MANAGING RISK
The gender dividend An urgent economic imperative
© OECD
Charles P. Heeter Managing Director, Global Public Policy, Deloitte Touche Tohmatsu Limited; Chairman, Business and Industry Advisory Committee to the OECD (BIAC)
The corporate world is far from making the most out of gender diversity in the workplace. But some businesses are finding innovative ways to change this. The biggest issue facing most major economies today is economic growth and job creation; yet it is with mixed results that governments and business are tapping into arguably the largest emerging market in the world and the greatest natural resource for knowledge, talent and investment: women. Given the challenges facing economies, there is a strong imperative to move quickly and harness this potential. This is why BIAC enthusiastically welcomes the OECD’s initiative on gender equality. There is a long way to go with respect to improving women’s economic opportunity, and in particular at executive leadership levels. According to current data, only 14% of senior executive positions at the Fortune 500 are held by women, a number that has barely budged since 2005. A global study of the number of women on boards is even more dismal—only 9.4% globally, up marginally from 9.2% in 2009 according to GovernanceMetrics International. This is despite the fact that economic studies show that corporations with women on their boards and in leadership positions have a higher return on equity. In Europe, the return has been estimated at more than 10%. Furthermore, a Deloitte study citing data from the Harvard Business Review forecast the income and global spending power of women at US$18 trillion and $28 trillion respectively by 2014. Women typically spend money differently from men, with different buying patterns and preferences.
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OECD Yearbook 2012 © OECD 2012
Thus, companies should invest in understanding women as consumers and fully capitalising on their purchasing power. Getting more women in the workplace, including in senior decision-making roles, who understand the buying preferences of their cohorts makes business sense. A 2010 global survey of executives found that 72% agree that there is a direct connection between gender diversity and business success, but only 28% say it is a top-10 priority for senior leadership. Institutional investors, however, increasingly identify gender as a key determinant in their investment decisions, banking on the gender dividend in the long term. What can be done to improve opportunity for women, which will benefit business performance, the economy and society as a whole? Focused government policy and business
Corporations with women on their boards and in leadership positions have a higher return on equity engagement at all levels is needed to support women at work. Sound socio-economic policies must underpin and encourage action, and governments, along with business, must innovate, support community investment and remain committed to making the difference as it relates to women. Gender equality may be on the agenda of the G20 government leaders, but it can be argued that this should be elevated to a higher priority, given the economic and community benefits of empowering women. The OECD, a key advisory body to the G20, is undertaking an extensive project on gender equality which is rightly focusing on the “Three Es: Employment, Education and Entrepreneurship”. These elements represent key pathways for women in the economy and society in both developed and developing countries alike. The OECD analysis will help identify and develop better indicators necessary to inform key policy decisions that surround these issues. There is a lot of anecdotal evidence supporting the need and benefits to empowering women, but clear data can be a significant motivator. Business too has a role to play. Change requires measurable, management-led policies and practices that drive female leadership, across management roles and divisions, on boards, at the highest executive levels (the C-suite) and