Womenomics 101
Anne Sonnen, formerly Chief Compliance Officer Wealth Management BMO Financial Group, now SVP and Chief Compliance Officer at Great-West Lifeco Inc.
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Originally published in MISC Magazine, 2016
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14 MINUTE READ
The evidence is in: having women in the C-suite is good for business. In 2015, the McKinsey Global Institute estimated that a scenario in which women achieved complete gender parity with men could increase global output by more than 25% relative to a business-as-usual scenario.
Other research on US firms found that mixed-gender boards outperform all-male boards (McKinsey 2012) and that the Fortune 500 companies with the highest proportion of women on their boards performed significantly better than firms with the lowest proportion. McKinsey estimates that going from having no women in corporate leadership (the CEO, the board, and other C-suite positions) to a 30% female share can be associated with a one-percentage-point increase in net margin – which translates to a 15% increase in profitability for a typical firm.
This is supported by a recent Catalyst Group study, which demonstrated that companies with higher female representation in top management outperform those without by delivering 34% greater returns to shareholders. And although less than 5% of Fortune 1000 companies have a female CEO, they generate 7% of the Fortune 1000’s total revenue and outperform the S&P 500 index during the course of their respective tenures.
A Deloitte study found that those companies with more mature diversity programs were outperforming their peers at a rate that was two times higher in terms of cash flow per employee than those who didn’t have a diversity program.
Women comprise 57% of the Unites States workforce, control 73% of consumer spending, own 51% of US wealth, and are better educated than men, on average holding 21% and 48% more undergraduate and graduate degrees respectively.
With evidence like this, you’d think organizations would be tripping over each other to increase diversity at the top. And yet, in a 2014 global survey conducted with 22,000 companies by the Peterson Institute for International Economics, 60% of the firms studied had no female board members, over 50% had no women in the C-suite, and fewer than 5% had a female CEO.
We know that women enter university in the same numbers as men. They also enter the workforce 50/50; but those rates decline by about 10% at the point of their very first promotion, and then in more senior roles it drops by another 30%.
So what is stopping women from moving up? Karla Congson, CMO at Dundee Corporation, an investment firm, says that while there is no simple answer to this question, “one reason is unconscious bias. Unconscious bias refers to a bias that we are unaware of, and which happens outside of our control. It is a bias that happens automatically and is triggered by our brain making quick judgments and assessments of people and situations, influenced by our background, cultural environment, and personal experiences. This can find its way into staff appraisals/feedback, high profile project allocation, and inclusion in key discussions. All of these things, cumulatively, can have an impact on women rising into senior executive roles.”
Karla Congson, Business Leader | CEO @ collective.iq
There are also biological reasons for unconscious bias. In her recent article for MISC, “A State of Mind,” innovation strategist Rachel Kwan reminded us that “our bodies predispose us to build stronger relationships with those whom we consider to be similar to us. They ensure this by releasing the hormone oxytocin, which creates a pleasant experience when connecting with certain people and not with others. Oxytocin promotes close relationships with the group that we think we belong to, while simultaneously decreasing our friendliness towards those we consider to be outsiders.” In the workplace, those outsiders are very often women.
This partly explains why people have such difficulty overcoming things like racial, religious, or gender prejudice. It’s not just in our heads; it’s in every cell of our bodies. If at a subconscious level our bodies and their evolutionary legacy predispose us to behave this way, overriding such a biological imperative requires a conscious, concerted effort.
In recognition of that challenge, women are organizing themselves to counteract the effects of unconscious bias in various ways. Dervla Kelly, VP Marketing and Communications at Shaw Media, is part of a group called Women in Communications and Technology (WCT). The WCT’s mission is to advance the careers of women in the tech and media space by using a blend of networking events, training programs, and content development. One of these initiatives is something called the Protégé Project.
“I was interested in the Catalyst Group’s research, which showed that one of the things that men tend to get earlier in their careers is sponsors, while women tend not to,” explains Kelly. “Sponsorship, as it turns out, is an absolutely critical aid to advancement. It’s different than mentorship; mentorship is when someone of influence and experience talks to you about your career; sponsorship is when someone of influence talks to others about you.” The WCT’s program brings in top executives and connects or matches them with women who have their eye on the C-suite, and are two or three years away from capturing a role there. The sponsors are then expected to leverage the power of their networks to help them out.
Recognizing that individual action is not enough, the Catalyst Group, which is a supporter of WCT’s Protégé Program, has its own training programs designed to promote the importance of sponsorship at the organizational level. As Kelly points out, “there needs to be discussion of this at the executive level. If it doesn’t come from the top, it doesn’t get done. Awareness of the issue needs to be raised. It needs to be mandated and measured across the organization.”
Dervla Kelly, Senior Vice President, Marketing & Social Digital Agency, CORUS Entertainment
Because the number of women in the workplace diminish as they advance, there is a shortage of senior female role models. To build that pool of role models, women need to be included in the search for top talent – and existing women’s networks within an organization need to be surfaced and leveraged to help younger women advance too.
Another thing standing in the way of women as their careers progress is the rigidity of traditional workplace norms. This is changing as more and more millennials enter the workforce, but most large North American organizations still cling to the notion that work happens in the office from 9 to 5 (and often beyond), Monday to Friday, month to month, with little more than a couple of weeks off every year. Life is perceived as something that happens outside of work. Childbearing is seen as an interruption in productivity to be dealt with as quickly as possible, as if lean methodology were as important in the nursery as it is in the enterprise.
"Business needs to be seen as a part of life, and life as the context within which business operates, not the other way around."
Children do not reach maturity at the end of maternity leave. And mothers aren’t the only parents that children need in their lives. Workplaces need to adopt more flexible approaches to the workday and to the responsibilities of parenting for both men and women. Yahoo’s Marissa Mayer took a giant step backwards when she banned telecommuting, a rather sad irony coming from one of America’s few female CEOs.
Women can also slow the pace of their own advancement by not asking for the opportunity early or often enough. As Mayer’s crosstown counterpart Sheryl Sandberg writes in her bestselling book, Lean In, many women tend not to go after an opportunity for advancement until they feel 95-100% ready to take it on, whereas for men that figure is more like 60%. The natural accumulation of that tendency enables men to move up faster.
At the same time, as Congson points out, an executive woman who is direct and decisive often runs the risk of being labeled as aggressive or abrasive. She mentions how, in a recent study among several hundred performance reviews, women tended to get significantly greater critical (as opposed to constructive) feedback at 87.9% vs. 58.9% of men who received critical feedback. Negative “personality criticism” (Watch your tone! Step back! Stop being so judgmental!) showed up twice in the 83 critical reviews received by men – but 71 times in the 94 critical reviews received by women.
Congson elaborates how “particularly among early and mid-career women, it’s concerning if they are hearing words like aggressive, bossy, or abrasive to describe behaviors when they are trying to lead, or emotional and irrational when they object. Feedback begets behavior, and if women are taught to hold back early on from enough sources, it can make a mile of a difference on how quickly or how high they rise later.”
Often this feedback is shared by the most well meaning of supervisors. Congson admits to receiving similar appraisals in the past. When asked how she addressed being labeled as bossy, she replied with “I always endeavor to do right by my team and the business I’m entrusted with. And at times, to lead well, you need to accept that you may not be liked by some.”
Twenty years ago, Janet Hanson, the first woman ever to be promoted to sales management at investment bank Goldman Sachs, founded a group called 85 Broads (named after 85 Broad Street, the address of Goldman Sachs) as a way of keeping in touch with other women who had worked there. Today, it has over 30,000 members from 130 countries and many different industries. In 2013, former Bank of America executive Sallie Krawcheck purchased the organization and rebranded it as Ellevate.
Like WCT’s Protégé Project, Ellevate’s mission is for women to help and invest in other women. As one of the few women to have come up through the ranks on Wall Street, Krawcheck saw firsthand the opportunity that exists when women invest in other women. So when she was released from Bank of America and looking for a new opportunity, she saw 85 Broads as her platform for shrinking the gender achievement gap.
Krawcheck has built a kind of branded house which consists of Ellevate Network, a professional women’s network focused on shrinking the gender achievement gap; Pax Ellevate Global Women’s Index Fund, which invests in the highest-rated companies in the world in advancing women; and Ellevest, a financial platform redefining investing for women. Collectively, these are channels for moving women up the corporate ladder and giving them opportunities to invest in the economy as well as their own financial success.
MISC spoke with Kristy Wallace, President of Ellevate Network, to talk about the organization’s efforts to advance the agenda of diversity in the workplace. We asked her if she thought men were threatened by the advancement of women up the corporate ladder. Said Wallace, “Well, in a way when you introduce the notion of diversity in the C-suite, you’re generally talking to white, sometimes older men and you’re essentially saying ‘we need less of you and more women in order for you to drive better results, and we need you to change your mindset around this issue.’ They may or may not be threatened by this, but I think mostly they’re just focused on other priorities. They don’t believe diversity is going to drive the same kind of results as, say, sales, marketing, or cost control.”
Kristy Wallace, President of Ellevate Network
One of Wallace’s ideas for building a case for the advancement of women inside organizations is the notion of an Employee Executive Board. “Such a board,” says Wallace, “would give women in the organization a collective voice, because right now, 53% of Ellevate members feel that they don’t have a voice in their respective workplaces.” The advantage of this idea is that, as a permanent feature of organizational life, an Employee Executive Board will engage employees in discussion, cultivate leaders, and focus on gender inequality. The disadvantage is that it must compete for resources against business units that produce revenue in the short term.
MISC asked Wallace which companies were doing the best job of addressing the gender gap. At the top of her list was BMO Financial Group. We reached Anne Sonnen, Chief Compliance Officer, Wealth Management at BMO Financial Group, to talk about the company’s commitments to diversity. “Commitment to diversity is in our Code of Conduct and in our Supplier Code of Conduct,” noted Sonnen, “and we have come out publicly with a goal of having 40% of senior leadership roles be women by the end of 2016. We are also committed to a 1/3 presence of women on the board.”
Sonnen sits on a cross-functional corporate diversity team responsible for planning, selling through, and executing programs in support of diversity and change. “You always have to start the conversation with evidence that this is good for business. You have to convince people that the pace of technology and change demand a more diverse response to problem solving. And that you can build collaborative, agile teams faster with a more diverse talent pool.”
At the senior level, BMO has conducted unconscious bias training with senior leaders in the organization. As a result, when having discussions about hiring or advancement, decision-makers are more aware of their biases and will actually acknowledge them as a way of ensuring that the discussion remains about talent and not about gender.
Sonnen is in fact one of the few women in business who has beaten the odds long enough to be just a door or two from the C-suite in a major public company. We asked her what was the final hurdle. “Even if you have an organization committed to change, women still need to speak up, not wait to be tapped on the shoulder. And women need to help other women. They need to find sponsors to help them move forward. Sponsors advocate for you, and in my case, men have been strong sponsors. I believe Madeleine Albright was right when she said that there is a special place in hell for women who do not help other women.”
If there is, it must also be filled with the men who remain blind to the biases that prevent them from embracing the value of diversity. Peggy Hazard, Managing Principal and Co-Lead of the Advancing Women Practice at Korn Ferry, reminds us that as much as women need to advocate for themselves, ignoring leaders’ behavior and a culture that perpetuates the status quo will eat advocacy for breakfast. To drive change, men and women need to “lean in” together to make diversity a shared responsibility. Otherwise, not even the hard evidence of a compelling business case will get women a seat at the executive table.