By Margarita Nahapetyan
Ernst & Young, an international business consultancy group, released a report earlier this week, according to which having more women in leadership roles could be the best way out of the current global financial crisis.
"Investing in women to drive economic growth is not simply about morality or fairness. It is about honing a competitive edge," said Ernst & Young chairman and chief executive officer Lou Pagnutti about the findings in the group's Groundbreakers report. Groundbreakers is about adopting new ways of thinking and not necessarily about race, gender, ethnicity or sexual orientation, he explained, which people traditionally associate with diversity.
Groundbreakers references The Economist magazine report according to which, women, for the past few decades, have made much more contribution to the world's GDP than has new technology or the emerging economies of China and India. Groundbreakers also refers to the data from a 2007 Catalyst report stating that on average, Fortune 500 companies with more females on their boards of directors ended up with better financial performances, compared to companies with fewer women as board directors.
The CEO noted that women account for approximately 45 per cent of all university graduates, however their employment rates are more than 20 per cent lower than those of men. And what is even worse, the female earnings are 15 per cent less than earnings of their male counterparts. In the past few years, participation of the women in companies has stagnated even as the correlation between women in the boardroom and financial performance remains strong, Pagnutti said.
In Groundbreakers, Ernst & Young group cites data from Goldman Sachs that estimated that per-capita incomes could grow almost 15 per cent within the next 11 years by decreasing the gap between male and female employment rates. This could increase GDP in the United States by as much as 9 per cent, European zone GDP by 13 per cent and Japanese GDP by 16 per cent.The situation is more problematic in the corporate senior ranks.
In Europe, women represent just 11 per cent of the governing positions in the continent's major companies. As to the United States, less than 30 per cent of companies in America have even one female holding a senior position, Ernst & Young found.
No matter how ironically it may sound, the current financial crisis and recession, a time when most of the companies are in search for new ways to keep their business afloat, is exactly the time when companies should be considering strategies to appoint more female workers into executive chairs, the report suggested. "While many corporations and governments have for years been making efforts to tap into the hidden potential of women ... now is the time to accelerate these efforts," said the study.
Companies have been grappling for years with ways of keeping women in their firms. Increasing the number of females in management and top positions will not happen just by chance. The Ernst & Young report says that companies must plan for it and put mentoring programs in place in order to make sure that women will get promoted and climb the career ladder. In the most recent report on the gap between men and women in the workplace and within society in general, however, the World Economic Forum said that the difference has actually widened in 41 of the 130 countries studied.