Gender Diversity is Good for the Bottom Line | DCR Workforce Blog

Gender Diversity is Good for the Bottom Line

Two recent research initiatives concluded that gender diversity can increase a company’s financial performance.

Gallup examined the workforce composition and financial performance of 800 business units from two companies. They selected one company from the retail industry and another from hospitality as both sectors tend to employ a large percentage of women.

In the second study, published in the Journal of Economics and Management Strategy (JEMS), professors from MIT and George Washington University analyzed eight years of revenue data and survey results from a professional-services firm with more than 60 offices in the United States and abroad. Research in both cases was conducted at the business unit level, as gender diversity, and its impact, can vary greatly across a company.

Both studies showed that a diverse workforce yields stronger financial performance. In the Gallup Study, gender diverse business units in the retail company showed a 14% increase in comparable revenue, while the more diverse business units in the hospitality company saw a 19% higher average quarterly net profit. The second study indicated more striking results. When all-male or all-female offices were shifted to an equal balance of men and women, revenue increased by as much as 50%!

Both studies pointed to the same advantages gained through gender diversity.

  • Men and women have different viewpoints, ideas, and market insights, which enables better problem solving and increases the collective knowledge of the group, ultimately leading to superior performance at the business unit level.
  • A gender-diverse workforce provides easier access to resources, such as various sources of credit, multiple sources of information, and wider industry knowledge.
  • A gender-diverse workforce allows the company to serve an increasingly diverse customer base.
  • Gender diversity helps companies attract and retain talented women.

Now, here’s the rub! Both studies also considered worker engagement. The Gallup study showed that when the workforce is both diverse and engaged, that business unit can see a 46% increase in revenue and 58% higher level of profit. However, the JEMS study found that in the gender diverse environments, the employees’ ratings of office satisfaction, cooperation and morale were lower. The study also found that employees expressed a desire to work for a company that cared about equality between the sexes, — as long as that caring didn’t translate into action. This raises an interesting question: How does one create a gender-diverse work environment that keeps all workers engaged, particularly when research indicated that diversity is a stronger driver of financial success than engagement?

To answer this question, let’s examine some efforts underway by Intel and Airbnb and attempt to extract best practices:

Earlier this year, Intel announced plans to achieve full representation of women by 2020. The company plans to invest $300 million to help build a pipeline of female and under-represented engineers and computer scientists, to actively support recruitment and retention of women, and to fund programs to support more positive representation within the High Tech industry. Intel is soliciting assistance from numerous professional associations to aid in this effort. The company is also launching educational programs aimed at K-12 as well as expanding its collaborations with computer science and engineering programs at higher education institutions. The company wants to provide financial support for women pursuing degrees in engineering and computer science; an individual scholarship might be as large as two hundred thousand dollars. To support the hiring and retention of women, Intel executives’ compensation will be tied to their success in reaching its diversity goals. It will also contribute to initiatives designed to counter the bullying of women in gaming.

Airbnb has also made workplace diversity a strategic priority. Employees are being trained on issues such as unconscious biases. The company is working with Code2040 to connect with more minorities in tech and will introduce a diversity and inclusion course, which will be available to all Airbnb employees. The company established the Nerdettes, a group of female engineers, to serve as mentors at a 10-week software development academy for women. They host middle schoolers in San Francisco and work with ‘Girls Who Code’, a national organization working to bring more women into STEM careers. The company also sponsors and sends employees to the Grace Hopper Celebration of Computing, an annual conference for women in tech. An internal team monitors diversity progress within the company and coaches supervisors and managers on the best ways to build a diverse workplace. Airbnb also sponsors speakers, collaborates with outside groups, and recommends ways to improve gender diversity.

While we have chosen to highlight the efforts of these two companies, we recognize that others are also attempting to improve gender diversity. Many companies have established employee-led affinity groups for women, employees of color, and other special interest groups. We also see an increasing number of collaborative initiatives between corporations, academic institutions, professional associations and government agencies.

Measures that Can be Taken to Increase Gender Diversity

In addition to the activities launched by Intel and Airbnb, there are additional measures that have been proven to assist in achieving gender diversity and equality.

  • Make diversity a highly visible strategic priority. Set inclusiveness goals, and hold managers accountable for diversity. Executive leadership must continuously reinforce the company’s commitment, measure managers and supervisors on progress toward goals, and establish feedback vehicles to identify obstacles.
  • Increase male sponsorship. Professional women tend to lack effective sponsors to serve as their advocates as well as their mentors. Men in executive positions can provide more support, and serve as role models for the rest of the employee population.
  • Develop a hiring strategy that increases gender diversity without reducing or ignoring merit. When women feel they are hired to fill quotas, it negatively affects relationships between co-workers while creating undue levels of pressure to exceed performance standards established for mail counter-parts.
  • Revamp policies and programs to increase gender neutrality. Create a corporate culture that embraces various leadership styles and eliminates the inherent biases toward men.
  • Achieve critical mass. Hire and promote enough women to avoid feelings of isolation and being an outsider. By placing “token” women into a role in an effort to appear more diverse, you actually add to the problem.
  • Focus on areas of greatest need. Identify business units with the poorest track record in terms of female hiring and engagement. Evaluate the root causes of the problem, and then use these business units as ‘pilots’ for diversity programs.

As discussed in yesterday’s blog, the challenge of gender diversity is not unique to the United States. Economists estimate that eliminating the gap between male and female employment rates could have significant impact on the world economy, boosting GDP in the U.S by 5 percent, in Japan by 9 percent, in the UAE by 12 percent, and in Egypt by 34 percent. This challenge cannot be met by promoting diversity in speeches while failing to enact programs that address the core issues of education, hiring, opportunities for advancement and worker relations.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.

One response to “Gender Diversity is Good for the Bottom Line”

  1. Lauren says:

    Great post! Companies should definitely follow Intel and Airbnb’s lead and make diversity a highly visible strategic priority. Thanks for sharing.

An industry veteran, Debra draws on more than 25 years of experience in corporate operations, strategic planning, marketing, sales and management. Her prolific work experience includes service at top computer technology, management consulting, and workforce management companies.