The role of women in business and as participants in economic processes has increased progressively and steadily since 1992. This increase is due to a combined effect of economic development, higher levels of education, more options around fertility, technological development and structural changes, which reduce transaction costs and the use of time.
However, this female presence in the business world has taken much longer if we consider what Claudia Goldin, from Harvard University, explains in the document "The Quiet Revolution that Transformed Women's Employment, Education, and Family" from the National Bureau of Economic Research in Massachusetts, in which she states that this evolution has taken place in four stages, the first three of which are evolutionary: The first, from the late 19th Century through the 1920s; the second from 1930 to 1950; the third extended through the late 1970s; the fourth, referred to as the "quiet revolution" is still in process. And it is evidenced by a more predictable attachment of women to their workplace, a greater identity with their careers, and a better ability to make decisions, individually or jointly with their spouses.
Each of these stages has meant a turning point that has been reflected in social and economic change. What differentiates the first three from the fourth are three variables: horizon, identity, and decision-making. The "horizon" refers to whether the woman considers that her labor participation will be long and continuous or intermittent and brief. Identity implies whether the woman fully identifies with her job, occupation, or professional career. Finally, decision-making refers to whether decisions are made jointly with her partner or whether she makes them, as a secondary worker, based on those of her partner.
What stage of the revolutionary phase are we in today?
According to the International Labour Organization (ILO) estimates, the female labor force is 1.3 billion workers. That’s about 39.9% of the 3.3 billion labor force. Between 1980 and 2008, the female labor participation rate increased from 50.2% to 51.7%, while the male rate decreased from 82% to 77.7%, a progressive decrease in the gender gap in recent decades. Specifically, in the Latin American and Caribbean regions, there has been a significant increase in the participation of women in the labor market. It has increased from 43.5% in 1992 to 52.6% in 2012.
Despite these differences and the fact that the gap between men and women in labor force participation has decreased worldwide, it is important to highlight that the rate of female participation in companies is a driving force behind a country's growth. Carmen Pagés, Head of the Labor Markets and Social Security Division of the Inter-American Development Bank, points out in the study "The Gender Dividend. How to capitalize on women's work" that the promotion of female employment has a direct impact on economic growth. This impacts women and their families by increasing income and financial security. It also affects the macroeconomic level by increasing the available human potential and contributing to the country's economic growth. At the microeconomic level, it generates direct income for their own and their family's well-being. In addition, closing the gender gap can increase GDP by an average of 35%.
Women's work in corporations also has other advantages that are rarely noticed. These include their "soft" skills. While technical skills, experience, and knowledge are critical to success, according to the U.S. Department of Labor, soft skills are now considered "even more important for job readiness. These skills, often referred to as "emotional intelligence" refers to the ability to relate to others and behave in professional life.
They are skills closely related to leadership and include professionalism reflected in work ethic and resilience; ability to network; collaboration; oral and written communication; and critical thinking.
These capabilities of the female sector have been demonstrated. For example, a global consulting firm Hay Group study reveals that women outperform men in 11 of the 12 key emotional intelligence competencies. According to Dr. Richard E. Boyatzis, one of the co-owners of the study, ".... If more men acted like women in employing their emotional and social competencies, they would be substantially more effective in their work."
Another of the advantages of women in the workplace is their vision of a different perspective on things, which leads to better problem solving, increased search for new information, and the development of creativity in their work teams. This leads to better decision-making.
At the same time, it is easier for women to build trust. According to the Pew Research Center's "Women and Leadership" survey, 34% of U.S. workers say that women have an advantage over men when being honest and ethical. However, only 3% believe that men are better. Companies that place the necessary value on ethics and trust, generate an excellent reputation and higher revenues. While failing to maintain ethics-based behaviors can have serious long-term negative consequences and implications for any organization, including damage to public reputation and loss of trust even from shareholders. In the words of Nidhi Raina, Director of Personal Excellence and Organizational Transformation at Tata Consultancy Services: "For any initiative, the return on reputation - values, and beliefs, as an organization and as an individual - is as important, if not more so, as the return on investment."
A clear demonstration of the value of women in the corporate world is revealed in the "Women in the Workplace 2021" study conducted by McKinsey and LeanIn.Org. reflecting the contributions of 423 participating organizations employing 12 million people, surveying more than 65,000 individuals about their workplace experiences, and in-depth interviews with women of diverse identities, including women of color, LGBTQ+ women, and women with disabilities.
The study reveals that a year and a half into the COVID-19 pandemic, women had already made significant gains in workplace representation, but we're already significantly more burned out occupationally than men. But despite the stress and burnout, women rose to the occasion as stronger leaders by taking on the extra work that the situation demanded. In their study, women managers were rated by their employees as taking the people-centered actions that helped them get through the pandemic: providing emotional support (12% more), checking overall well-being (7% more), taking steps to help manage burnout (5% more).
Compared to men at the same level, women were more supportive of their teams; but, while this resulted in women gaining representation in 2020 at all levels of each organization, burnout continued to increase in 2021.
According to the study, given the marked increase in anxiety levels and emotional overload expressed by this sector of the population as a result of increased responsibilities, some women (23% of those surveyed) have found themselves faced with the dilemma of choosing between their activities and their career; 10% of them have even considered quitting their jobs. One in three say they have considered changing their career or quitting their job, compared to one in four who said this a few months after the pandemic. In addition, four in ten women have considered leaving their company or changing jobs, and high employee turnover in recent months suggests that many are doing so. In fact, in the first year of the pandemic alone, 54 million women worldwide left the workforce, of which almost 90% left altogether.
Challenges in pay and lack of diversity
Unfortunately, there is still a problem that, although it has been solved to some extent, there is still a long way to go. It is that since 2016, the trend of low promotion rates of women to managerial levels compared to men has continued, let alone at the executive or Board of Directors levels. Not much progress has been made in creating more gender-inclusive work environments. According to the aforementioned study, only one in five top positions in the United States is held by a woman, and one in 25 is a woman of color.
According to information provided by Grant Thornton, the average number of women in business management positions in the world is 24%. Regionally, Eastern Europe ranks first (35%), followed by Africa (27%), emerging Asia-Pacific (26%), the European Union (24%), and North America (23%). In Latin America, the average number of women in senior management positions is 18% globally and ranges from 23% in Mexico to 16% in Argentina. Furthermore, 53% of companies in the region do not have women in their management teams, a percentage well above the world average (32%)
In its 2020 Executive Women Report, conducted from surveys of nearly 5,000 organizations as part of the International Business Report (IBR), Grand Thornton refers that 2019 saw a significant jump in the percentage of women in senior management positions of 5 percentage points over 2018, the highest percentage of women in senior management positions recorded by the IBR (29%); the results in 2020 remained at the same figure.
The report identifies that the proportion of companies globally with at least one woman in senior management remained stable at 87%, while some regions experienced considerable improvements. While it may appear that the results for that year did not constitute sustained progress globally, it is worth bearing in mind the positive gains made in 2019 and viewing them as a consolidation of that trend. "When you take a step back to look at the results, you see positive forward movement, although the pace is a bit slow," admits Francesca Lagerberg, Global Network Development Leader at Grant Thornton International Ltd.
Why more women executives are associated with better results
One thing that most research and surveys on the role of women in business agree on is that those organizations that have more women in leadership positions turn out to be: more profitable, more socially responsible, and offer safer and higher quality customer experiences, among many other benefits.
Existing research is much more limited when explaining why more women executives are associated with better business results and what specific mechanisms cause these positive changes. However, it has been possible to identify three attitudes around changes in corporate strategic thinking following the appointment of women to executive positions:
The first is the frank inclination of companies to be more open to change and much less risk-prone, implying that they increasingly embraced transformation while trying to reduce the risks associated with it. Following the appointment of women to senior management positions, most companies have increased their level of openness to change, which implicitly recognizes that the addition of women to senior management positions brings new perspectives to the entire team and even motivates change in the group's way of thinking.
The second is a shift, as a consequence of corporate risk aversion, from a knowledge acquisition approach based on mergers and acquisitions (considered a traditionally masculine approach) to a knowledge creation strategy centered on internal research and development, which could be described as a more traditionally feminine and collaborative approach.
The third is the acceptance of integrating women into senior management, given the experience that when women are well integrated into the team, they have a greater impact on corporate decision-making. This can be influenced by two factors: being the only woman on the team or being one of several new additions.
If it comes down to being the only one, it only really changes the mindset of managers in cases where there was the previous experience of having at least one woman on the team with whom everyone felt comfortable. This reduces the hurdles faced by new female appointees. If it is one of several additions, the change in mindset is greater; that is, if a company promotes ten men and two women to senior positions, the impact is less than if the company promotes five men and one woman. This could be because current managers may feel more threatened when a larger group is promoted into their midst, leading them to be less trusting and less welcoming of newcomers, thus limiting the ability of new executives to contribute effectively.
Another factor that speaks to the rise of women in management positions is their ability to do the "hard" things better and with better results.
Potential Project conducted a multi-year study of leaders and employees in approximately 5,000 companies in nearly 100 countries to investigate how leaders can accomplish hard things while remaining good human beings. The research conveyed in the book "How to Do Hard Things in a Human Way," was based on wisdom in doing what needs to be done, and compassion and empathy for others through support. Fifty-five percent of women were rated as wise and compassionate, compared to only 27% of men. By a 2-to-1 margin, respondents said that women leaders vs. men leaders can humanely do difficult things.
There is often a narrative that women are better at leading in a crisis, as if their leadership qualities emerge only episodically or in certain circumstances, and then disappear. On that premise, anyone would say that women excelling in the workplace over the past two years, during a pandemic, is an exceptional circumstance, but the reality is that it is not an isolated occurrence. Potential Project research reveals that better job performance is enjoyed and achieved when working for a woman; the worst results occur when a man works for a man, and the best results occur when a woman manages a woman or a man. When these findings are translated into financial impact, the call to action increases.
There is no doubt that the employment status of women has changed favorably, even down to the board level. Among the changes, it is notable that nearly one-third of S&P 500 boards now include three or more women, which implies recognition of the value of the female gender in decision-making. Also, the concept that women are unqualified for certain positions has ended, so the standards for board membership now reflect a diversity of mindset in search of quality and efficiency in decision making.
There's still work to do
Much remains to be done; organizations still have a long way to go in supporting and promoting women. Flexibility and work-from-home arrangements need to be updated to truly reflect and support the realities faced by women and to ensure that these arrangements facilitate women's promotions to increasingly higher positions within organizations. Also, it would be helpful for companies to create peer-to-peer mentoring and coaching circles for men and women where they can learn more from each other about ways to do the hard things in an empathetic way.
The way forward is clear: Companies need to recognize and reward women leaders who are driving progress. And they need to do the deep cultural work necessary to create a workplace where all women feel valued, and biases about their competence and authority are eliminated. It's proven that women managers are taking more consistent steps to promote employee well-being, including checking in on their team members, helping them manage their workloads, and providing support to team members who are dealing with burnout or navigating the challenges of work life.
If you are a man, think for a moment about how you would like the company you work for to treat and support your wife in her professional growth, and what would you be willing to do to support her in her development? If you are a woman, do you recognize that moving up is a long and complicated road? How far are you willing to fight for gender equality in your company? What challenges would you have to overcome at home or at work to achieve your full professional development?
ExO Insight Newsletter
Join the newsletter to receive the latest updates in your inbox.