Global Chief Diversity Officer
Can you name the world’s largest emerging market? Most would say China or India or maybe even Brazil. But Sylvia Ann Hewlett, CEO of the Center for Talent Innovation, argues that women are in fact the largest emerging market. While this might seem like a novel idea, companies should be paying close attention to the economic power women wield. According to Financial Planning women control the majority of personal wealth in the United States, own businesses that contribute $3 trillion annually to the economy, and are due to inherit 70% of the $41 trillion in intergenerational wealth transfers in the next 40 years.
A study exploring what drives, inspires and engages women entitled “Women Want Five Things” looked at 35-50 year old women and what inspired them to become truly engaged in their careers. Women and men share two motivating factors: the desire to excel and the desire to earn well. However, three other factors set women apart. The study found that:
- Women want to flourish in their work – a much bigger concept than work/life balance
- They want to empower others
- They want to align their beliefs with their work, which drives real engagement
For example, Moody’s Investors Service reinvented themselves following the financial crisis, and saw their employees become deeply involved. The business started working at improving a ratings tool for micro finance. The employees, especially the women, became highly involved in the project, even offering their free time to work on the tool. Why? They saw this as a way of using their skills to improve poverty and contribute to the greater good. The ability to connect their skills to larger beliefs was highly motivating; they were proud of their contribution to improving quality of life. And as industry seeks the best and brightest, remember that millennials often go job hunting with meaning and purpose in mind.
And many of the best and brightest in every generation are women, who hold more degrees than men in many fields. Sandrine Devillard, Global Leader of the McKinsey Women Initiative, Head of Paris Offices, says, “By the year 2020, we will need nearly 40 million people with higher education in the global economy. If women were to work at the same level as men and stay in the labor force, this talent pool would close more than half of this gap.”
McKinsey studied the top companies in 25 countries analyzing stock market performance in terms of return on capital employed. They compared the performance of companies with no women on the executive committee and those with three or more women on the executive committee. On average, companies with women on their executive committee experienced 50% better financial performance. Further, Sodexo’s three-year study of 52,000 managers revealed a strong correlation between gender-balanced management teams (groups with 40% to 60% women) and several key business metrics, including:
- Gross profit: The results showed that FY14, 65% of the subsidiaries with gender balanced management had seen an increase in gross profit over the last 3 consecutive years compared to 42% for other management subsidiaries.
- Operating profit: The results showed that FY14, 71% of the subsidiaries with gender balanced management had seen positive operating profit over the last 3 consecutive years compared to 60% for other management subsidiaries.
- Organic growth: The results showed that FY14, 45% of entities with Gender balanced management group saw positive organic growth over 3 consecutive years, vs 32% of entities with other management groups.
Although correlation doesn’t prove causality, the link between diversity and performance is hard to ignore. So what does this all mean? Companies who want to excel need to hire, retain and empower women to reap the benefits of gender-balanced teams.
Rohini Anand, Ph.D. is Senior Vice President and Global Chief Diversity Officer for Sodexo.