Closing the Diversity Divide

SYDNEY—When it comes to leadership, gender shouldn’t be an issue, but it is—a business issue. New research from Development Dimensions International (DDI) shows that organisations can benefit from addressing why and what to do about it.

This report Ready Now Leaders: Cultivating Women in Leadership to Meet Tomorrow’s Business Challenges consists of responses from 1,528 human resource executives and 3,452 women leaders around the world.

Many organisations are making serious efforts to attract and retain women, but so far there hasn’t been clear evidence of the best approaches to tackling the female leadership shortage. Some of the key findings of the research include:

 

Gender Diversity Pays Off—Organisations with Better Financial Performance Have More Women in Leadership Roles

Gender diversity is good for business. Organisations in the top 20% of financial performing organisations indicate 37 percent of their leaders were women, almost double the amount (19 percent) of female leaders in the bottom 20%.  

Data from more than 13,000 leaders in our Global Leadership Forecast Research found no significant differences between men and women related to skill and ability yet women are still represented in leadership much lower than men.  

 

Does Australia Really Embrace Diversity?

Australian organisations indicate a third (33 percent) of their leaders are women. Top financial performing organisations are twelve times more likely to have gender balance in their leadership ranks, with women in at least 30 percent of leadership roles. Mark Busine, Managing Director for DDI Australia highlights “While Australia sits slightly ahead of this critical point; we still fall behind the World Bank Group average for women in the global workforce (41 percent) and the Philippines and North America”.

“It provokes questioning, if women in leadership is good for business and with so much focus in the country on female leadership, introducing quotas, extensive media coverage etc how much do Australian organisations really embrace the concept of diversity? Most people and organisations will generally agree that diversity is a good thing. But until actually confronted by the reality of it, why don’t we see as many women in leadership roles? In a hiring situation for example, people tend to hire for likeness or qualities they find in themselves. When building teams or working with others do we openly and willingly address our own potential biases and tendencies to work with similar people or involve others and support new ways of doing things?” Mark comments.

“Rather than focusing on gender, culture or generation, a leadership style that focuses on “Gen I”—the individual. What works for one employee may not work for another, and likewise not all “women” can be motivated and inspired by one particular approach. Robust systems that reduce the chance for bias and open access to opportunities are how organisations can truly begin to embrace diversity”.

 

How Industries Stack Up in Gender Diversity

Industries having more female-dominated workforces such as health care, education, and retail; had the highest representation of women leadership. Only eight industries currently reach or surpass the critical percentage of women in leadership linked to top performing organisational financial performance which includes; business services, financial services, pharmaceuticals, insurance and consumer products plus healthcare, education and retail. “These are predominantly the main industries in the Australian market—which explains in some cases why we fair slightly better than other markets for higher percentages of women in leadership” adds Busine.

 

Confidence, Not Competence is the Key to Narrowing the Gap in Self-Perception

The research found that men were more likely than women to rate their leadership effectiveness compared to their peers as high at all levels (first-level, higher-level, senior) except at the middle level. Mark comments “What we found across the sample was that there was no significant difference in their leadership abilities, men and women are equally as competent but women are found to be less confident in their own abilities”. The confidence gap between men and women begins early in their careers before almost tripling at the senior leader level.

“Many of the predictors of confidence that emerged from the research are just basic, good development practices, or results of effective development planning—regularly seeking development opportunities, feeling strong engagement and satisfaction with one’s role, having tenure and leadership experience and spending hours on leadership development. Better development matters” says Mark. The impact of better development is evident. Women in organisations with high-quality development programs are 21 percent more likely to be highly confident in their leadership ability—more than 5 times the increase for male confidence levels with access to high-quality development programs. Organisations can reap the rewards of more confident women too. Women are more likely to be engaged in their roles (11 percent more) and less likely to indicate an intention to leave (67 percent) with good quality development programs. 

 

Talent Practices That Lead to More Women in Leadership

The research found seven talent practices that were strong influencers on the percentage of women in leadership. “When reviewing the practices, it is evident that they are a combination of widely known best talent management practices across selection, development and succession management practices. Irrespective if you put a focus on women, the data shows that good HR practices will lead to better selection and development and open up access and opportunity for gender diversity, and diversity in general. By having robust and objective practices in place you eliminate the natural bias or subjective approaches that can occur in identifying, developing and growing talent” Mark says. While men also benefit, women at organisations with high-quality development programs report being 36 percent more satisfied with their roles and 70 percent less likely to leave their organisations (compared to 30 percent and 65 percent respectively for men).

When compared, initiatives aimed specifically at women have less impact than formal talent programs. Initiatives focused on female leaders are 7 percent more likely to have women in leadership than those that don’t. However, organisations that strongly support mentoring will have almost double that in women in leadership (12 percent) whilst organisations that strongly support programs such as high potentials are three times (21 percent) as likely to have women in leadership. Organisations that do have initiatives focused on women should continue but supported by a foundation of strong talent programs. Organisations should focus on driving leadership systems that promote and sustain universal, high quality development and growth opportunities for all leaders.

 

Access the full report here: Ready Now Leaders: Cultivating Women in Leadership to Meet Tomorrow’s Business Challenges

Available for interviews: Mark Busine, DDI Australia Managing Director

About Development Dimensions International

Founded in 1970, DDI is a global talent management consultancy that helps companies transform the way they hire, promote and develop their leaders and workforce. DDI’s expertise includes designing and implementing selection systems and identifying and developing frontline to executive leadership talent. Clients include half of the Fortune 500 and multinationals doing business across a vast array of industries from Berlin to Bangalore and everywhere in between. We serve clients from 42 DDI-owned or closely affiliated offices.

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