Are you looking for your next growth area? What are your plans to beat your competition? Come to think of it, what business exactly are you in? If your answer to any of these questions isn’t talent, then you are running the risk of being left behind. Why? Because growth and competitive advantage will come from innovation and creativity in the 21st century.
As John Hagel III, co-founder of the Deloitte U.S. Center for the Edge, says, “companies must truly become talent-driven firms.” Yet most today are underutilizing, and often downright ignoring, half of their talent pool—their women. Or, put another way, investing in women—both as workers and as consumers—is one of the best levers for creating competitive advantage.
Let’s take women as workers—talented workers—first. Today’s economic realities—from the shrinking taxable workforce in many countries to the importance of critical-thinking, analytical, and decision-making skills in the digital economy—underlie why talent is becoming the most valuable resource for nations and businesses alike. And women not only make up roughly half of the workforce in most of the world, but they are graduating college at higher rates than men in many countries. The World Economic Forum’s 2010 Global Gender Gap Index shows that the educational attainment gap has almost disappeared. But that is not translating into women being retained, developed, and advanced in the workforce. In fact, those numbers are dismal. There has been no change in the percentage of women in senior management among the Fortune 500® for almost a decade1. In Europe, where women make up more than half of college graduates and 45 percent of the workforce, they are a measly 11 percent of corporate executives2. These numbers mean that the pipeline to the top either leaks women—or that they are getting stuck.
Either way, it’s not good for the bottom line. Churn has a steep price: a conservative estimate of the cost of turnover for knowledge workers ranges is 200 percent of salary. But that may not be the biggest cost to your business. Evidence is mounting that gender diversity (and diversity in general) at the top delivers better business results. Today, Fortune 500® companies in the top quartile when it comes to women’s representation on their boards outperform those in the lowest quartile by at least 53 percent on return on equity3. And in Europe, of 89 publicly traded companies with a market capitalization of over 150 million pounds, those with more women in senior management and board members had, on average, more than a 10 percent higher return on equity than those companies with the least percentage of women in leadership4. Women bring their experiences, perspectives, and approaches to decision making, making it more robust.
But that’s not all—because the other half of creating competitive advantage is to understand the power of women as consumers. Women are not a niche group—they are the market. Already, women control roughly US$20 trillion of total consumer spending globally, and that number is predicted to rise to US$28 trillion by 20145. And women either make or influence up to 80 percent of buying decisions, on everything from appliances to cars and medical services6. This is not a consumer segment that businesses can afford to ignore—and those with more women in management are in a stronger position to understand and market to this population.
The bottom line—and that is what this is all about—is that there is a Gender Dividend to be reaped by any company or country that invests in women. But that doesn’t mean businesses are doing all they can to take advantage of it. For many, promoting women is still a “soft” issue—not a business imperative. They have not figured out the cold, hard fact that not capitalizing on women as workers and consumers is holding their businesses back. Which means that if you build your business case for the Gender Dividend, it just might help you beat the competition.
(This column is adapted from our new study The Gender Dividend: Making the business case for investing in women.
Anne Weisberg is a Director of Talent, Deloitte Services LP, in the U.S. member firm and co-author of Mass Career Customization: Aligning the Workplace with Today’s Nontraditional Workforce.
1 - “2005 Catalyst Census of Women Board Directors of the Fortune 500 Shows 10-Year Trend of Slow Progress and Persistent Challenges,” Catalyst press release, 29 March 2006.
2 - “More women in senior positions: Key to economic stability and growth,” European Commission, January 2010
3 - Lois Joy, Ph.D., Director, Research, and Nancy M. Carter, Ph.D., Vice President, Research, at Catalyst Inc.; Harvey M. Wagner, Ph.D., and Sriram Narayanan, Ph.D., The Bottom Line: Corporate Performance and Women’s Representation on Corporate Boards (Catalyst, 2007)
4 - McKinsey, Women Matter
5 - Michael J. Silverstein and Kate Sayre, The Female Economy, Harvard Business Review, Sept. 2009, see also Sylvia Ann Hewlett, “Why Women are the Biggest Emerging Market,” Harvard Business Online (March 8, 2010)
6 - See e.g., The Economist, A Guide to Womenomics (April 12, 2006); Sandra Lawson and Douglas Gilman, The Power of the Purse: Global Equality and Middle Class Spending, (Goldman Sachs Global Research Institute, 2009)