What's the business case for gender diversity at work?
But first, why does it matter what the business case is? Isn't gender equality simply the right thing to do?
The reason we think it's important to highlight the financial arguments for gender equality is simple: we worry that morality isn't persuasive because it just doesn't rise to the level of "must do".
Let's face it: businesses are challenged every day in acquiring and retaining customers, attracting and motivating employees, and pleasing shareholders. So why is gender equality something that rises to the level of these issues? We argue that achieving gender equality at work is precisely about tackling each of those issues.
1. Acquiring and retaining customers
We've had a number of off-the-record conversations with large employers about the fact that team performance (as rated by clients) is higher whenever diverse teams are involved.
These are real-world results -- not controlled academic research studies -- and even the academic research compellingly shows that diversity does enhance performance.
Unfortunately, not all employers are able to analyze business results in this manner -- either for lack of resources dedicated to gathering this data, or even more fundamentally because they don't have a set of diverse teams to comprise a control sample set in the first place. Fortunately, there are new solutions in the marketplace trying to address data issues around diversity.
2. Attracting and motivating employees
Most employers spend millions and millions of dollars on recruiting and retention programs. There's a measurable cost to hiring and employee turnover -- and some of that cost is simply a matter of life or even a good thing, as it weeds out people who don't perform or fit in culturally.
However, every employer also knows that the cost of losing a high-performer is much more than that person's salary and bonus. Valuable talent is an investment that keeps paying dividends year after year. A loyal, satisfied employee's value isn't obvious from their cost -- but that doesn't mean it can't be measured.
Moreover, the newest members of the workforce -- the Millennials — expect different things from employers and also are less likely to stay at companies than their predecessors because their values and perspectives are different.
Keeping employees happy is something we understand a bit about -- our research on female job satisfaction suggests that gender equality bears a strong relationship to women's job satisfaction at work.
3. Pleasing shareholders and investors
Many studies show that companies with diverse leadership perform better over time, by having higher returns on equity or exhibiting lower volatility. One new mutual fund invests in an index of 400 companies based on leadership diversity and this article by Ellevate explains why betting on women leaders makes good financial sense.
It's a truism in the financial markets that you win either because you have better information or because you analyze it better. Employers who don't pay attention — or have the data in the first place — could be seriously left behind.
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