What is Good for Women is Good for Business

Published: 20/01/2014

Article published by Joh Bersin on the 16th of January 2014

“This week The Shriver Report launched a groundbreaking report, A Woman’s Nation Pushes Back from the Brink,” which describes the tremendous challenges women face in the US workforce. It makes the case that despite the promotion of high-profile women CEOs, there is still a significant wage and career gap for working women, leading to poverty, family crisis, and education problems with our children.

In particular, Maria Shriver’s personal essay, “Powerful and Powerless”, (video here) makes a very compelling case. You may be surprised to learn, for example, that 70% of low wage workers do not get sick leave and that women make up two-thirds of this population. 63% of women are now breadwinners and more than 40% are sole breadwinners. These are often the women who serve us in restaurants, teach our children, work behind the counter, or even work next to us in the office.

Much of the solution to this problem lies in the hands of employers.

In this article I’d like to help business leaders and HR managers understand why and how they can help address this issue. I will describe four pieces of research which clearly describe how and why we should improve the life of women at work. (Note this article is an extract from the original article published on The Shriver Report.)

Point 1: Good Work and Good Wages Pay Off

The Shriver Report notes that women still take home between 9% and 30% less than men for similar jobs. Does this make business sense?

Well putting aside the possible discrimination issue, should business leaders always try to keep the cost of labor as low as possible? Much data says no. When we pay people low wages they do not invest in the job itself, turnover is often high, and engagement is low – with overall lower sales as a result.

Remember that people are not like machines: they are what we call an “appreciating asset.” When people are paid well they engage more deeply in the business and ultimately their value goes up.

Zeynep Ton, an adjunct profession at MIT, studied this issue in her new book “The Good Jobs Strategy,” which makes a compelling case for higher wages in retail.

She studied Costco, Trader Joe’s, QuikTrip, and Mercadona (the largest supermarket in Spain). Her research shows that these companies, which pay 150-200% higher wages than their competitors, deliver much greater profitability over time than their competitors. Her argument is that by investing in retail employees (by giving them training, autonomy, and what she calls “slack time”) these companies empower their people to spend more time with customers, provide better service, and sell more product.

A recent article in the New York Times article makes this point well. The author describes his frustrating trip to Ikea and points out that certain retailers make retail buying easy, and others make it hard. Those that make it easy seem to be more profitable and sustainable than the others.

Consider Costco. According to the Times article the company pays its workers $21 an hour, well above the $13 minimum wage. Why? Costco believes that this enables them to hire people who will learn the business, work harder, take more time with customers, and take responsibility for local store sales. This focus on a high value workforce, coupled with its simplified business model, has enabled Costco’s stock to outperform its retail competitors for years.

The point is simple: while it may appear that low wages save money, companies should seriously evaluate changing their thinking. A highly engaged employee who is well trained and ready to work is a huge competitive advantage.

Point 2. Creating a Flexible Work Environment Pays Off

The second issue is that of flexible working conditions. The Shriver Report study states that 70% of hourly workers have no sick leave. This of course means that they come into work sick (if they can make it), which of course makes life worse for them and their co-workers. Worse yet they lose wages and suffer at home.

It makes one ask: why would companies create rigid work policies that punish people for coming in late, taking time off, or getting sick? It turns out it’s often bad business.

I recently spent time with a senior HR executive at a large telecommunications company. His company employees tens of thousands of people and he was complaining to me of high turnover in the call centers. Some of their service centers have turnover greater than 100% (every employee is replaced each year).

It turned out, after he did some research, that managers were penalizing employees for coming in late by giving them night shifts. This punitive environment was reducing morale and creating high turnover.

We have entered an economy where good people look for good work. When an employer gives someone a little extra time off, encourages them to stay home when sick, or gives them time to handle a family situation, they build a stronger bond. The employee feels better about their job, their boss, and their company. And as a result they serve customers better, sell more products, and help others in the team.

Study after study has shown that in today’s high-stress work environment flexibility is one of the greatest (and cheapest) benefits you can provide. (And this is just as big a problem for men as it is for women.)

Sick leave and job flexibility are the #1 benefit requested by workers. Think about your work environment: are you giving people the time and flexibility they need to live a meaningful life? A little flexibility goes a long way in building employee engagement.

Point 3. Diverse and Inclusive Work Environments Pay Off

The third and fourth topics discuss the issue of opportunities and career growth for women: research proves that diverse and inclusive companies outperform their peers. One could argue that women, which make up half the working population, don’t qualify as “diversity” – but in most companies women are a minority and they certainly are a minority in leadership.

Most big companies have a “Diversity & Inclusion” program which measures the number of women and minorities in various roles. Companies try very hard to avoid discrimination (which is illegal and often subconscious) to help them hire good people and build an inclusive work environment that attracts good people of all races, genders, ages, and cultures.

However our research shows that these strategies are even more powerful than most business leaders understand. Despite attempts to push diversity itself, many companies have a hard time building a truly inclusive culture. So while companies hire many women and minorities, they are less frequently promoted to leadership (we discuss below) and they often feel “unincluded.” In such an environment they may not fully express their opinion, take risks, or strive to take on more responsibility.

Maria Shriver talks about the need for women to define themselves as “providers” and build their life around a real career. Sheryl Sandberg’s book Lean In talks about the need for professional women to build self-confidence and assert their natural role as leaders in business. Well one of the reasons this is hard is that organizations themselves have inadvertently created a “non-inclusive” environment without even knowing it. By not promoting women into management and leadership, for example, women naturally feel un-included.

Deloitte Australia studied this issue in a famous research report entitled “Waiter is that Inclusion in my Soup?” This groundbreaking research studied the behavior and performance of several thousand employees in several organizations and found that employees who work in a “high-inclusion and high-diversity” environments perform at 80% higher rates than those who work in “low-diversity and low-inclusion” environments!

Recent Deloitte US research went further: 82% of women at work change their appearance in some way to get ahead, and 53% believe that their ability to “cover” their true self helps them get ahead. (Men are impacted by this as well.) Is this any way to come to work?

This research confirms other studies we’ve uncovered. A major manufacturing client told me that they looked at the innovation and manufacturing efficiency of dozens of programs in their company and found definitively that the “highly diverse” teams were statistically more innovative and delivered higher quality than their peers.

When a team has a diverse make up (which includes gender, age, nationality, personality, thinking style, race, and other factors) more ideas are tested and commonly held wisdom is challenged. Many of the best decisions are made when people think outside the box and “see the truth,” rather than “see what everyone else sees.” Women in male-dominated organizations bring this new perspective.

Point 4. Promoting Women into Leadership Pays Off

The last piece of research addresses the issue of women in leadership. Research shows that when women lead, the business performs.

Catalyst, a leading research firm that studies women in business, found that a 10% increase in women on the board correlates to a 21% increase in women in executive positions, and even more importantly:

  • Return on Equity: Companies with the highest percentages of women board directors outperformed those with the least by 53 percent.
  • Return on Sales: Companies with the highest percentages of women board directors outperformed those with the least by 42 percent.
  • Return on Invested Capital: Companies with the highest percentages of women board directors outperformed those with the least by 66 percent.

This has certainly been my own personal experience. In the company I founded (Bersin by Deloitte), many of our best analysts, sales people, and marketing leaders are women. In fact more than half our business is women.

This is a challenge which remains unsolved. Despite the promotion of Sheryl Sandberg (Facebook), Ginny Rometti (IBM), Indira Nooyi (Pepsi), and other high-profile executives, progress seems stalled:

  • Women held only 16.9% of corporate board seats in 2013, indicating no significant year-over-year uptick for the 8th straight year.
  • Only 14.6% of Executive Officer positions were held by women—the 4th consecutive year of no year-over-year growth.
  • Women of color continued to fare particularly poorly, holding just 3.2% of all board seats.
  • 10% of companies had no women serving on their boards; more than 2/3 of companies had no women of color directors.
  • Women held only 8.1% of top earner slots—again no change from prior year.

If you are a business leader or HR manager look around at your own leadership. Are women represented adequately? If not, I challenge you to ask why.

Bottom Line: Employers Can and Should Make a Difference

The Shriver Report study makes a compelling case. Too many women still find the workplace difficult, uninviting, or unrewarding. Too many women live in poverty. And even professional women (and men) struggle to balance the demands of their employer with the needs of their family.

My point is that this is not only hard on people, it’s also bad business. Paying people well, creating flexible working conditions, and creating an inclusive environment improves business performance. It creates a workplace of engaged, hard-working, collaborative people. And this in turn increases sales, customer service, and long term profitability.

A famous 2008 Harvard Business Review article “The Service Value Chain” proves that employee-centric companies like Southwest Airlines outperform their peers on a regular basis. This lesson, which was learned many years ago, needs to be re-learned today.

What’s good for people is always good for business. Think about these issues in your own work environment and ask yourself are we doing what’s best for our people and our customers? If you do I think you’ll find many opportunities to help women in your own work environment, and improve your bottom line as well.”

Josh Bersin writes and researches corporate talent, learning, leadership, and HR best-practices around the world. He is Principal, Deloitte Consulting LLP and founder of Bersin by Deloitte. You can follow Josh here or on twitter josh_bersin or at www.bersin.com .