Increased Profitability Through Gender Diversity

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Gender Diversity – The Guys Who Get It, and Those Who Don't

Sometimes it seems like most companies don’t know how to work with women. Fox News, Uber, Bestworks, UBS, Ralph’s Grocery Stores, Chipotle, Google, and countless others make headline news on a regular basis for this very reason.

Many corporations at some point in their lifetime have been, are, or will be engaged in/settling their sexual harassment and discrimination claims, and unfortunately no one sees those (very expensive) sexual harassment and discrimination cases ending anytime soon. But does all the fault lie on men who don’t value women in the workplace? Can you name one male-run company that values female input tremendously and has been in the news lately?

Probably not and probably not without a Google search. Here’s two:

Joe Keefe, is President and CEO of Pax World Funds and its investment adviser, Pax World Management LLC, as well as its majority-owned subsidiary, Pax Ellevate Management LLC. Keefe is a leading advocate for investing in women, is aware of the critical role that gender diversity plays in business success, and actively works to create this diversity in his own companies. Indeed, Pax Ellevate Management LLC, a gender-lens investing pioneer and investment adviser to the Pax Ellevate Global Women’s Index Fund (PXWEX, or just “the Fund”), announced in July, that the Fund outperformed the MSCI World Index, for the three-year period.

Keefe sees the economic benefit in working with women. It really is just that simple. No grandstanding. No excuses. No headline news. Just performance that exceeds that of men-run only companies by up to 65%. Just profitability, which, in case you forgot, is what most of us are in business for.

Similarly, Kevin O’Leary of Canada, better known as “Mr. Wonderful” from Shark Tank, also sees the value and financial contribution of women-led businesses. In a recent interview with The Boston Business Journal, Kevin spoke about why he has 50% of his portfolio in women-run companies. In the interview he even goes so far as to claim that “women CEOs are a better bet than men”. A man of few words (though some may argue that his words aren’t very kind), Kevin “gets it”.

The factual, responsible, and proven understanding/implementation of the gender diversity research results demonstrates that when 30% or more of a company’s Senior Management Team and/or Board membership are women, the company will be up to 65% more profitable. Contrast that with the companies who have sexual assault/discrimination/harassment issues all over them and no/few women at the top. Coincidence? I think not.

Headlines like this from August 4th’s Washington Post: “Uber’s search for a Female CEO has been narrowed down to 3 men”, while cleverly-written and quite humorous, is sobering – and sad. It tells us how the men in charge at Uber think, taking the hypocritical approach of “Let’s-tell-the-world-we-want-a-female-CEO-but-do-something-else” which historically hasn’t served them very well.

Arianna Huffington, the ONLY woman on the Uber Board, had the gumption to speak up and tell the guys what Joe Keefe and Kevin O’Leary (and others like them) already knew. Her honest, fact-based and responsible suggestion to put more women on the Uber Board to attempt to capitalize on the expertise women bring to business was met with a comment by Board member, David Bonderman that women talk too much (maybe he should have listened to her, as he no longer has a Board seat at Uber, but perhaps he considers his new reputation as a rampant misogynist as a fair tradeoff).

Uber has offered their open CEO position to Dara Khosrowshahi, as one Uber source told Recode…”everyone is becoming exhausted. We need someone with the skills to move us along”. I personally believe Khosrowshahi to be extremely qualified. But so was Meg Whitman, Sheryl Sandberg, and Susan Wojcicki. For the sake of all of those who work at Uber and their investors I hope Dara works out for you.

Uber did not ask my advice as a Gender Diversity Consultant, a former CEO of a publicly-held company, and as a woman, But here it is:

Bank on the guys who bank on the women….it’s just good for business!

Gender Inequality in Business is NOT Generational – witness UBER.

Recently I conducted a Genderversity™ training session in a large international technology firm. In the audience was a confident female Gen-Yer who was considered a leader within the company, and she stated the following: “… in my opinion, gender inequality and sexual harassment is just a generational issue”. She went on to say that sexual harassment and discrimination were a thing of the past in her generation (that is to say anyone born after 1990). When probed as to why she thought this way, she added that it was the older business men who have been accused of several counts of sexual harassment and discrimination (and when you think of some of today’s headline news, Donald Trump, Bill O’Reilly, and Bill Cosby would be considered “old” by her definition). She believed that the businessmen in her generation and in coming generations behave differently around women than their predecessors. In her mind the mistakes made in previous generations regarding inappropriate sexual behavior had since been mitigated.

A laudable argument, but objectively incorrect.

The meltdown of Uber - the most successful technology start-up ever, with an estimated market valuation of $40 billion based on a recent Inc. Magazine report - indicates that sexual harassment is clearly NOT a generational issue. The median age of an employee in tech-related companies is only 30 years old (based on a study from PayScale) - technically millennials. Uber is a millennial company; has millennial leadership; and millennials are the most enthusiastic Uber adopters according to Felim McGrath of the globalwebindex.

Uber has been the subject of extreme public scrutiny lately due to several instances that indicate a toxic corporate culture for women, throughout the entire Uber organization. Indeed, in February of 2017 Uber brought in the heavy-hitters to help solve their sexual harassment problems by hiring former U.S Attorney General Eric Holder (can’t even begin to imagine what that cost but “A” for effort right?)

To give an indication at how deep the problem runs, witness David Bonderman, an Uber board member who, in the midst of a June announcement of the findings from a sweeping sexual harassment investigation, made a joke about gender stereotypes, adding even more fuel to claims of a toxic culture. He resigned within the week.

We have no idea of the direct economic cost yet of settling Uber’s sexual harassment lawsuits (although personally I would advise the CFO to put a big, fat, liability accrual on the balance sheet; Uber, and other companies who operate like them are sure going to need it). The Equal Employment Opportunity Commission reports that American companies paid out $40.7 million in 2016 alone to remedy charges of sexual harassment, meaning these were payments to women who went to HR to report incidents and were largely ignored.

With the ever-growing media focus on women and women’s issues (including but not limited to sexual harassment, pay gaps, etc.) companies must make gender inclusion and diversity a strategic imperative. The result of this would lead to the prevention of sexual harassment and discrimination claims (and therefore the multi-million dollar payouts), all of which negatively affect profitability.

You can “hope” that what happened at Uber is not happening where you work. You might not see a sexual harassment lawsuit, but the facts point out that many companies will. 1 in 3 women report being sexually harassed in the workplace, the EEOC reports that 74% of all claims to them come from women, and largely involve sexual harassment.

“Hope” is not a strategy. A proactive approach to gender and diversity inclusion is a strategy and is necessary to properly address sexual harassment and discrimination in the workplace.

If you feel that gender diversity is not a priority in your workplace, Genderversity™ is here to help. Please contact us for more information.