Can women fix capitalism?

Can Women Fix

Here is a brief excerpt from an article written by Joanna Barsh for the McKinsey Quarterly, published by McKinsey & Company. She shares her thoughts about gender equality at the top of business and why it has stalled, and trust in business is alarmingly low. Putting more women in charge could well be the key to a better future for business and society alike. To read the complete article, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.

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Fifty years ago, women in the United States won a major achievement: Title VII of the 1964 Civil Rights Act listed sex as one of the characteristics that employers couldn’t discriminate against. American women began to enter the workforce in larger numbers across sectors, paving the way for social and economic change.

Yet I’ll admit that for much of my career, I wasn’t thinking about the societal or business impact of gender equality. I had graduated from Harvard Business School among its first 1,000 women students, joined McKinsey, and advanced to senior partner with 19 others—all men. At age 50, I looked up and realized that there were too few women leaders in business and that I didn’t feel much like one myself. Troubled, I set out to discover their secret sauce. That effort was the beginning of “centered leadership,” an approach that, in its simplest terms, joins feminine archetypes with masculine ones, anchored in purpose.

Recently, this journey has taken me back to those bigger socioeconomic themes. As America’s trust in business and government has dwindled, my dreaming took a new direction: imagining a world led by women who replace capitalism’s relentless push for ever-increasing short-term profits with long-term value for all stakeholders. Or—better yet—a world where women and men together lead as equals, delivering meaningful impact over the long term.

By the way, I’m not alone here. Many others are talking about feminine archetypes of leadership—and, specifically, the role of meaning in companies: building on strengths, leading with purpose, achieving fulfillment. If the women and men who rise to the top embodied these capabilities, they might advance a new paradigm for capitalism too and get us out of the tough place we’re in today, with levels of income inequality worryingly high in many countries and trust in business and government disturbingly low.

Simply put, putting more women in charge is a key to a better future for business.

What 50 years can do for women

We can all agree that women have come far. In the United States, 40 million more women work today than did in 1970—we’re half the professional workforce. We hold more than half the college diplomas and Fortune 500 entry-level professional jobs. We occupy 16.9 percent of the board seats at Fortune 500 companies. Only 13 percent of Fortune 1000 boards in the United States remain “men only” clubs. But 19 percent of Fortune 1000 companies have three or more women on their boards. And that’s just the United States.

The business case for women in leadership gets better every year: women bring improved decision making at the top, more creativity and innovation, and better problem solving, stemming from greater cognitive diversity. Women also improve the ecosystem, because company leaders better match the profile of customers and employees. And when three or more women make it to the top team, a company’s organizational health appears to improve on every one of the nine dimensions McKinsey tracks. Moreover, women propel economic growth. To quote the International Monetary Fund’s Christine Lagarde, “All economies have savings and productivity gains if women have access to the job market. It’s not just a moral, philosophical or equal-opportunity matter. . . . It just makes economic sense.”

Dozens of companies are leading the way in advancing women to the top, but even these leaders confide that their organizations are not where they need to be. It’s true; we’ve reached a plateau. Only 24 women lead Fortune 500 companies, and the share of female senior executives at these companies hasn’t significantly budged in the past three years. The barriers—among them cultural factors and entrenched mind-sets—are well known. Often, the women who make it to the top win by playing the game better than men. Female winners cite grit, perseverance, hard work, and toughing it out as key factors. No wonder: our research in Europe and the United States finds that it is two to three times harder for women than men to advance at each stage. Most men just don’t see those obstacles, even though they are visible to most women.

Structural and often controversial interventions, such as quotas (at the country level) or targets (at the company level), can counter biases and improve outcomes. Take the United Kingdom, where the Davies Review recommendations—not a quota but a 25 percent target—were approved in 2011, to be achieved by 2015. They have already increased the proportion of women on FTSE 100 boards to almost 21 percent, from 12.5 percent. The intervention is working: it focuses on a discrete group of leading companies, offers a framework of “what good looks like,” sets a voluntary but achievable target, is led by six chairmen willing to stand in the spotlight, leverages the fear of scarcity and leadership’s competitive spirit, and is actively monitored in the public eye. Today, not one FTSE 100 company has a men-only board.

The detractors of quotas, however, argue that they aren’t meritocratic, impair competitiveness, and are unfair to senior women who fought hard to make it. Most leaders reject targets linked to compensation for the same reasons. Agree or disagree, this sentiment is a reality, and it’s one reason progress for women at many companies is slow and incremental.

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Here’s a direct link to the complete article.

Joanna Barsh is a director emeritus in McKinsey’s New York office and was a member of the firm from 1981 to 2013. She is the author of two books, How Remarkable Women Lead (Crown Business, 2011), co-written with Susie Cranston and Geoffrey Lewis, and, most recently, Centered Leadership, with co-author Johanne Lavoie (Crown Business, 2014).

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