Gender balance: is your organisation closing the gaps?

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No one can argue against the business case for organisational balance and gender parity. The McKinsey Global Institute (MGI) estimates that fully incorporating women into the economy would add $12 trillion to global GDP by 2025 [2]. Yet the gender gap is still vast on many levels and will continue to widen if we don’t stop “trying to fix the women”[1] and address the historical hangover of social engineering that has influenced our corporate culture and environment.

In this blog we explore the three commonly discussed gender gaps and present our view on how best to start addressing these.

The Opportunity Gap

Achieving a more gender balanced workplace boosts productivity, increases organisational effectiveness, enhances employee engagement, meets the diverse needs of customers and suppliers and improves brand reputation [3] yet organisations are still struggling to close the gender gap and meet conservative targets at all corporate levels.

Under-representation of women is not just an issue for the large corporates, the recent Rose Review stated that up to £250billion of new value could be added to the UK economy if women started and scaled new businesses at the same rate as UK men [6]. Yet research shows that female entrepreneurs are hugely disadvantaged in obtaining access to finance, a major contributing factor as to why only one in five new businesses in Britain are launched by women [9]. Men are 86% more likely than women to be venture capital funded, and 56% more likely to secure angel investment [10]. At recent IWD events we heard from female entrepreneurs their experiences, with one stating that in over 300 pitches 99% were to men [1]. There are vastly more men than women making funding decisions in the UK, suggesting there is an inherent gender imbalance that risks penalising female business innovators.

The issue is not just about setting up for entrepreneurs, it’s about maintaining and scaling business. Dame Stephanie Shirley demonstrated how positioning herself as ‘Steve’ led to significantly more opportunities. As a start-up management consultancy, in an industry dominated by the big-5 who have a privileged advantage of being on clients’ preferred supplier list, WhartonBC find the biggest challenge is large corporates’ appetite for engaging with small unknown businesses with flexible & agile working values. It was refreshing to hear Alison Rose share that Natwest are addressing this by embracing SMEs where ‘their solution meets the business problem’ and not just defaulting to the comfort of the big-5. Yet many organisations are still creating barriers for small businesses to thrive, through outdated procurement processes and perceptions.

A diverse workforce brings depth and breadth to decision making, increasing innovation, competition and economic performance. Engaging with SME’s can bring a fresh perspective and more agile working practices. What is your organisation doing to create organisational balance and encourage SMEs?

The Leadership Gap

In the IMF’s most recent publication, Christine Lagarde states that adding one more woman in a firm’s senior management or corporate board – while keeping the size of the board unchanged – is associated with an 8–13 basis point higher return on assets [4]. Yet currently 100 companies in the FTSE 350 either have no female directors, or have just one – while the remaining 250 companies are not on track to meet their gender diversity targets set in 2016, let alone improvements to sexuality, race, or social mobility [5].

Advancements have been made with campaigns like 30% Club and Everywoman, yet the issue still persists. In the Financial Services Industry, women hold fewer than 20% of board seats in banks and bank supervision agencies [7] and account for fewer than 2% of bank CEOs [8]. Yet banks with a higher proportion of women board members have thicker capital buffers, a lower proportion of nonperforming loans, and greater resistance to stress [8].

In the fast-growing technology sector, women are 15% less likely than men to be managers and professionals and 19% more likely to be clerks and service workers [8]. Yet evidence shows a more diverse workforce improved innovation and greater alignment to customer needs.

Speaking with several chairmen over the last few weeks, there is clear appetite and focus on building parity - yet it’s still a question of supply - recruitment agencies have a limited number of candidates and often it’s the same women on many boards. Should there be more focus on making recruitment agencies accountable for identifying new candidates rather than only positioning those who have board experience? Or, as raised several times at recent The Telegraph’s Women Mean Business event, is it more about self-belief and supporting women to have the confidence to put themselves forward?

As we shared at the World Traders Panel [1] “it’s not just having the seat at the table - it’s about having a voice”. We believe leaders need to actively listen to every voice to bring true diversity of thought to decision making. Boards need to make diversity appointments a priority and support people once on board to thrive. What is your organisation doing to increase gender parity and create the culture of diversity of thought?

The Pay Gap

According to the WEF it may take another 202 years to close the economic gender gap globally [14]. Statistics give us a stark truth: on average women across the world are paid just 63% of what men earn. In no country are women paid as much as men [11].

Many factors contribute to this, from the sectors women historically have chosen to work within (education and healthcare which tend to have more women and pay less [12]) to the smaller proportion of women in higher paying professional and leadership positions. Women have traditionally been the 2nd earner and therefore often required jobs with greater flexibility, which historically has meant more routine or less senior roles.

There is now a new concern emerging, the widening of the gap due to digitisation and AI. The jobs more eligible for automation and robotics are those involving routine and repetitive tasks, in which women are over represented. Therefore, a high proportion of women doing lower paid work are at greater risk of losing their jobs to automation in the digital age [8].

Interestingly, the WEF ranked the UK only 50th out of 149 countries for gender pay, with women collecting 70% of that paid to men; a sad reflection 100 years after suffrage. Without the fundamental step of gender parity in pay, gender differences in society will continue, as families are forced to make decisions around caring responsibilities based on income.

Parity in pay is a moral duty and fundamental step to strive towards organisational balance. What can we learn from countries like Iceland, Sweden and Rwanda [13] whose public policies have transformed women’s opportunities to not only be equally represented in the workforce, with the smallest pay gender gap but also be in senior positions? What is your organisation doing to highlight and address your pay gap?

Closing the Gap

Wharton Business Consulting believe it is not about hothousing diversity groups or programmes. These often only create further division and reinforce the ‘Mindset Gap’ that women need ‘fixing’. The focus should be on:

  • Insight - understand the gap at all levels and explore the root cause. Often the focus is on the ‘glass ceiling’ yet it’s important to look at the full employee lifecycle from attraction to exit and understand where your issue is and why.

  • Mindset - as Avivah Wittenberg-Cox noted [15] change is about ‘will and skill’ leaders need to understand the benefits of organisational balance and truly believe in it. Build the business case together, so all functions are involved not just D&I or HR. Equip all leaders with the knowledge and skills to embrace diversity and allow the minority voice to be heard. Set a clear example to your workforce that diverse people can and do thrive here.

  • Environment – create a culture that enables flexible working focused on output rather than input. Legacy policy and processes are often laced with unintended bias written many years ago by the dominant group. Explore your cultural levers such as recruitment, reward, promotion to eliminate bias, such as using skill-based assessment tasks rather than a reliance on interviews can ensure fairness across candidates.

  • Social and Economic Culture – it’s our responsibility as organisations and individuals to make change happen. Hold each-other to account when we show bias at work, home and in society. Engage with SMEs and female entrepreneurs to drive change for our suppliers and in society. Encourage social change by stepping up, embracing diversity and spreading the word. 

It is our responsibility to build a #balanceforbetter future, addressing the gaps and unlocking the potential to increase economic performance.

At WhartonBC we are a ‘Results Driven Organisation’ focused on output not input. This enables both our 74% female workforce and our men (of which 46% are working parents) to have flexible working and give our clients the greatest results. If you would like to hear more about how our points of view on closing the gaps please contact Natalie Wharton

References 

  1. Worshipful Company of World Traders International Women’s Day Panel (Devika Wood, Michael Cole-Fontayn, Dame Fiona Woolf and Natalie Wharton), 7 Mar 2019

  2. How advancing women’s equality can add $12 trillion to global growth McKinsey Global Institute, Sept 2015

  3. Shaping the Future Women and Work Commission, 2006 Women and Work FactsheetBITC, 2018

  4. Empowering women is critical for the world’s economy and people International Monetary Fund, Mar 2019

  5. International Women’s Day, Balance for Better Everywoman, Mar 2019

  6. The Alison Rose Review of Female Entrepreneurship, Mar 2019

  7. Women in Finance: A Case for Closing Gaps International Monetary Fund, May 2018

  8. Closing the Gender Gap International Monetary Fund, Mar 2019

  9. Female entrepreneurs typically start businesses with half as much capital as men The Telegraph, Mar 2019

  10. 'I was told I didn't look the part' The Telegraph, March 2018

  11. Global pay gap will take 202 years to close, says World Economic Forum The Guardian, Dec 2018

  12. Highlights of women's earnings in 2017 Bureau of Labor Statistics, Aug 2018

  13. How Rwanda beats the United States and France in Gender Equality World Economic Forum, May 2017

  14. Closing the Gender Gap World Economic Forum, 2019

  15. Gender-balancing Avivah Wittenberg-Cox TedTalk, 2018

What makes a digital lab successful?

Without doubt any business that wants to survive, let alone thrive knows that innovation is the name of the game, specifically “Digital Innovation”.

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Whilst there are many definitions[i] of what Digital Innovation entails most agree on a number of key factors:

  • An unwavering focus on the customer, their needs, experiences and how best to engage with them;

  • Using digital technology to rapidly accelerate development of new products and services;

  • Structuring differently, moving away from traditional hierarchies into flatter more agile teams, squads and tribes.

As Forbes[ii] states Digital Innovation is different to Digital Transformation, its all about the ‘new’ rather than just trying to digitise the existing business.

With this in mind, an increasing number of organisations have created some form of offshoot, where they can incubate and grow a different type of business. There are a plethora of names for these offshoots - Digital Lab, Garage, Foundry, Greenhouse and Studio. Some even enjoy the opportunity to create an acronym, such as the Cisco Hyper Innovation Living Labs (CHILL) who take the concept of a lab to the extreme by tackling ‘really big problems’ in just 48 hours[iii].

The appeal of a Digital Innovation lab is unquestionable but what do you need to consider when creating one? And most importantly, how do you set it up for success?

WHAT TO CONSIDER

There are many factors to consider when embarking upon the creation of a Digital lab (or noun of your choice!).

WHAT’S THE PURPOSE?

Before creating the lab, a clear vision and understanding of its purpose should be defined and communicated. Some labs are created with a very clear definition of the type of product or service they will be focusing on. Others (such as the Barclays Rise Lab[iv]) are set up to engage with customers and a broader innovation ecosystem. There is also the ‘skunk works’ model (such as the famous Google X Research Center[v]) where there can be freedom to explore everything and anything. These purposes need not be mutually exclusive, but clarity of purpose - even if it may change in the future - is important.

WHERE IS THE LAB?

Whilst exposed brickwork and an onsite barista doesn’t necessarily make a lab, the level of separation and differentiation from the main business is a key decision to take. If the purpose of the lab is to focus on Horizon Three[vi] then a radically different environment and culture is likely to be needed to enable the required level of thinking and culture. A lab that is more closely linked to a business line, product or service may benefit from being more closely located with the core business, both geographically and environmentally.

WHO IS IN THE LAB?

A fundamental question is how - should you staff the lab? One thought might be, ‘well this is technology so let’s just put our current IT function in a lab’. It is fair to say this is unlikely to garner success, the wholesale move of an existing business function into a lab (whilst temptingly simple) is far from innovative.

This is not to say that a lab needs to be staffed wholly by new recruits. There are examples of successful labs that have been created with the majority of members being sourced from across the organisation. In fact, it is that cross organisational approach that is key, bringing diversity of thought, experience and skills from existing employees, coupling this with an intimate knowledge of the broader organisation and its market and strategy that can be very beneficial.

New thinking from external sources is generally seen as an accelerator to the establishment of a lab, whether that be temporary via experts and consultants, permanent new hires or a combination of both. Building a sense of integration and camaraderie will be more difficult with this mixture but the need for new thinking and challenging ideas combined with business and market knowledge is well worth the effort.

Another choice to make is - who leads the lab? Will the introduction of a Silicon Valley style tech wunderkind provide the radical innovative thinking needed in a lab? Maybe, however consider how the ideas generated will then be received by the wider organisation? Another approach might be that of Johnson and Johnson who rotate business leaders through their Innovation Centers[vii], this has the added benefit of continually delivering fresh thinking and perspectives to the labs.

HOW DO YOU DEFINE SUCCESS?

The innovative nature of labs means they don’t necessarily lend themselves to measurement by traditional success metrics and therefore performance management and reward must reflect this. Depending on the purpose of the lab it may be possible to assess things such as new product/service revenue generation or number of ideas generated, although the definition of an idea and whether it is successful may be more challenging.

Some organisations look to labs to provide direct internal benefits, for example the number of employees trained in agile ways of working or adoption of digital tools across the whole organisation.

Deborah Arcoleo[viii] of The Hershey Company looks to measure what teams have learned: “As you conduct learning experiments, the amount that you know goes up so the amount that you don’t know goes down … then you feel more comfortable starting to invest a little bit more.”

The home improvement store, Lowe’s, has innovated the measurement of innovation, by partnering with Neurons Inc. They use neuroscience technology to measure customers’ emotional reaction to potential new products and services.[ix]

Whilst labs may be created to design and develop innovative products and services, it is often left to the rest of the organisation to deliver and ‘run’ these new innovations. With this in mind it is important to consider how you not only transition the products and services back into the wider organisation, but also how you transition lessons learned, methods and ways of working from the lab so that the whole organisation gets the benefits and starts to adopt a digital mindset.

CONCLUSION

It is important to realise digital innovation is not just technology. It requires a customer focused innovation culture, suitably structured to offer the flexibility to identify new opportunities and rapidly develop offerings to take advantage of them.

Digital disruption presents all organisations with both challenges and opportunities. Creating an innovation lab may well be part of a strategy to address these challenges and accelerate your ability to benefit from the opportunities, but it is not as simple as moving part of the business to an environment more suited to start-ups.

Be comfortable with the fact the lab will be a different type of business, be clear on the purpose of the lab, what the lab workforce will look like and what skills they will need; most importantly think how the rest of the organisation will work with the lab, and how they can benefit from the creation of this lab.

Finally, with organisations in all industry sectors creating labs, learning from peers in your ecosystem can be an excellent way to get started.

If you would like to explore how Wharton Business Consulting can accelerate your digital journey through people change, and connect you with other likeminded organisations on this journey, please get in touch or visit www.whartonbc.co.uk

[i] Digital Innovation - what does it really mean? OECD Insights, 2016

[ii] Digital Transformation doesn’t mean innovation. Forbes, 2018

iii] How Cisco chill turns ideas into companies in 48 hours. Forbes, 2018

[iv] Barclaye launches new home of Fintech, 2015

[v] X Company

[vi] Horizon Three is a reference to the The Innovation Horizons Model from The Alchemy of Growth. by David White, Mehrdad Baghai, and Stephen Coley. Horizon Three is where “Visionaries create viable options”

[vii] Innovation Centres, JNJ Innovation

[viii] Hersheys Exec on metrics and how they keep innovation focused

[ix] Lowe’s innovation Labs and Neurons Inc