GENDER

Why Gender Balance Cant

Wait
by Michel Landel
MARCH 08, 2016

The World Economic Forums recent Global Gender Gap Report 2015 gives us a wealth of
detail about the continued worldwide imbalance in gender equality and what it means for
the future.

In some areas the news is good. Political representation, for example, has made great
strides in the 10 years covered in the study. Overall, 50% of the countries have or have had
a female head of state. And its been shown that once women attain leadership roles, the

number of women serving in senior positions starts to rise. Scotlands Nicola Sturgeon, the
countrys first female head of state, has already achieved gender balance in her cabinet.

Of course, progress can be made under male leadership, too: Justin Trudeau, Canadas new
prime minister, named a perfectly balanced 15 men and 15 women to his cabinet. And in
African countries the overall number of parliamentary seats held by women increased, on
average, by 15% from 2000 to 2014.

In education, too, there has been a good deal of improvement. More women than men are
pursuing higher education in 97 of the 145 countries included in the WEF report, for
example. And in some places, such as the UK and U.S., this issue has been so well
addressed that the gender balance scale has swung the other way.

But business and the economy have been more resistant to change: there are still relatively
few women in leadership roles, and a troublesome gap in pay persists. In fact, the average
annual pay for women in the countries surveyed for the report is now equal to mens
average annual pay a decade ago, when the report was first released. The World Economic
Forum forecasts that it may take 118 years to close the gender pay gap a number that is
just unacceptable.

Even considering the growing number of women enrolling in college, women make up the
majority of skilled workers in only 68 of the 145 countries. They make up the majority of
top managers in only four of those countries.

How can this be? Its certainly not for lack of evidence about the economic benefits.
Multiple studies have made the business case for more women in leadership roles in the
workplace. On a macro level, a recent report from McKinsey Global Institute estimated that
$12 trillion can be added to global growth by advancing gender equality. We can look at a
country-by-country comparison and see a correlation between economic performance and
gender parity.

Even at the level of the individual company, we see a correlation between financial
performance and female leadership. A landmark and much-quoted report from Credit
Suisse Research Institute found that companies with women directors outperformed those
without women directors in average growth, price/book-value multiples, and return on
equity.

At Sodexo, we recently completed our own company-wide study on the effects of genderbalanced management. The analysis correlated both the financial and the qualitative
performance indicators that we use with the gender proportions in each unit, and we
covered all levels of management (50,000 global managers) in the analysis.

The results were compelling. For one, we found that the more gender-balanced units of our
company have greater client retention rates and customer satisfaction. (We defined the
optimal balance as being 4060% women, and we discovered that 55% of our employees
are working in a gender-balanced unit.)

In terms of the bottom line, our study revealed that units of our business with genderbalanced management were 13% more likely to deliver consistent organic growth and 23%
more likely to show an increase in gross profit. Encouragingly, in FY14 71% of genderbalanced groups saw positive operating profit during the last three consecutive years,
versus 60% for others.

Overall, we found that our teams with gender-balanced management achieve operational,
organizational, and performance benefits that include employee engagement, enhanced
brand image, greater client and consumer satisfaction, increased organic growth, and an
increase in generating profit and cash.

As a result of these findings, Sodexo has formally targeted achieving gender-balanced

management teams in all its business units and in its senior management team by 2025.
We are starting from a good base: currently, 43% of my direct reports and 43% of Sodexos
board of directors are women.

We are working not only to ensure that our teams meet the gender diversity standards we
have set, but also to share these principles and best practices with our clients through
diversity awareness programs and training. In our organization, we are developing male
leaders as advocates and allies for their female counterparts, in part by sharing the strong
business case for empowering women. We are building support networks for women,
establishing mentoring initiatives to strengthen the pipeline, and enrolling high-potential
women in leadership development initiatives and aligning sponsors with them.

The case cant be clearer gender balance in business cant be labeled purely a womens
issue or a matter of diversity for diversitys sake. Its an economic issue, and addressing it
can benefit business and economic performance, thereby impacting all stakeholders. This
is my strong personal conviction, and its a priority for the organization I lead.

Michel Landel is the CEO of Sodexo, a global and diversified services company headquartered in Paris,
France

This article is about GENDER

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Sam Ky

5 months ago

Contrary to the assertions of this article that the relatively small percentage of women in top management is
"not for lack of evidence about the economic benefits", what is indeed lacking is *causal* evidence
regarding such economic benefits. Whether increased female management actually causes - rather than is
merely correlated with - improved organizational performance remains a major point of contention within
the peer-reviewed literature, with several prominent studies (e.g. Ahern & Dittmar 2012: Quarterly Journal of
Economics, Adams & Ferreira 2009: Journal of Financial Economics) indicating that increased female board
membership may actually cause *reduced* performance, with Adams & Ferreira outright documenting that
"the average effect of gender diversity on firm
performance is negative." Indeed, as Frank Dobbin denoted (North Carolina Law Review (2011)): "The big
picture seems to be that gender board diversity does not help firmsand it may hurt them."
The articles cited in this piece that purportedly support a connection between female management and
organizational performance are purely *correlational* in nature. To their credit, most (but not all) of those
articles concede that their evidence is correlational and make no explicit claim of causality. As I'm sure we
all learned when we were schoolchildren, correlation is not causality. Indeed, *reverse* causality is a highly
plausible explanation for the correlation between female management and performance: perhaps
organizations that are *already* performing well have the resources and freedom to hire/promote more
women.
Establishing a clear causal connection between female management and performance requires analyzing
data where female management was plausibly exogenously determined. For example, one might examine a
dataset of family-run firms where the leaders unexpectedly died or were incapacitated and firm leadership
thereby transitioned to a daughter or a son. One could then compare the relative subsequent performance of
such son-run versus daughter-run family firms. {Note, such a leadership transition would need to be a
surprise to allay any concerns that a firm that expects the leader to die soon will likely have made
preparations for such an eventuality.} If female leadership does indeed improve performance, then the
empirical evidence should substantiate the notion that the subsequent relative performance of such
daughter-run firms would indeed surpass that of son-run firms.
But in the absence of such sort of careful rigorous analysis, we have no clear basis for concluding that
female management actually outright causes improved performance, which renders this article moot.
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