More women in leadership roles might have prevented current economic crisis
As economies the world over struggle to rebuild from this global downturn, there has never been a better time to capitalize on the contributions women can make.
Groundbreakers, an Ernst & Young report first launched at the 2009 World Economic Forum in Davos, Switzerland, takes an unflinching look at the productive power of women — and the failure of countries and businesses to fully tap into this vast resource. Groundbreakers argues this myopia poses a serious risk to the prospects for global long-term growth.
Let’s look at the growing body of evidence supported by increasing quantitative research.
• According to an Inter-American Development Bank report, “Without a doubt, women joining the workforce will increase the overall efficiency of a country, whether developed or developing.”
• Goldman Sachs’s Economics Paper No. 154 says clearly: “Closing the gap between male and female employment rates would have huge implications for the global economy, boosting gross domestic product (GDP) in the United States by as much as nine per cent; Eurozone GDP by 13 per cent; and Japanese GDP by 16 per cent.
• A 2007 Catalyst report found that, on average, Fortune 500 companies with more women on their boards of directors turned in better financial performances than those with fewer board members.
• An Economist magazine report says, over the past few decades, women have contributed more to the world’s GDP than has new technology or the emerging economies of China and India.
• A 2007 McKinsey study showed companies with three or more women in senior management scored higher than companies with no women at the top over a range of measures for organizational excellence.
The evidence is clear: Advancing women advances the bottom line, not to mention whole communities. Our companies and countries will be stronger and more competitive if they have more women operating as managers and decision-makers. Investing in women to drive economic growth is not simply about morality or fairness — it’s about honing a competitive advantage.
Time for acceleration
While many Canadian corporations have made efforts to tap the potential of women, it’s time to accelerate these efforts. It’s not just about adding a woman here or there. It’s about building the critical mass that gives people the power to speak up, and have their views heard.
Groundbreakers raises the question of whether or not the economic and financial upheaval we’re living through would have turned out differently if more diverse perspectives had been considered at key decision points.
Would the frames of reference that women and others from more diverse backgrounds bring to issues have resulted in different discussions about risk, and would different decisions have been reached? Would different strategies have been tried? Would different actions have been taken?
By asking these questions, Canada’s business leaders and recruiters can become aware of their own biases and frames of reference, which so often shape thinking and decision-making. Leaders and recruiters must have the ability to hear and be open to new perspectives and develop strategies from the most diverse talent pool.
And this really is the point of Groundbreakers: Diverse voices and perspectives challenge us to tackle familiar problems in new ways. Diversity of thought can help us reject the kind of groupthink that may have contributed to the global financial challenges the world is facing.
Groundbreakers extols the concept of diversity as a strategy for success. Academic research shows that diverse groups of people tend to outperform homogenous groups if both groups’ members have equal abilities.
Tips for employers
How can Canadian companies build leadership capacity for increased competitiveness?
• Create a deliberate plan to get women into leadership positions, including mentoring and experience programs.
• Work towards “functional diversity,” where people with diverse ways of perceiving problems arrive at better solutions.
• Don’t underestimate the power of critical mass. Studies show that at least three women are needed on boards and management committees to make a tangible difference.
While there may be no quick fix to the current financial crisis, fostering new perspectives by advancing more women into leadership positions is a sure-fire way to drive economic development.
Lou Pagnutti is the Toronto-based chairman and chief executive officer of Ernst & Young LLP in Canada. For more information, visit www.ey.com.
