Closing the Gender Gap: It's About the Money

Last Thursday I had an excellent day attending The Next Billion Conference in Vancouver, where an illustrious group of speakers joined a surprisingly intimate number of delegates to discuss women’s global economic participation.  

Much of the focus in international gender equity and equality efforts has been on the social, educational and political aspects.  These remain important and have increasingly been complimented by economic initiatives as evidenced by the World Economic Forum’s Gender Parity Program, for example.

What was interesting about this conference was its decision to approach the issue of women’s economic participation squarely from the business side.  From across the panel topics one could pull four key threads of what women’s economic participation looks like from the business-case perspective.

1. As consumers.  Women constitute the largest consumer base in the world, accounting for approximately 63% of global spending.  Economic empowerment makes sense from the point of a sustained and expanding customer base.

2. As workers.  Women constitute the largest unemployed population in the world, such that closing the gender employment gap would have a substantial positive impact on GDPs (percentages cited by Lisa Wolverton in her opening address included a potential GDP rise of 9% in the US and 16% in Japan).  

3. As producers.  Women entrepreneurs remain underfunded, despite consistently showing higher rates of return and quicker exits for investors.  The conversations around this aspect started with its impact on women-led start-ups but shifted to the ability of women suppliers to scale into global supply chains.  I must admit I hadn’t thought much about that angle, and find it a fascinating point. 

Another angle to the impact of underfunding women business owners was raised by Eduardo Ferreira of Itaú Unibanco, who noted that in his experience with microfinance, men and women have shown a marked difference in their approach. He framed it as men focusing on “how much money can I make with this business”, and women focusing on “what can I do with this money.”  Ambassador Verveer similarly referenced the multiplier effect of the way women spend money.  While I tend to balk at gender-based generalizations, there is plenty of evidence beyond the anecdotal to back this up.

4. As leaders.  Women remain underrepresented at decision-making levels such as executive boards, and throughout management ranks.  A lot of discussion revolved around the question of quotas or no quotas.  Despite the varying viewpoints on that particular question one sentiment was clear: time’s up.  At the current pace, it will take 80 years to achieve gender parity in this area, and everyone at the Next Billion has quite clearly lost their patience. 

The discussions amongst the panels and delegates were sharp, optimistic, and practical. For me, as a management consultant focused on gender and also an international lawyer, my mind kept going to the “4-P” approach that underpins nearly all of my work: Principle -> Policy -> Procedure -> Practice.  Elucidating any one of these things well is a challenge.  But the real difficulty is in building bridges between each of them that (a) can safely carry everyone across, and (b) will actually connect everyone to where they need to be.

What I think will make the Next Billion Conference of real value is tying it all together by effectively envisioning how to build these bridges amongst the various approaches currently underway within specific businesses, organizations and communities.  From the “4-P” perspective, we could start by elucidating the basic Principle that women and men should have equal access to participation in economic life as consumers, workers, producers, and leaders.  From this, the bridge to Policy is arduous but not necessarily onerous.  Understanding contact points and associated barriers should produce good policies around hiring, retention, mentoring, and promoting; around removing or at least countering hidden bias in making business decisions; and around the way the female consumer is engaged as a whole person, for example.  Where things get sticky is in building the next bridge.

Confronting the Barriers

In my experience, the drivers behind adopting a Principle will impact the resulting Policy, Procedure and Practice.  Understanding the drivers and what in turn drives them is important.

When it comes to gender equality, the value proposition for business is nicely intersectional: economic, related to each of the four threads outlined above; moral, either in and of itself or because ‘good business’ has becomes good business; and quite often legal obligation.  When the driver for investing in gender equality is a combination of these factors, the 4-P road will be a strong one.  However, too often the driver is one of these things in isolation (often bare-bones legal compliance), if it is thought of at all.  The result is policies that go unimplemented; procedures that undermine the starting principle; and a failure to practice fairness in how workplace culture plays out.  Why?  It has a lot to do with what shapes the driver, and behind the obvious one – money – lies something even bigger.  Culture.  Discriminatory, biased cultural norms are the biggest impediments to gender equality. 

At the conference, the issue of culture arose frequently during the panel and delegate discussions: the need to change the norms surrounding perceptions of and behaviors toward women.  This is not of course a revelation. The Convention Against all Forms of Discrimination Against Women (CEDAW) is one of the most heavily ratified treaties and the most heavily reserved (a mechanism that allows signatories to carve out exemptions for themselves) in the international human rights regime.  What makes CEDAW so controversial?  It asks governments to take steps to ameliorate the culture of discrimination against women: how individuals view the world and behave from the streets to their homes. 

This is the most challenging aspect of gender equality across sectors and across spheres.  It is the thing that most quickly gets people worried about what to do about it and what will result.   In the same way that culture informs workplace practices, so does it inform the drivers behind engaging (or not engaging) with gender equality in the first place, and in turn the quality and process of that engagement.  

Revisiting the four key threads of what women’s economic participation looks like from the bottom line perspective, it doesn’t take long to find the cultural impediments. 

1. Reaching (and serving) the female consumer.  Many businesses seem to be missing the mark on how to effectively reach female consumers more effectively, not only in terms of product offerings but also services and relationship building. 

At the conference, Jessica Schnabel from the International Finance Corporation made the hilarious observation that “women aren’t looking for pink credit cards.  They’re looking for high-value services, advice and products.”  Epiphany. 

Stereotypical conceptions of women’s wants and needs, as well as the failure to have a finger on the pulse of women in the world have led to several missteps and aside from the immediate costs of such blunders they divert resources away from developing products and services that will properly reach the world’s largest consumer spending population.  Removing the various cultural assumptions underlying the idea of “women” and considering instead female people as whole customers is so very basic and yet often seems forgotten. 

2. Leveraging the productivity and contribution of female workers.  Culture comes into play in three overarching ways here: (a) excluding women from paid employment altogether or in certain sectors as a result of discriminatory laws or norms; (b) creating or tolerating work environments that range from overtly hostile to subtly exclusionary; and (c) allowing biases – overt or hidden – impact hiring and retention policies and practice, or becoming unattractive to female talent.  The last two problems are detrimental to men too, as they also experience bullying and parenting penalties albeit in different ways and with different outcomes.

The impediments to entering and retaining paid employment obviously vary for women from country to country.  Access to employment could begin with something as basic as access to education but quickly becomes complex.  In many places, as we all know, barriers to education range from geographic and financial to child-marriage and other cultural norms that keep girls out of school.  In a North American context, attrition rates may require a heavier focus.  Even where legal impediments do not exist there remain persistent problems with ineffective workplace policies and workplace cultures that drive attrition rates amongst women to disproportionate levels. 

While we could spend hours discussing the relative gravity of the respective scenarios, the net impact is the same – an enormous, costly gender gap in global employment numbers.

3. Increasing GDP through the funding and scaling of female-owned businesses.  Discriminatory laws tend to be based on and used to reinforce cultural gender norms.  An example the panels discussed with reference to women entrepreneurs is the impact of abridged property rights on women’s access to collateral and consequently to capital for the purpose of scaling into global supply chains.  It is important for businesses to understand the mechanics of such factors and for an integrated public/private sector approach to removing such barriers. 

When it comes to investment, the disparity in access to venture capital as between male and female led businesses is no secret.  What is interesting is the apparent cognitive dissonance that drives assumptions of such businesses as being higher risk despite growing evidence to the contrary.  Cultural factors ranging from outright sexism to subtler, hidden bias is an important driver of deciding not to fund women-backed businesses or shouldering women out of networking circles where purse strings may be easier to loosen.

4. Reaching parity - or at least reasonable representation – in leadership

Study after study has shown significant performance increase when women are included in decision making.  The 2013 McKinsey “Women Matter” report showed a 47% increase in return on equity from boards with female representation.  That study is not alone.

The conference panels discussed a number of practical approaches in addition or in place of quotas for improving this access issue.  From term-limits, independence requirements, and qualifications at the top to stronger mentoring and sponsorship regimes in between, it’s clear this isn’t rocket science.  But people being people, it’s not simple either.  Many of the same factors outlined above come into play here, primarily perception-based.  One would hope that as barriers ‘at the top’ break down the resulting trickle down will be positive, but we’re learning it will take more than that to make real progress.

The UNFPA defines ‘gender equality’ as when people’s “access to opportunities and life changes is neither dependent on, nor constrained by, their sex”.  They define ‘gender equity’ as “the process of being fair to women and men.”  While structural approaches such as laws, policies, and procedures can create the framework for gender equality, we need cultural shift to get the equity part in place, and without that, the bridge to Practice will remain unfinished.   

In looking at progress in the private sector, Marianne Schoenig from Accenture pointed out that the importance of “more assertive asks” from customers should not be discounted.  This somewhat quick and quiet point deserves real consideration, as it expands the scope of responsibility while making the whole issue real.  Outside the many systems and structures we have amassed to operate within, each of us has a role to play. 

Achieving board parity, providing equal opportunity for female business owners, stemming female attrition rates, and understanding the needs of female consumers are not “women’s issues”.  One cultural shift that may finally be underway is the realization that we are all – each – responsible, and invested.

In a world that can’t go five minutes without talking about sustainability, this is important: from a financial perspective, from a peace and security perspective, from a personal perspective.  We need more people to recognize the problems, realize that the problems are theirs, and act – not from a sense of obligation, but from a sense of vision. We could use some positive vision for the future, and this is an obvious area to find it.