East European history creates gender balance in business

10 March 2016 Consultancy.uk 6 min. read
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The global average number of women within mid-market company senior management remains relatively low at 24%, while 33% had no women at all in senior management. A new study highlights, however, the length at which historical normative traditions continue to shape female participation – in Russia for instance, where the idea that men and women are equal in work and education was historically firmly held, 45% of senior management positions today are held by women.

Women active in leadership positions has, across a range of studies, been shown to drive up business performance. One report from McKinsey & Company, titled ‘Diversity Matters’, revealed that companies in the top quartile for gender diversity are 15% more likely to have financial returns above their national industry peers; a study from EY, into the utilities industry, found that the top 20 gender parity performers in the industry enjoyed a 1.5% increase in ROE. This is in part, as highlighted by numerous other consulting as well as academic studies regarding women in leadership, the result of providing new perspectives outside of traditional ‘groupthink’ as well as possessing additional leadership qualities.

While the business case has long since been made, changes within the industry appear to be painfully slow. In a new report from Grant Thornton, titled ‘Women in business: Turning promise into practice’, the professional services firm considers, among others, the progress towards equality across the globe as well as how businesses can better build on the promise women have for their bottom line. The report was developed from 5,520 interviews with chief executive officers, managing directors, chairmen and other senior decision-makers from all industry sectors in mid-market businesses across 36 economies.

Women in senior management

Up and out
The report finds that across the globe the number of senior management positions held by women has increased slightly on 2015, up from 22% to 24%. At the same time, however, the number of businesses across the globe that have no women in senior management positions has also increased slightly, up from 32% in 2015 to 33% this year. Across all major economies, the number of senior management roles in the hands of women stood at 22%, while the number of businesses with no women in senior management roles was found to be somewhat higher than the global average, at 39%.

Proportion of senior management roles held by women

Historic normativity
The research highlights considerable regional differences in the number of women in senior leadership positions. Eastern Europe and the ASEAN countries (Southeast Asian nations) have the highest average number at 35% and 34% respectively. Southern Europe and Africa follow, at 28% and 27% respectively. Eurozone countries average 24%.

The research found some interesting data regarding the differences between East European countries, the ASEAN countries and much of the rest of the world. In East Europe, many of the ex-USSR countries that grew up under communist ideas, grew up under the conviction that there is no division between men and women – all advance in society was open to men and women equally. Additional boosts included that it was common for women to receive higher education, including in subjects such as engineering and mathematics, providing a strong basis on which to build a successful career. And there was high-quality childcare attached to most workplaces, overcoming one of the most common barriers to women’s progression in business. The normative conditions have lived on, and now sees more women continue to value themselves as equally adequate for the role of leadership.

ASEAN countries, too, have performed strongly within the metric of senior leadership attainment, in part from their historically agreed on policy direction for gender equality in education and jobs, including the constitution of the Philippines, being implemented.

senior roles held by women by country

Russian parity
The result of the legacy in both Easter Europe and ASEAN is that countries in the region have high levels of female engagement as leaders. In Russia for instance, 45% of senior management positions are held by women, while the Philippines comes in at 39%. Women in Lithuania and Estonia manage 39% and 37% respectively, while Thailand and Indonesia come in at 37% and 36% respectively. China too does relatively well at 30%. On the other side of the scale are predominantly Western European countries, and their historic colonies. New Zealand comes in at 19%, while the Netherlands comes in at 18%. Argentina manages 18%, while India comes in at 16%. Germany has a particularly poor showing, with 15%, while Japan has a total of 7% of women in senior management positions.

Many of the Western European countries that have low levels of women in senior leadership, also have high proportions of companies that have no women at all in senior leadership positions. 36% of companies surveyed in the UK, for instance, have no women in senior management, while in Germany this climbs to 60%.

Reflecting on the difference in leadership, resulting in the disparity, Pamela Harless, Chief people and culture officer at Grant Thornton US, says: “In the US and the UK, societal norms are based around a ‘command and control’ style of leadership. If you look at government structure, direction is often set from the top down, leadership is seen as something that needs to be strong and direct, not collaborative – and that trickles down in the corporate world.”

senior management roles held by women

Management positions held by women
Interestingly, the kinds of roles that women do land when they manage to make it into a senior position, are mostly focused on human resources and finance. Of the women that are at the top of business, only 9% are the top of business (CEO). The suggestion is that few women make it to the strategic side of the business, and thus lack influence in implementing strategies that surpass company groupthink.

Harless adds that, “If we are going to crack the problem of women in business leadership, we need to have more women serving in truly operational leadership roles. Women shouldn’t just be in support roles such as HR and marketing but owning profit and loss lines and driving the operation of the business.”