Improving the balance of men and women at all levels in science, technology, engineering and manufacturing is good for business.
That is a simple statement, the truth of which is increasingly acknowledged. Nearly every employer now understands that prioritising diversity and inclusion is good management practice. However, this is not just about being recognised as a genuinely equal opportunities employer, about being seen to be fair and socially responsible or about keeping up with wider cultural change. It goes beyond that.
Recruiting, retaining and promoting more women is a business imperative. It is a matter of leadership. Ultimately it is a bottom-line issue.
Organisations that lead the way on gender balance so often also lead on performance and even profitability. Organisations that ignore gender balance risk putting themselves at a competitive disadvantage. We are not, of course, saying that all this is simple cause and effect. The components of success are complex. But the correlation between improved diversity and business results is striking and should give every leader pause for thought.
We invite you to consider some of the evidence.
Beating the skills shortage
The most immediately pressing reason for reaching out to women scientists, engineers and technologists is that, at a time of continuing skills shortages, companies cannot afford to do otherwise.
A report by the Royal Academy of Engineering’s Diversity Leadership Group (Diversity and Inclusion in Engineering, 2015) shows that employers acknowledge this as the most important business case for diversity, with 96% anticipating future difficulties and wanting to broaden the recruitment pool.
This is not merely about initial recruitment. Successful firms recognise the cost of losingtalented and experienced employees once hired and know they should make the best use of all the skillson their books, with opportunities for progression equally open and equally encouraged among both men and women. This requires inclusive policies and practices.
Research by Gallup, cited in The Business Case for Engineering, showed that companies with a more inclusive culture found it easier to recruit women initially and that more diverse workplaces had a 22% lower turnover rate.
“With a shortage of skilled staff, excluding half the population as a possible source of talent for the sector makes no sense.” (Louise Stokes, Digital Leaders, Women in Tech, 2017 Attitudes Survey)
Increasing innovation, creativity – and productivity
Improving the gender balance and establishing a more inclusive culture within an organisation have the potential to transform the business. Employers tell us that mixed teams bring wider experience, different ways of thinking and fresh approaches to problem-solving – all necessary to meet the new challenges in many industries.
The Royal Academy of Engineering reports that 83% of engineering organisations see “enhancing capacity for innovation and creativity” as one of the top reasons driving diversity and inclusion work. Their view is that including people with different backgrounds, perspectives and experience delivers a broader collective intelligence and creativity, and that ensuring that all employees feel included improves their engagement and productivity.
Similarly research from Aston University shows that creativity, problem-solving and lateral thinking are enhanced through more diversity, while work by Deloittesuggests that companies with inclusive cultures are six times more likely to be innovative and to anticipate and respond effectively to change.In particular, when leaders demonstrate an inclusive approach, employees are more likely to report feeling engaged and more productive. (Inclusive Leadership: culture change for business success, Opportunity Now and Shapiro Consulting)
Moreover, the National Bureau of Economic Research reports that patents granted to mixed-gender teams are cited 30-40% more often than those from all-male teams, while an international study referred to by the Institute for Women & Technology shows that including more women on a team increases group experimentation, confidence and efficiency.
In many companies, marketing and customer relations are also likely to benefit from improved diversity. McKinsey & Company report that, with purchasing decisions increasingly made by women, firms with diverse leadership teams are likely to have a better understanding of marketing behaviour.
“Bringing women into software development can introduce an extra dynamic. Women often bring a more detailed approach and that can make for better teams.” (Conrad Langworthy, Head of Sky’s Software Engineering Academy)
“This could be seen as just a ‘nice thing to do’, but it’s been recognised as a business imperative, which drives higher performance. That’s why it’s being rolled out from the top down.” (Camilla Barrow, deputy project manager on Crossrail project, Bechtel)
Improving financial performance
The evidence that all of this feeds through into hard results is difficult to ignore.
According to McKinsey, there is a significant link between diversity and financial performance, with companies in the top quartile for gender diversity being 15% more likely to have financial returns above their industry’s national median.
Technology companies reap particular rewards from gender diversity. Over five years, highly diverse tech companies showed average yearly returns 5.4% higher than those with less diversity. In other industries, the uplift was 1-2% (Morgan Stanley, 2016). According to the Journal of Economics and Management Strategy, shifting from an all-male or all-female office to one that is evenly split along gender lines could increase revenue by over 40% (referred to in the Women in Technology 2017 Attitudes survey).
Diversity at the most senior levels has a marked impact. For every 10% increase in gender diversity on the senior executive team, earnings before interest and tax rose by 3.5% (McKinsey, 2013). For companies with at least three female directors on the board, the return on invested capital is 66% higher than for other companies and the return on equity 53% higher (research from the Carnegie Institute and Cranfield University).
The chairman of UBS’s global investment committee, Mark Haefele, has said that enormous extra returns can be expected from investing in companies with more women in senior jobs: “Our gender-focused company basket out-performed the MSCI World Index [covering 1600 large and mid-capital companies in 23 countries] by 2% a year on average between 2011 and November 2017.” (Daily Telegraph, 15 December 2017)
“In any complex business environment, companies with a strong representation of women on their boards increase their chances to out-perform competitors.” (Marie-José Nadeau, Chair of World Energy Council and EVP of Corporate Affairs, Hydro Québec)
Companies within the STEM sector are increasingly recognising the strength of the business case for diversity. It’s why more and more of them are working with WISE to maximise women’s contribution at all levels. Join us and find out how a better gender balance can boost your organisation’s productivity and performance.
The business case for gender balance:
- Better choice of skilled workers
- Better platform for innovation and creativity
- Better workforce productivity
- Better customer experience
- Better financial performance