Benefits of Gender Diversity in the Workplace

Tatenda Sayenda / Posted On: 12 August 2020 / Updated On: 26 September 2022 / Other / 1,179

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Benefits of Gender Diversity in the Workplace



As we celebrate Women’s month, we take this opportunity to discuss the issue of diversity in the workplace. Many companies report that they are highly committed to gender diversity, but no meaningful progress has been made. The proportion of women at every level in most organizations has hardly changed. Globally there continue to be substantially unequal gender ratios in workplaces, both horizontally (i.e across industries and sectors) and vertically (i.e. in leadership positions (OECD, 2017; Sojo, Wood, Wood, & Wheeler, 2016).

According to McKinsey & Company, women are doing their part. For more than 30 years, they have been earning more bachelor’s degrees than men. They are asking for promotions and negotiating salaries at the same rates as men. And contrary to conventional wisdom, they are staying in the workforce at the same rate as men. It’s time for corporates to do their part in actively addressing the issue of gender diversity.

 

WHAT IS WORKPLACE GENDER DIVERSITY?

We have all come across job adverts that either says female candidates urged to apply or this role is more suited for male candidates, or any gender suggestive statements in an advert. Now for some organizations they believe stating gender bias statements on an advert or aiming for a certain gender during an interview/ recruitment process makes it a fair process.

Now, gender diversity doesn’t mean your company needs a 50/50 mix of males and females in every job in the company. It does mean, however, that all roles, at every level in the company, should have a fair representation of both sexes. It also means that every hiring manager should strive to hire the best person available for the open position, without assumptions or prejudices about it being a man’s or woman’s job (traditionally speaking). According to Gallup, Gender diversity is vital to any workplace. Not just because it's a commendable goal; it simply makes bottom-line business sense. Furthermore, gender diversity in a workplace means that men and women are hired at a similar and consistent rate, are paid equally, and are given the same working opportunities with the same promotional opportunities.


BENEFITS OF GENDER DIVERSITY IN THE WORKPLACE

In a recent study by Gallup, it was discovered that hiring a demographically diverse workforce can improve a company's financial performance. The study of more than 800 business units from two companies representing two different industries -- retail and hospitality -- finds that gender-diverse business units have better financial outcomes than those dominated by one gender:

  • Gender-diverse business units in the retail company have a 14% higher average comparable revenue than less-diverse business units (5.24% vs. 4.58%).
  • Gender-diverse business units in the hospitality company show a 19% higher average quarterly net profit ($16,296 vs. $13,702) than less-diverse business units.

Gallup research further goes on to suggest that gender-diverse teams perform better than single-gender teams for several reasons:

  • Men and women have different viewpoints, ideas, and market insights, which enables better problem solving, ultimately leading to superior performance at the business unit level.
  • A gender-diverse workforce provides easier access to resources, such as various sources of credit, multiple sources of information, and wider industry knowledge.
  • A gender-diverse workforce allows the company to serve an increasingly diverse customer base.
  • Gender diversity helps companies attract and retain talented women. This is especially relevant as more women join the labor force around the world. Companies cannot afford to ignore 50% of the potential workforce and expect to be competitive in the global economy.

Increased Productivity: In another study conducted by Professor Zhang (an assistant professor at Harvard Business School) covering 1,069 leading firms across 35 countries and 24 industries, it was found that gender diversity relates to more productive companies, as measured by market value and revenue, only in contexts where gender diversity is viewed as “normatively” accepted. By normative acceptance, we mean a widespread cultural belief that gender diversity is important. A report by MSCI shows that having women on the board of a company boosts productivity.

Attract top talent: According to Harvard Business Review, a diverse workforce signals an attractive work environment for talent. In a survey of 1,000 respondents, the job site Glassdoor found that 67% of job seekers overall look at workforce diversity when evaluating an offer. Top female candidates, in particular, care about gender diverse work environments. Another survey found that 61% of women look at the gender diversity of the employer’s leadership team when deciding where to work. The takeaway is the most talented individuals go to places that do better with diversity, and this may be what is driving diverse firms in certain contexts to outperform their peers.

Diverse idea exchange: Significant research has shown that diverse teams can develop more innovative ideas. When people from different contexts work together, their unique perspectives often lead to greater creativity. Research by Hewlett, Marshall, and Sherbin, for example, showed that leaders with diverse backgrounds and experience helped companies innovate more. Diverse leaders were more likely to create an environment where new, creative ideas were considered. And diverse teams, they found, were more likely to have some common experiences with their end-user. With this advantage, teams created better products.

Enhanced collaboration: Having women in teams can help improve team processes and boost group collaboration. Researchers have observed that women have stronger skills in reading non-verbal cues. They also conclude that groups with more women were better at taking turns in conversation, which helps them make the most of the groups' combined knowledge and skills. This will benefit groups both when they are collaborating on projects face-to-face.

Improved Staff Retention: Having an inclusive culture in your workplace boosts morale and opportunity. Inclusive workplaces tend to have lower employee churn rates – which represents big savings in terms of time and money spent on recruitment.

Employee Satisfaction: Opportunity and fairness are the biggest predictors of employee satisfaction. Employees universally value opportunity and fairness. Across demographic groups, when employees feel they have equal opportunity for advancement and think the system is fair, they are happier with their career, plan to stay at their company longer, and are more likely to recommend it as a great place to work.

 

WHAT COMPANIES SHOULD DO

The vast majority of companies say that they’re highly committed to gender and racial diversity—yet the evidence indicates that many are still not treating diversity as the business imperative it is. It is time companies take more decisive action. This starts with treating gender diversity like the business priority it is, from setting targets to holding leaders accountable for results. According to Mckinsey & Company, based on four years of data from 462 companies employing more than 19.6 million people, including the 279 companies participating in this year’s study, two things are clear: one, women remain underrepresented, particularly women of color. Two, companies need to change the way they hire and promote entry and manager-level employees to make real progress.

In a study conducted by Gallup, the findings indicated that managers not only need to increase gender diversity in business units but also create workplaces that engage employees. Open, trusting, and supportive relationships among coworkers and supervisors unleash the power of diversity by enabling employees to turn their differences in thought, behavior, skills, knowledge, and talent into innovative ideas and practices that can drive a company forward.

Secondly, the Gallup study found that gender diversity varies substantially across business units within a company, which in turn affects the business performance of these units. To achieve the real benefits that diversity can bring, leaders and managers must look carefully at the gender balance in specific business units when designing and implementing a strategy to increase diversity. A blanket policy designed to increase overall gender diversity at a company, for example, is unlikely to achieve the desired results or to increase financial performance.

According to Badal (2014) for organizations to reap the bottom-line benefits that diversity can bring, business leaders must:

  • Identify business units that are less gender diverse.
  • Develop a hiring strategy that increases gender diversity in these units without reducing or ignoring merit. For example, studies indicate that when women feel they are hired to fill quotas, it negatively affects relationships between coworkers.
  • Create an engaged culture that enables men and women to form trusting relationships and motivates them to perform at a high level.
  • Set inclusiveness goals, and hold managers accountable for diversity.

Lack of gender diversity in most cases starts during the recruitment process and performance reviews. McKinsey & Company suggest that to have gender diversity in the workplace evaluators need to go through unconscious bias training. Unconscious bias can play a large role in determining who is hired, promoted, or left behind. Companies are less likely to provide unconscious bias training for employees who participate in entry-level performance reviews than senior-level reviews, but mitigating bias at this stage is particularly important. Candidates tend to have shorter track records early in their careers, and evaluators may make unfair, gendered assumptions about their future potential. There is also compelling evidence that this training works.

Companies need to make sure they have the right processes in place to prevent bias from creeping into hiring and reviews. This means establishing clear evaluation criteria before the review process begins. Evaluation tools should also be easy to use and designed to gather objective, measurable input. For example, a rating scale is generally more effective than an open-ended assessment. Without exception, candidates for the same role should be evaluated using the same criteria. Research shows that it can help to have a third party in the room when evaluators discuss candidates to highlight potential bias and encourage objectivity. When companies have strong hiring and performance review processes in place, employees are more likely to think the system is fair and the most deserving employees can rise to the top.

Managers have a big impact on how employees view their day-to-day opportunities. Employees are more likely to think they have equal opportunities for growth and advancement when their manager helps them manage their career, showcases their work, and advocates for new opportunities for them regularly.

Companies must foster a culture that embraces gender diversity. According to Mckinsey & Company, management support is important in improving gender diversity in the workplace. In some organizations, management has been seen to be supportive of gender diversity though they have been seen not to do these things with enough consistency. In a Mckinsey report, it was shown that only about one in four employees say managers help them manage their career and about one in three say managers advocate for new opportunities for them a great deal. Companies can help by making sure managers have the tools and training they need to more fully support their team members—and by rewarding them when they do. As a next step, companies should push deeper into their organization and engage managers to play a more active role. Compared to senior leaders, fewer managers say gender diversity is a high priority, and far fewer managers say they are actively working to improve diversity and inclusion.

The gender pay gap remains an issue around the globe; the World Economic Forum estimates that it will take more than 100 years to close it worldwide. Perhaps the most effective way for employers to reduce pay inequality is by improving transparency around salary. If a pay range is established for each position and made clear to employees, it is much less likely that there will be discrepancies in what people in the same role, with similar levels of experience, are paid.

Gender diversity is more than just an equal rights issue. It’s an economic issue. Gender-diverse workforces are more inclusive, catalyze higher engagement, and undoubtedly increase economic performance-enhancing the entire organization from workers to customers to other stakeholders, as well as prospective employees.

Tatenda Sayenda-Havire is a Consultant at Industrial Psychology Consultants (Pvt) Ltd, a management and human resources consulting firm. Phone +263 (242) 481946-48/481950 or email: [email protected] or visit our website at www.ipcconsultants.com

 


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