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Why we need more women working at the bottom, as well as the top

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New research from Gallup released Monday offers further evidence that gender diversity in the workplace is good for the bottom line.

Gallup, which consults with companies to help improve employees' engagement on the job, examined the gender makeup and financial results at about 800 individual stores and restaurants of two of its national clients, an electronics retailer and a restaurant chain. After controlling for various factors, such as the location of the store or how long the unit had been open, it found that the outlets with greater gender diversity performed better financially.

At the electronics stores with a stronger mix of men and women, same-store revenue growth was 14 percent higher on average than at those without a strong mix. Meanwhile, the restaurant chains with better diversity had average quarterly net profits per location that were 19 percent higher.

The reason these stores and restaurants with closer gender parity performed better seems pretty obvious. Varied ways of thinking and life experiences translate into diverse viewpoints for solving problems; and in the service industry, this could lead to better customer service.

What is notable about Gallup's research, however, is that it looked at the power of diversity among the rank-and-file. Studies connecting gender diversity and financial performance usually tout how having more women at the top can help decision-making, strategic direction and hiring practices for the company. Just look at all the focus on how few women are attending the World Economic Forum in Davos or are on boards of directors or in the C-suite

Yet here instead, Gallup's research finds a link between financial performance and diversity on the front line. "Most studies focus on looking at women in leadership positions, mainly because it's easier to look at the data," says Sangeeta Badal, the study author and a senior consultant at Gallup. "There's a stream of thought that says that including women at the top will automatically trickle down to hiring more women at the front line. But it doesn't always work out that way."

Badal says that while diversity often gets far less attention among rank-and-file employees than it does at the top, her results prove it shouldn't: "Is it really strategic direction that drives performance, or is it the productivity of your front-line workers that's going to affect it?" Too often, she says, hourly workers' feelings about their work environment "isn't really seen as a close link to financial performance. I think there's a stronger link there than people realize."

She admits that her findings shouldn't prompt managers to make sure all their stores have a 50-50 split between men and women. (Equaling out the ranks of dressing room clerks at Ann Taylor with guys, for instance, might not be the best idea.) Still, her research is a reminder that more gender diversity in the workforce shouldn't be an effort of tokenism or mere window dressing at the top, but a way of improving the employee environment at every level.

Jena McGregor is a columnist for On Leadership.

Read also:

The boardroom is still an old boy's club

The science of getting women on boards

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