This article was forwarded to me recently and I found it very insightful and thought provoking. For me personally, I know that one of my greatest sources of coaching is my wife … I find her insight very helpful and have a deep respect for her management talent and knowledge. Something to think about.

Reason No. 1 should be enough: Increased profits and shareholder returns Tuesday, March 21, 2006

By Heather Arnet

What if I told you that I knew the secret to increasing your company’s shareholder returns by at least 34 percent? That the information I had could help you increase shareholder confidence and approval in your work and make your board of directors more efficient, mission minded, accountable and productive?

What if I told you that I would share this secret with you — at no cost to you — provided you made me one promise: that you would make sure it was implemented into your corporate policies? Would you make that trade?

Below, you will find the top 10 reasons why increasing the number of women on boards and in senior management structures, throughout our region and throughout all sectors, is not just good sense; it is good business. This is not because women are better than men, smarter then men or because men are not competent leaders (or vise versa).

But rather, the data have proven that when there are diverse perspectives and experiences within leadership structures, there is more robust thinking, problem solving and relationship building that becomes systemic — that is, occurring at all levels of an organization. All boards and management structures can benefit from fostering creative, innovative solutions to traditional problems.

The status quo, for our region and for our national economy, is not something that any of us wants to maintain. We strive for something better, for excellence, for increased revenues, returns, accolades, more jobs, better performance and an economic renaissance. Diversifying our boards and making a concerted regional commitment to recruiting and retaining more women into leadership positions throughout all sectors will help make this region’s economy stronger and position the Pittsburgh metropolitan area to compete globally for the best talent available. Here’s why:

1. More women executives result in increased corporate earnings.

In 2004, Catalyst, a New York-based research organization, made national headlines when it released a study that connected the percentage of women in senior management to corporate performance. In this landmark study, “The Bottom Line: Connecting Corporate Performance to Gender Equity,” Catalyst examined the financial performance of 353 companies between 1996-2000. It found that the companies with the highest representation of women in their senior management teams had a 35 percent higher Return on Equity — a key measure of profitability — and a 34 percent higher Total Return to Shareholders — capital gains plus dividends — than companies with the lowest representation of women at the senior level.

In a similar study in the late 1990s, Roy Adler, a marketing professor at Pepperdine University in Malibu, Calif., tracked the number of women in high-ranking positions at Fortune 500 companies between 1980 and 1998. His research found that the 25 companies with the best record for promoting women to senior positions, including to positions on their boards, posted returns 18 percent higher and Returns on Investment — how much money an investment earns, be it equipment or financial instruments — 69 percent higher than the Fortune 500 median of their industry.

2. More women board members result in increased accountability.

In a time of increased emphasis on corporate governance, ethics and accountability, it is especially profound to note that a 2002 study published by the Conference Board of Canada found a direct correlation between the number of women on a board and the focus of that board on corporate governance and accountability. According to the study, which tracked the corporate performance of corporations with two or more women on the board from 1995 to 2001:

74 percent of boards with three or more women explicitly identified criteria for measuring strategy, compared with 45 percent of all male boards.

94 percent of boards with three or more women explicitly monitored the implementation of corporate strategy, compared with 66 percent of all-male boards.

94 percent of boards with three or more women ensure conflict of interest guidelines, compared with 68 percent of all-male boards.

86 percent of boards with three or more women ensure a code of conduct for the organization, compared with 66 percent of all-male boards.

3. More women in management help companies compete for the best talent.

In order to compete for top-tier talent graduating from our institutes of higher learning, American corporations are going to have to become experts at recruiting and retaining women. As the New York Times reported a year ago, women make up 56 percent of the national college population, and that number continues to rise. “Within 10 years, three million more women than men could be attending college with women making up on average 60 percent of every entering freshman class,” the article said.

This is especially interesting for our region since women already make up the majority of our work force. While some believed that our region was suffering from a “brain drain,” the University of Pittsburgh’s 2004 Women’s Benchmarking Report documented that from 1990 to 2000, the number of women residents 25 to 34 with a bachelor’s degree or higher increased by 10.9 percent in the metro area, while the number of male residents of the same age with a bachelor’s degree or higher fell 4.3 percent.

In other words, the increase in educated young women was greater than the loss of educated young men, which produced an overall brain gain in the region. Further, the study said, educated young women now outnumber educated young men in the region.

When recruiting for a board or senior staff vacancy, companies will continue to search for the best and most qualified people available. More and more these individuals will have to be women. Choosing to put more women in leadership positions will demonstrate to potential hires that your company values women — not just as workers, but as leaders — and help it compete for this rich talent pool.

Demonstrating a true commitment to paying women fair wages and providing opportunities for advancement within your corporate and board structure will enable your company to compete for the most qualified workers in the market.

4. More women in management increases corporate insight to customers.

As Carol Stephenson, former president and chief executive officer of Lucent Canada eloquently stated in her 2004 article in the Ivey Business Journal, “Women have a deep and intimate knowledge of consumer markets and customers. Women control 80 percent of household spending, and using their own resources, make up 47 percent of investors. They buy more than three quarters of all products and services in North America.”

More women in senior management and at the board level will provide your company with a competitive edge to attract and appeal to this growing and ever more discerning consumer base.

5. More women on boards connect companies to emerging markets.

Female entrepreneurship is the fastest growing demographic of corporate ownership in our nation. The Center for Women’s Business Research concludes that today, one in 11 adult women is an entrepreneur and one in seven employees works for a women-owned business.

As of 2004, women have a 50 percent or greater stake in nearly half of all privately held businesses in the United States, for a total of 10.6 million enterprises. Growth in women-owned businesses has outpaced that of other firms. Since 1997, the Center estimates that women-owned firms have grown at nearly twice the rate of all firms — 17 percent vs. 9 percent.

Growth in employment by women-owned firms has been even more dramatic: 24 percent compared with 12 percent for all firms. Previous Center research indicates that this growth trend includes dramatic growth among the largest women-owned firms — those with 100 or more employees. These companies present tremendous opportunities for business-to-business markets, presenting unlimited new opportunities for vendor relationships, investing opportunities and the potential to have a large impact on the development of new jobs in our region.

6. More family-friendly corporate policies result in increased corporate growth and retention of both genders.

Companies that have emphasized a commitment to attract and retain female employees throughout all tiers of the company usually invest in the development of family-friendly corporate policies and worker retention programs that attract and retain the top talent of both genders.

Nationally, Cary, N.C.-based software company SAS has become a national leader on this issue. It has been listed in the top 20 of Fortune’s “100 Best Companies to Work for in America” for eight straight years, and its corporate culture has been featured on CBS’ “60 Minutes” and on “Oprah.” It has done all this while also achieving record earnings, continued growth and continued status as a market leader for new product development year after year.

At the heart of SAS’s unique business model is a simple idea: satisfied employees create satisfied customers. SAS enviable low employee turnover rate has consistently been significantly below the industry average, and SAS reaps the rewards of employee loyalty with low recruiting costs and the benefit of the most talented minds in the software business. Programs and facilities at its world headquarters include two on-site child care centers, an elder-care information and referral program, an employee health care center, wellness programs, a 77,000 square foot recreation and fitness center, and many other work-life programs.

In a more local example, Carnegie Mellon University has become a leader in such practices by offering a semester of paid leave to any faculty member — regardless of gender — for parental leave related to a newborn child. It also was one of our first local universities to offer domestic-partner benefits and an on-site child care facility. These practices have provided CMU with the ability to compete for the best minds working in academia today, securing the university’s status as one of the top colleges in the country.

7. More women on boards provide access to underutilized investors.

Women make up 47 percent of investors, even though they make up more than 52 percent of the work force and will represent 60 percent of every college freshman class by 2020. Add to this the soon-to-be-retiring baby boomer women who also may have access to inherited and other family income, and the female investor represents an exciting and under tapped market.

This market should be of interest to companies related to financial services, investing, real estate, and leisure services, but this population also presents a rich pool of qualified board members, new investors and donors for corporate and nonprofit board consideration. In addition, having more women on your board will provide your company with increased access and insight into this market base.

8. More diversity around the table results in new innovative thinking.

One of my favorite quotes on this topic comes from Jane Evans, who sits on the boards of Altria (formerly Philip Morris Companies), Georgia Pacific, KB Homes and PetsMart. “Women [board members] ask questions that men don’t think to ask, because women come from a completely different environment and vantage point,” she says.

Dr. Judy Roesner, author of “America’s Competitive Secret, Women Managers,” also explains that, as lifelong outsiders, ” women are more likely to ask questions that male [board] members avoid. Being an outsider gives one a sense of freedom that insiders don’t always have. This outsider freedom is a valued characteristic of independent directors, the type of director much sought after today.”

This kind of creative questioning can encourage a board to move beyond status-quo thinking toward a place at which new product development, innovative technologies and creative problem solving can occur. Because women and people of color were not the majority of boards in the past, they are less likely to have a long history on that particular board.

Unlike directors who have served for a longer period of time, making them hesitant to try something because “it failed in the past,” a new member of the board likely will consider all options as possible solutions. Often a solution that may not have worked in a past scenario may be a perfect solution for a new or current challenge because of changing market conditions or new information and technology .

9. More women role models will keep more of our young people in Pittsburgh.

What would economic health for southwestern Pennsylvania look like? For most corporate leaders and families, that answer is simple: We want our region to have a thriving and robust economy. We want businesses to move here because they know that our region offers a talented work force and excellent quality of life. And most importantly, we want our children to know that there are sustainable career opportunities for them in the region , and that if they are born here and educated here at one of our top-tier universities, there will be a life here for them as adults that would include being paid top dollar for what they are worth, and having multiple opportunities to become decision-makers and leaders in the community.

Considering our region currently pays women less then 70 cents on the dollar compared to their male counterparts working the same job, and understanding that this is one of the worst wage gaps in the country, we are currently failing our children, 52 percent of whom are young women. But making a community commitment to fixing our regional wage gap and becoming a leader in providing educational, professional, and leadership opportunities for women in the corporate, nonprofit, and government sectors, will provide this community an opportunity to mobilize and energize the work force we have — and attract the employers and employees of tomorrow to move here from elsewhere.

10. Investing in women is investing in the future of our region.

Recently, Microsoft co-founder and Chairman Bill Gates, speaking as president of the Gates Foundation, spoke of how his foundation has identified women and girls as the best recipients for investment by his foundation. He articulated that while battling famine, poverty, illness and illiteracy in foreign countries, one can make the most dramatic and long-term impact in a region by investing in women’s education and economic empowerment . We would do well to take Mr. Gates’ advice and implement this strategy within our local economy. By recruiting and retaining more women into leadership positions throughout our region, we can make our region’s economy stronger.

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