Women at the Top Improve the Bottom Line

Written by Sara Meyer-Davis Tuesday, August 30 2011

The best-known diversity initiative is the Federal Glass Ceiling Commission established by the Civil Rights Act of 1991. Its mandate was “to identify the glass ceiling barriers that have blocked the advancement of minorities and women as well as the successful practices and policies that have led to the advancement of minority men and all women into decision-making positions in the private sector.”

The commission was directed to conduct a study of opportunities for, and artificial barriers to, the advancement of minority men and all women into management and decision-making positions in corporate America. The Glass Ceiling Commission’s report, which was finalized in 1995, was meant to identify the barriers so that they could be broken. When reviewed today, the document is thorough, relevant, and current. Its recommendations became the core of diversity best practices for the next two decades. Unfortunately, it failed in its mission.

The progress of women has been minimal. Women, and minorities, rarely reach the senior levels of corporate ranks. A recent Catalyst report noted women represent fewer than 14 percent of corporate executives at top publicly traded companies, 3 percent of Fortune 500 CEOs, and 15 percent of board directors at those companies. While the global work force is nearly 50-percent female, anecdotally, gender trumps race, sexual orientation, etc.

Companies that focus on the business impact of diversity – understanding the commercial impact within each company – show an increase in profitability. This finding has been known for some time. In 1992, Kotter and Heskett proved that, over a 10-year period, companies that intentionally managed their culture significantly outperformed those that did not. In 1998, a study by Covenant Investment Management showed that, “The 100 companies rated lowest in diversity averaged 7.9-percent annualized stock return; compared to 18.3 percent for the 100 companies that rated highest.”

More recently, the statistics have become even more compelling. “In a study of 353 companies, those companies with the highest representation of women in the top management team experienced a 35-percent higher return on equity and a 34-percent higher total return to shareholders.” (The Calvert Women’s Principles Initiative, April 2008.)

Even companies that focus on the advancement of women have not been as successful as they desire. Recently, there have been a number of studies as to why. In September of 2010, Harvard Business Review published an article analyzing why men still get more promotions than women and points to lack of sponsorship as the reason. “Without sponsorship, a person is likely to be overlooked for promotion, regardless of his or her competence and performance – particularly at mid-career and beyond, when competition for promotions increases.” Lack of sponsorship is clearly an issue, but the problem is more fundamental.

The lack of progress is caused by to two things. First, the facts prove that the concept of “Diversity and Inclusion” is a business imperative. In the minds of far too many corporate executives, not to mention middle managers, gender diversity is not a business matter. It continues to be viewed as a social program, a nice "to do" – an altruistic gesture.

Second, women have not broken through the glass ceiling because of the gap between concept and execution. The subject matter of Diversity and Inclusion is unusual in that it touches each individual’s core values, socialization, conscious behaviors, and subconscious mind-sets. For this reason, it is incredibly challenging to implement.

In conclusion, when work force, client, and supplier diversity are acknowledged as part of doing business, they will be integrated into business strategy. As such, diversity will be addressed in the same manner as all other business matters, and it will be achieved.

Sara Meyer-Davis is founder of Strategic Diversity Advisors, an advisory firm that develops and implements work force, client, and supplier diversity programs, showing clients how to utilize these programs to extend their commercial brand, create a competitive advantage, and increase revenues and ultimately profits.

Previously at Credit Suisse, Meyer-Davis was director, global diversity and inclusion, and the global head of human resources for the Information Technology Division of 4,200 employees. Meyer-Davis is secretary of the board of directors of the Inter-Organization Network (ION), which advocates for gender diversity in the boardroom, a member of the leadership committee of the Financial Women’s Association of New York, on the steering committee for the YWCA New York City Chapter of the Academy of Women Leaders Salute, and she has provided pro-bono consulting for Legal Momentum.

She resides in New York City and South Berkshire County with her husband and two small sons.