Joanna Barsh: Gender inequality in business and why quotas aren’t enough
An article published this month by McKinsey & Company argues that we need to move away from “conscious capitalism” and focus on a different kind of business structure – one which places more emphasis on the value of female qualities.
Written by former director of the New York office Joanna Barsh, it promotes the idea of “centred leadership” as the optimum alternative – where as many women as men take the top positions and success is approached from a long term point of view rather than as an opportunity to achieve short term rewards.
Businesses have stalled on the road to gender equality according to the consultancy, and trust in business has fallen to an extremely low level. Although there are 40m more women in work in the US today than there were fifty years ago, with women constituting half of the total professional work force, women occupy just 16.9 per cent of seats on company boards.
Similarly, only 24 women lead Fortune 500 companies and the share of female senior executives has hardly changed in the past three years.
Barsh believes this is having a negative impact on how businesses are run, since it allows them to be dominated by “conscious capitalism” – where short-term profit maximisation is chased at the expense of stakeholder value, leading to reckless risk taking, a loss of moral values, and the erosion of a company’s brand.
She argues that it is because of the persistence of conscious capitalism that women now cite “grit, perseverance, and toughing it out” as the most important qualities for making it to the top. One study conducted by McKinsey found that in Europe, it is two to three times more difficult for women to advance in their careers at every stage than it is for their male counterparts.
Abhorring conscious capitalism's “relentless push for ever-increasing short-term profits with long-term value for all stakeholders,” she believes “centred leadership” would be a better option.
Describing it as a joining of feminine archetypes with masculine ones, she says its basis lies in variation. Women, for example, tend to choose different investment options to men, with health, education, community infrastructure and the eradication of poverty listed as some of their preferred choices.
Qualities greater diversity is considered to bring to business leadership include improved decision making, enhanced creativity and innovation, and better problem solving. Research previously conducted by McKinsey found that when three or more women were included in the top team at a company, its organisational health improved in every measurable dimension.
“Simply put, putting more women in charge is a key for better future for business,” writes Barsh. “Better yet would be a world where women and men together lead as equals, delivering meaningful impact over the long term.”
She is not the only powerful woman to promote the benefits of a mixed work force. Christine Lagarde, managing director of the International Monetary Fund, previously said: “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.”
The problem with quotas
Barsh recognises the benefits of introducing quotas for women in high positions, citing the 25 per cent target of female inclusion set for the UK in 2011 as an example of success.
“The intervention is working,” she writes. “It focuses on a discrete group of leading companies, offers a framework of “what good looks like,” and sets a voluntary but achievable target. Today, not one FTSE 100 company has a men-only board.”
But she does not believe this is enough to counteract “conscious capitalism”. The problem with quotas, she explains, is that they aren't meritocratic, they impair competitiveness, and are unfair to senior women who fought hard to make it.
“Centred leadership” should therefore be kept in mind whenever a person is chosen for a top position. To reach this ideal she says certain traits should be looked out for in particular, in both men and women. These include the ability to mobilise others through hope while diminishing their fear of taking risks, the ability to leverage trust and create relationships, and the ability to re-frame challenges as learning opportunities.
“if approaches like centred leadership deliver striking benefits for the leaders who embrace them, there’s a good chance to change the game," she says.