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Why should organisations be concerned about the underrepresentation of women in on high-level positions? Apart from ethical considerations, there are a number of strong business arguments that show why gender diversity is an important issue for organisations.
One strong argument is that organisations need women as a response to the upcoming talent shortage. The last decade there has been a growing recognition of the importance of talent (Sparrow, 2007). Studies have shown that influenced by changing demographics, globalisation and the rise of knowledge workers, talent shortages will become one of the major concerns for organisations (Capelli, 2008). In this global and competitive environment where leadership talent is critical and difficult to find, organisations cannot afford to underutilise any segment of the talent pool. Women make up half of the population and represent more than half of the graduates in western countries, overlooking female talent means that half of the world’s vital talent is neglected. In addition, the mismatch between training and employment contributes to these shortages. In some male-dominated sectors such as engineering and IT, there is the problem of a serious shortage of talent on the one hand, and a high percentage of educated but inactive women on the other hand (Desvaux et al., 2008).
Not only can women help to fill the shortfall of talent, other business goals are enhanced as well. A study by the European Commission (2003) showed that from the organisations that implemented a diversity program, 58% reported a positive impact on employee motivation, this was 57% for customer satisfaction and 69% noted an improvement in their brand image. Another argument is that by integrating women into the decision-making process, organisations are able to better adapt to social and consumption trends. Research showed that in Europe, women have a major influence on purchase decisions; although 51% of the population is female, they are the driving force behind more than 70% of the household purchases; in the US this is even 83% (Crush, 2004). Also, women increasingly represent a growing part of consumer base for products that are typically known male buys, such as cars, PC’s or smart phones.
Furthermore, the arguments for diversity in general apply to gender balance; diversity is considered to be an accelerator for innovation and diverse teams show a higher performance than homogeneous teams (Wittenberg-Cox & Maitland, 2008). Studies have shown that the different and complementary leadership skills of women have positively impacted on the organisation’s corporate performance (Wittenberg-Cox & Maitland, 2008).
Mckinsey (2008) did a number of studies to investigate the relation between the number of women employed in leadership positions at an organisation and the organisation economic performance. Their research has shown, firstly, that those organisations around the world that scored high on nine important organisational dimensions were more likely to have higher operational margins. And secondly, organisations with three or more women on their senior management teams scored higher on all nine organisational criteria than did companies with no senior-level women (Desvaux et al., 2008). This implies that women positively impact organisational performance.
And a catalyst study showed that those organisations with more women in their leadership teams achieved a 112%-plus return on invested capital in comparison to those companies with the lowest number of women (Catalyst, 2007).