Firms ignore chief talent pool

In a country where more than half of university graduates are women, Australians have good reason to wonder why only 3 per cent of its top chief executives [|CEOs] are female.

In today’s winner-take-all business environment, businesses clearly need to hire the best to succeed in the marketplace. So, can companies competing for the best human resources really afford to ignore half of the talent pool?

The statistics highlight that such ignorance is widespread.

More than 60 per cent of university graduates in Australia are female, yet among the top 200 companies only a handful are led by women and just 17 per cent of corporate board members are female.

In the lucrative resources sector, women represent less than one in five members of the workforce. The situation is improving but at a glacial pace.

Over the past decade, the Workplace Gender Equality Agency estimates that for larger Australian companies, gender diversity in resources companies has improved marginally from 17 per cent to 20 per cent.

The gradual shift has been driven, at least in part, by awareness campaigns from community and government bodies.

Should we be bothered by the statistics highlighting the scarcity of women in leadership and non-traditional roles? The answer is a resounding yes.

Diversity pays a dividend.

A recent McKinsey study (“Why diversity matters”, McKinsey Quarterly, January 2015) examined 366 public companies across a range of industries in North and South America and Britain and found that those in the top quartile for gender diversity were 15 per cent more likely to have above industry average financial returns.

Conversely, companies in the bottom quartile for gender diversity also languished in the same quartile for profits.

Despite the evidence, companies have struggled to address this issue. Significant strides have been made globally and in Australia over the past few decades but there is a sense that efforts are plateauing.

The 2012 Australian Census of Women in Leadership showed that only 6 per cent of key management positions in line roles were held by women as against 22 per cent of the support roles. The implication is that the most powerful roles in organisations are often not available to women since they haven’t had the requisite experience in the middle tiers.

McKinsey research into the persistence of these challenges (Women Matter survey, 2010) unearthed two main barriers to gender diversity in upper management.

The first barrier is the so-called double burden syndrome: the combination of work and domestic responsibilities. It presents a challenge on its own but is even more difficult to reconcile with the second barrier: the pervasive “anytime, anywhere” business model that demands constant availability and greater geographic mobility.

A third complication is the declining participation by girls in so-called STEM subjects — science, technology, engineering and mathematics — in WA schools. Most line roles to management in a commodity- driven economy have a strong STEM emphasis, which is contributing to an acute shortage of women in the talent funnel.

The relatively few qualified women who do progress often struggle later from the “double burden” arising from having children, subsequently dropping out of the workforce. Those who make it through encounter the “anytime, anywhere” performance model barrier in senior executive roles.

There is no magic formula for getting more women into executive positions.

In keeping with the national spirit of giving it a go, Australia has created a pioneering approach. In 2010, Australia’s Sex Discrimination Commissioner, Elizabeth Broderick, was instrumental in bringing together some of Australia’s most influential and diverse male chief executives and chairmen to form the Male Champions of Change.

The group uses individual and collective influence to ensure the issue of women’s representation in leadership is ensconced in the national business agenda.

Inspired by the MCC, the WA Equal Opportunity Commission established CEOs for Gender Equity, launched in December.

The group has 17 WA chief executives [|CEOs] — male and female — who are passionate about driving greater gender equality.

They have identified three themes that address the issue: inspiring more girls to pursue a STEM education, creating a flexible workplace and correcting the gender imbalance in senior management.

International Women’s Day on Sunday will focus the spotlight on the issue of gender equity.

[|Naveen Unni is a Perth-based partner at McKinsey & Company and a member of CEOs for Gender Equity]