Lack of female leaders costs US, UK and India $655 billion

05 October 2015 Consultancy.uk

The domination of men in executive boards comes with a massive opportunity cost to corporates and society, reveals a new study by Grant Thornton. According to the researchers, $655 billion of profit is flushed down the drain by corporates in just three markets alone, with an extrapolation across companies and markets globally bringing the value into trillions. Their advice is elementary: companies, investors and governments need to consider ways of further increasing the number of women on boards to improve financial performance of businesses across the board.

Gender diversity in business remains a critical social and ethical issue for academics and cultural leaders alike. For business – driven by the profit imperative – gender diversity remains a business issue. Various reports have in recent years backed the business case for diversity, including research from BCG (‘The Diversity Paradox’), the Kellogg School of Management and the Scientific American.

In a new study, titled ‘Women in business: the value of diversity’, Grant Thornton too considers the gender diversity business case with hard numbers. The accounting and consulting giant explores whether there is correlation between business performance – in terms of financial performance – and diversity at board level. To identify possible correlation the business advisory, together with Linstock Communications, looked at publically available information from companies on the FTSE 350 (UK), S&P 500 (US) and CNX 200 (India).

Woman on board in major indices

According to the researchers, a central issue for discovering the effects of diversity has been that due to the lack of women in executive roles, comparisons between companies that do and do not have women at the top has been difficult. Recent years have seen more women make it to the top of the highest indexed companies, providing a better basis for statistical comparisons. Of the companies considered, a woman is on the board of all but 16 of the S&P 500, with 330 of the FTSE 350 and 176 of the CNX 200 having women placed in their boardrooms.

The research then considered the financial performance effects of a woman on the board, finding that the return on assets (ROA) for companies with diverse executive teams performed better than those without, by a significant margin in all three markets studied. The analysis finds that male-only boards forego up to $655 billion in profit opportunities across the three economies. More diversity on the S&P 500 could potentially $567 billion, with the FTSE 350 and the CNX 200 adding $14 billion and $74 billion respectively.

According to the analysis, bringing board diversity up to the best-in-practice level could generate an addition 3% to GDP across the UK and US. The report highlights further that the business environment is considerably more extensive than the businesses on the indices considered, with diversity on the boards of all business globally generating potentially a considerably bigger performance boost to the world economy.

Value of diversity

According to Grant Thornton, three major business stakeholders need to provide pressure on companies to further improve the number of women at decision making executive board level. Companies need to understand that male only boards can hamper performance, investors need to pressure boards to add woman to maximise their return on investment – while governments need to consider ways to encourage women board participation to improve economic performance. Francesca Lagerberg, Global Leader Tax Services & Europe Grant Thornton, comments: “Perhaps businesses have simply not been aware of the value diversity brings. So it makes sense to invest in your high-performing junior women now to make sure they are ready and willing to take the step up into senior management.”

A previous report by Grant Thornton showed that when it comes to women in business, Russia and Eastern European countries lead the way.

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Why leaders must balance technical expertise with soft skills

17 April 2019 Consultancy.uk

Soft skills matter in the workplace just as much as technical expertise, writes Samantha Caine, Managing Director of Business Linked Teams.

For too long technical expertise has been seen as the marker of a strong candidate for development into a sales or leadership position. Sales and leadership candidates are tasked with demonstrating a diverse and wide-ranging set of technical skills, yet their aptitude in these technical skills or ‘hard skills’ cannot signify great leadership potential. This is why a healthy balance of soft skills and technical ability is required. 

So what exactly is the difference between technical skills and soft skills? In engineering, it’s crucial to demonstrate knowledge of physics as well as a strong grasp on mathematical equations. Yet, in any industry, it’s important for leaders to be able to interact with other people effectively with soft skills like communication, empathy and adaptability. 

Business Linked Team’s 2018 study into internal leadership development revealed that 69% of large organisations are prioritising the identification and development of future leaders from within the workforce. As more and more organisations begin to invest in sales or leadership development within their existing workforces, more focus needs to be placed on ensuring the right soft skills are in place. 

With those soft skills in place throughout the workforce, the business will benefit from a wider pool of potential leaders developing under their noses, and it should be the same where sales candidates are concerned. 

It’s not just about easier access to ideal candidates for these positions without the rigmarole of recruiting from outside of the organisation. The leadership development study also found that 89% of HR decision makers say succession planning has become a top priority. Those currently serving in leadership positions can’t lead forever and the same goes for those generating sales for the business.

Why leaders must balance technical expertise with soft skills

From people leaving for new opportunities or retirement, to people simply stepping aside to focus on other areas of the business, successful leaders and salespeople require experienced and capable successors that will be ready and able to confidently step into their shoes and pick up the mantle without the business experiencing any lapse in performance.

Soft skills make stronger candidates

When it comes to the soft skills required, a strong leader must be able to manage through clear communication and effective time management, coaching and goal setting. They must be able to demonstrate empathy and empower their teams to be successful, productive and fully engaged. And beyond simply giving direction, they must also be able to take direction from those above them and cascade the business strategy down through their teams. 

A strong sales candidate must possess the ability to communicate value to the customer, negotiate well and protect margin or the ability to increase the scope of a particular sales opportunity. 

With the relevant soft skills in place, the business will benefit from increased productivity, greater agility against changing market conditions and greater transparency. In turn, this will provide visibility on issues and inefficiencies while removing opportunity for miscommunication. All of this can transform the culture of a department, improving employee satisfaction and reducing staff turnover. 

Ultimately, developing leadership or sales candidates will require the business to strike the right balance between technical skills and soft skills, and this requires an effective and sustained learning journey.

A balanced learning journey

Facilitating and supporting the development of leadership and sales is best achieved by establishing training groups. By cultivating training groups, businesses are creating talent pools that will inspire and support each other on the learning journey. However, personal goals and learning objectives must be defined for each individual based on their own existing skillsets and the skills that each individual needs to develop. 

With the emergence of e-learning, businesses recognise the value of online-based learning activities, yet many make the mistake of opting for one-size-fits-all solutions which are solely focused on self-study. A development solution will only deliver true return on investment if it combines e-learning activities with group learning activities that provide opportunity for shared experiences and support.

A blended learning solution that combines self-study and face-to-face group learning activities will aid strong development of the talent pool through shared experiences. Through these shared experiences, those undergoing the training will organically develop a support network that supports the development of the group as much as it supports the development of each individual. 

The blended learning approach is supported by one of the seven principles of human learning that socially supported interactions aid the individual development of expertise, metacognitive skills, and formation of the learner’s sense of self. The strongest opportunities for development can be unlocked by blending workshops with online activities such as virtual sessions, peer coaching, self-study, online games and business simulations. But it’s crucial to provide a blend of one-to-one and group sessions too.

Beyond delivering a better learning outcome for the employee, the blended learning approach allows organisations to adapt their training quickly and easily to shifting business demands in an ever-changing landscape.