The Washington PostDemocracy Dies in Darkness

Bosses are failing to explain why female leaders boost profits. This could hurt corporate diversity efforts.

Adult businesswoman working at home using computer, studying business ideas on a pc screen on-line. (iStock)
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Corporate leaders are failing to explain to their employees why having women in leadership positions is good for a company’s bottom line, according to survey results released Thursday by London-based recruitment company Phaidon International.

When asked why they thought their co-workers did not think that gender diversity brought financial benefits to companies, 6 in 10 employees surveyed said they felt that leadership did not promote these benefits. Seven in 10 said that workplace gender diversity, when it was discussed at all, was presented as a human resources issue rather than an element of a business’s success.

The survey found that only one-third of workers interviewed had attended any gender diversity training at work. Of those who attended such training, two-thirds said that the benefits of gender diversity were not presented. For the few workers who were told how having women as leaders boosts a company’s financial performance, more than 40 percent said they were not presented with evidence of those benefits.

Results of the survey also showed that when such benefits are touted without any empirical justification, training can backfire and make employees skeptical of gender diversity efforts. “The harder the issue is pushed without conveying the business benefits, and without evidence, the more ‘turned off’ to the issue an employee becomes,” the report says.

Kellie McElhaney, founding director at the Center for Equity, Gender, and Leadership at the University of California at Berkeley Haas School of Business, said that employees often keep performance-centered metrics at the front of their minds and rely on proof rather than accept platitudes from management at face value. “If a leader doesn’t come in and say this is good for business first, it’s not going to fly,” McElhaney said.

Phaidon Chief Commercial Officer Andrew McNeilis, who oversaw the team that conducted the survey, said that leaders could overcome such skepticism by better communicating the benefits of gender diversity to their employees. “Leaders haven’t used role models or examples of success in better promoting gender balance, and in the absence of information, people connect the dots themselves,” he said. “To effect change, you absolutely need to have leadership sponsorship on this topic."

This lack of communication on the benefits of gender diversity in the workplace seems remarkable considering how extensively the topic has been researched by academia and the corporate world alike. McElhaney said that companies such as McKinsey & Company and Credit Suisse, as well as a slew of academics, have all studied gender parity in the workplace and largely concluded that companies with women on boards of directors and in c-suites perform better financially than those without.

Even though there is a preponderance of evidence to suggest that having more women in corporate leadership positions correlates with increased financial success, McElhaney said that many company leaders don’t take active measures to address any disparity because they see it as a problem that happens elsewhere. Once leaders see the data, however, they are usually quick to change their tune. “You’re only aware of what you get measured on,” McElhaney said.

Just over one-fifth of survey respondents think co-workers do not believe that gender parity improves company financials because they think that performance is based on merit, not gender. One survey respondent wrote, “Cash makes the call, not gender; if you are bright you will make it to the top.”

McElhaney says that this belief in meritocracy in lieu of diversity programs is idealistic. Merit can be explained away, for example, by the use of “fit” as a factor in deciding to hire or promote someone. Fit is a vague concept that means different things to different leaders, which defeats the idea of meritocracy, McElhaney said. “Fit is often ‘you look like me, you act like me and I want to have lunch with you,’ ” McElhaney said.

The survey found that employees want to know that they earned their position based on ability and talent rather than as a diversity hire. “All said and done, people want opportunity and access to roles, and they want to feel they received the promotion based on merit,” said McNeilis.

The survey advised that merit and affirmative-action programs are not mutually exclusive, that programs that aim to train and promote women and minorities foster inclusion rather than simply diversity, a distinction McElhaney said is crucial to understanding how women and minorities contribute to a company’s success. “If [an employee] doesn’t feel included in decision-making, collective intelligence goes down, innovation goes down,” she said. “Diversity is counting heads; inclusion is making heads count.”