Go equal, get bigger

As International Women’s Day approaches - and in anticipation of much of the debate in the corporate realm - it’s important to recognise two critical elements.

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There is an indisputable moral and ethical imperative to treat all gender categories equally whether that relates to remuneration, opportunity, culture or representation. As there is for diversity more broadly.

"There is an indisputable moral and ethical imperative to treat all gender categories equally.”

And there is now an almost indisputable body of evidence demonstrating organisations which do this, or indeed strive to, do perform better as organisations. They deliver more sustainable earnings, they reward shareholders more and they deliver greater social benefit for the communities in which they operate.

Just one example of the extensive literature - McKinsey & Co’s report Delivering through diversity noted “while social justice typically is the initial impetus behind these efforts, companies have increasingly begun to regard inclusion and diversity as a source of competitive advantage, and specifically as a key enabler of growth”.

But the firm concedes progress on diversification initiatives has been slow and “companies are still uncertain about how they can most effectively use diversity and inclusion to support their growth and value-creation goals”.

Yet the data, first analysed in 2014 then again last year, are unequivocal.

“Using 2014 diversity data, we found that companies in the top quartile for gender diversity on their executive teams were 15 per cent more likely to experience above-average profitability than companies in the fourth quartile,” McKinsey found.

“In our expanded 2017 data set this number rose to 21 per cent and continued to be statistically significant.”

“For ethnic and cultural diversity, the 2014 finding was a 35 per cent likelihood of outperformance, comparable to the 2017 finding of a 33 per cent likelihood of outperformance on EBIT margin; both were also statistically significant.”

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Equally the demand for more empirical evidence approaches the absurd when the counter-factual is examined: does diversity destroy value?


As Uber’s head of diversity and inclusion Bernard Coleman argued in a recent, widely cited, blog for the Forbes Coaches Council, the inverse of the argument exposes the lack of logic.

“When you examine the ranks of most tech companies, it is statistically improbable that senior ranks would be devoid of women and people of colour, considering the makeup of (the US) which has over 326 million people and the ability to attract talent from anywhere in the world,” he said.

“Certainly, from a global pool of 7,405,107,650 (as of July 2017) people, we could find talent that can run and/or ascend into leadership roles. The lack of diversity, then, defies logic, which is especially paradoxical considering that the tech ecosystem prides itself on logic.”

Tech is not alone. While the tech industry is notorious for an underrepresentation of women and too often misogynistic culture, financial services have unfortunately led the way with pay disparities.

Once again, the data offer no defence. According to activist investor Natasha Lamb, managing director at Arjuna Capital, companies with gender diversity perform better and are more innovative than those that lack it.

Lamb’s activism spurred four large American banks - Bank of America, Wells Fargo, Citi and BNY Mellon - to publish their adjusted gender pay gap numbers.

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Lamb’s campaign in financial services repeats another directed at the tech industry in Silicon Valley.

In 2015, Arjuna Capital created a model shareholder campaign for addressing gender pay issues in the technology sector. The fund filed a first-of-its-kind shareholder proposal asking eBay to close the gender pay gap.

 Shortly thereafter, Salesforce’s CEO came out with a commitment to pay women fairly. Eight of nine proposals were eventually approved by tech giants to disclose and close their gender pay gaps.

Lamb’s new focus squarely rests on business as much as equity: “Women are 20 per cent more likely to leave a career in finance than any other industry,” Lamb told The Financial Brand. “That’s bad for business and it’s bad for investors.”


Given both the moral and financial cases for diversity and equal pay are distinct, the question returns to why isn’t change happening more readily?

Again, the answer is hardly rocket science: powerful interests benefit from the status quo.

This is the fundamental underpinning of all rent seeking, the desire to be paid for property not rightly held.

In this case the rentier class is dominated by older, white males, the traditional power elite now amusingly disparaged as ‘male, pale and stale’.

The generalisation may be cruel but it is fair and the corollary is there are many in established positions who would not have achieved these positions if earlier in their careers they had been exposed to greater meritocracy and less bias – conscious and unconscious – in their favour.

Of course, redress is not comfortable and today we see the very understandable and very human resentment shown by some who once would have been automatic members of the privileged class.

From their position the perception is ‘my chances of promotion are less because I’m male’.

Logically, that’s not false: if an inequitable situation is to be righted, by definition for balance to be achieved there will be adverse bias.

It is a complex challenge; there are legitimate debates around the role of quotas, regulation, policy.

But there is no room for debate about around the fundamental propositions – creating a genuinely diverse workplace is the right thing to and it delivers superior business outcomes.

  • To celebrate International Women's Day, bluenotes will be publishing special edition articles from March 1-8 to focus on the triumphs and setbacks of equality for women. We will be joined by guest editor and renowned author, Catherine Fox.

Andrew Cornell is managing editor at bluenotes

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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