just about every company wants to “get the best
brains to work on the problem.” That said, successfully transforming gender
attitudes and performance requires much greater leadership attention and
dedication than even committed CEOs and top teams are currently giving to it.
These goals also call for integrated management and monitoring of women in the
talent pipeline from early on to the point when they become eligible to join
the C-suite and for intervention to shift widely held beliefs holding back
talented women.
Every major
cultural, operational, or strategic change in a business requires personal
passion, “skin in the game,” and role modeling from senior leaders, and gender
diversity is no exception. When a CEO is the chief advocate and “storyteller,”
more people (including the often less committed male middle managers) believe
that the story matters and begin to adopt the CEO’s mind-set and behavior.
Intensely committed CEOs make their goals clear and specific, tell everyone
about them, get other leaders involved, and manage talent to help make things
happen. CEOs who do not see gender diversity as a top issue fold “gender” into
“diversity” and “diversity” into “talent,” thereby losing focus as leadership
of initiatives is delegated to others further down the line. CEOs who champion
gender diversity, for example, participate in women’s events and multiday
talent discussions; less committed CEOs introduce them and leave, inadvertently
signaling that other priorities take precedence.
In Europe,
many executives tell us that the momentum for change took hold only when the
top team made its commitment visible—for example, by appointing women to senior
positions or taking measures to ensure that they were considered for certain
jobs. Sponsorship is (and always has been) a critical part of an executive’s
path to the top. HR leaders tell us that these relationships are hard to
institutionalize and that formal programs have mixed success. But we find it
significant that one company did much better when the CEO and the diversity
leader personally took charge of the sponsorship program, selected a group of
high-potential women, and invited them to spend significant time with the top
team. Women in the program really got to know the CEO and senior-team members,
and vice versa, and most have since moved up the management ladder.
McKinsey’s
more general work on transforming the performance of companies shows that those
with a clear understanding of their starting point are more than twice as
likely to succeed as those that are less well prepared.4
In a gender diversity context, this understanding means knowing the gender
balance at every level of the organization; comprehending the numbers by level,
function, business unit, and region; and then monitoring metrics such as pay
levels, attrition rates, reasons women drop out, and the ratio between women
promoted and women eligible for promotion.
Why go to
this expense? Establishing the facts is the first step toward awareness,
understanding, and dedication to improvement. Using a diagnostic tool, one
company simulated how much hiring, promoting, and retaining of women it would
require to increase the number of senior women managers. That approach helped
it set an achievable and, just as important, sustainable target that would not
compromise a highly meritocratic corporate culture. With an overall target—that
25 percent of managing directors and directors should be women by 2018—and a
clear understanding that the bar for promotion could not be lowered, managers
now look harder for high-potential women and start working with them earlier to
develop that potential.
Incentives
tied to managers’ bonuses can help, though some companies fear that targets may
undermine the credibility of women at the top. Those in favor of such targets
believe that a radical mandate is required for substantial change and worth the
backlash from women who ascended “the hard way.” Where targets are rejected,
other mechanisms “with teeth” are necessary—almost all the top US performers on
gender diversity have goals, if not targets. In Europe, we identified a gap
between the measures companies now have in place and how carefully these
companies apply and monitor them. Some have targets for women in senior
positions, for example, but no plans for implementation; others have targets
and plans but fail to communicate them. Companies with cultures inimical to
top-down diktats should consider adopting a regular report that candidly
evaluates progress and prompts senior management to brainstorm for new ideas.
Leaders with
the best of intentions may still fall short unless they can change the way they
and their organizations think. So if, for example, the prevailing view is that
truly committed executives work 24/7 and travel at the drop of a hat, many
talented women will turn their backs on further advancement. Such prevailing
attitudes are hard to shift: in our experience, that can be done only by role
models who challenge them through their actions and by a learning environment
that cultivates self-awareness. More women at the top should help, though of
course women can be as responsible as men for promoting a culture of nonstop
work.
The top
performers on gender diversity value and promote inclusiveness. Their leaders
firmly believe that mutual respect drives better customer service and hence
sales. When such beliefs take hold, they are powerful. One global cosmetics
company we know, which operates in 88 countries and has a customer base that’s
90 percent female, now cites gender diversity as one of its key strengths.
Another consumer-based business, headquartered in Europe, makes mostly products
for men but learned through research that women usually make the buying
decision. Increasingly, the company looks to female employees to refine its
marketing and product-development approach.
Certain
institutional biases are subtle—for example, a reluctance on the part of men to
give women the tough feedback everyone needs on their way to the top. Many men,
fearing that sponsoring women might seem inappropriate, find it difficult to do
so. Most people feel more comfortable promoting those who behave and think as
they do. A willingness to question can make a difference. When one company
discovered, through an audit of its recruiting processes, that recruiters were
more critical of female than male candidates, it devised a training course for
the critics. One of them was asked to lead a session and has since become among
the company’s most vocal supporters of diversity and inclusion.
The
mind-sets—and aspirations—of women themselves are as important as those of the
companies that employ them. Interviews with 200 successful middle-management
and more senior women in 60 large companies across the United States
highlighted some common threads: early career acceleration coupled with
significant sponsorship, a willingness to change employers to gain greater
opportunities, and a propensity to stay in line jobs for much of their
advancement. These women remained optimistic even in the face of significant
challenges.
Early-tenure
women want to move to the next level as much as men do. Yet we found that only
18 percent of entry- and midlevel women have a long-term eye on the C suite,
against 36 percent of men. That finding reinforces our belief that
inspirational leaders should intervene with talented female middle managers to
discuss their aspirations, build their confidence, embolden them to aim higher,
and seek ways to make line roles more palatable for them. In particular, we
would emphasize the need for women’s leadership-development programs to focus on
personal mastery of thoughts, feelings, and actions and thus to make women
accountable for their own future.5
In the average Fortune 500 company, a 10 percent boost in the odds that women
will advance from manager to director and then to vice president would yield an
additional 90 female executives, including five senior vice presidents and one
member of the executive committee.
The
widespread applicability of the principles above suggests a short list of
actions that should be on every committed leader’s priority list:
1.
Treat gender diversity like any other strategic business initiative, with a goal and a
plan that your company monitors and follows up at the highest levels over many
years. Build in a “report or explain” process and articulate a well-supported
point of view on the value women bring to your organization and the case for or
against explicit targets. If greater representation of women in the talent
pipeline promises a competitive advantage, successful leaders will work hard to
include them. If greater female representation better serves the company’s
customers, those leaders will make that happen.
2.
Ask for—and talk about—the data, sliced and diced to identify ‘pain points’
in the pipeline by business, geography, and function. Go well beyond measuring
success by the number of women at the top. Discuss the percentage of talented
women at each stage of the pipeline, their odds of advancement versus men’s,
and the mix of women between line and staff jobs compared with that of their
male counterparts. Make sure your entire top team and those who report to its
members are accountable for the numbers, and brainstorm about what it will take
to improve them.
3.
Establish a culture of sponsorship, encouraging each top executive to sponsor
two to three future leaders, including women. Instill a mind-set of “paying it
forward,” so that every woman sponsored will in turn sponsor two or three
others. Embed effective sponsorship of women into the profile of successful
leaders at your company and raise the issue in performance dialogues with your
own direct reports. Show your wider commitment by talking with top female
talent when you visit regional divisions and business units or participate in
external events.
4.
Raise awareness of what a diverse work environment looks like, celebrating
successes to reinforce the mind-set shifts you desire. Use frequent personal
blogs, top-team meetings, and town hall gatherings to communicate what you are doing
to drive change. To increase awareness of the new mind-sets, question your own
personnel choices, and think about whom you tend to work with and why. Top
executives who work hard to encourage diversity of thought across a company
will increase everyone’s determination to bring the best to work—ending up not
only with what they set out to achieve but with even more: an engaged community
that corrects itself when things go off track.
A
wide range of global companies made real advances in gender diversity over the
past five years. They know that this is hard work—a journey measured in years
rather than months. But they also know that improving the pipeline of female
talent is possible, with rewards that include tapping the best brains,
improving customer service, increasing employee engagement, and everything that
comes with these benefits.