Gender diversity is much more than an issue of social justice — it’s strategic. It can be very difficult to assemble the best talent at an organization without drawing from a complete talent pool that is equally representative of men and women.
But countries like Canada have a long way to go in achieving gender equality in the workplace. Canada holds the seventh largest wage gap of the 35 countries that make up the Organisation for Economic Co-operation and Development. In an interview with The Globe and Mail, Sarah Kaplan, the Director of the Institute for Gender and the Economy at the University of Toronto’s Rotman School of Management, called the gender wage gap “outrageous” and stated that “we’re kind of stuck,” acknowledging that the problem is not disappearing anytime soon.
On a larger scale, the World Economic Forum estimates that it will take 170 years for the gender wage gap to close. A 2015 report entitled “Women in the Workplace,” created by global consulting firm McKinsey & Company and LeanIn.org, estimates 100 years for equal representation in the senior executive suite, or C-suite.
A diverse management will produce a diverse array of ideas for business decision-making processes, which is correlated with enhanced financial performance. Based on a study completed last year by PricewaterhouseCoopers (PwC), a multinational professional services firm, Canada would experience an approximated $105-billion growth in Gross Domestic Product by closing the wage gap and increasing female participation in the workforce.
A common explanation presented for the wage gap — and used to combat the idea of enforcing gender parity policies — is that women leave the workforce for personal reasons and are unable to progress to senior positions as a result. This is largely a misconception; McKinsey & Company senior partner Eric Kutcher states in a podcast that women have a greater likelihood of remaining with their firms than men.
The role of societal pressures in determining a woman’s career trajectory also cannot be understated. Women in business often encounter difficulties when attempting to juggle family and work life, and competing obligations can result in a hit to their professional careers.
Examining gender parity in line roles compared to staff roles also brings this to light. It is possible that societal pressures create limitations that result in women taking on roles that are more flexible, but less likely to lead to the C-suite. Line employees have authority over achieving the organization’s main goals, whereas staff employees provide line employees with special assistance and expertise. The McKinsey study found that although the gender differences between these positions are initially immaterial, over time, more women end up holding staff roles that limit access to senior leadership positions.
There is clearly a gap between what firms say they want to accomplish and what is actually being done. Kutcher estimates approximately 75 per cent of human resources representatives list diversity as a top priority for their companies, though only about a third of CEOs and approximately 20 per cent of managers at lower levels do the same. Since the reporting structure within workplaces is scaffolded to give more senior managers decision-making power, there is a risk that gender diversity policies will be implemented at lower rates.
Fortunately, even though progress may be slow, there are initiatives that go beyond lip service by setting quantifiable measures. PwC has set a goal to make half of its new partners women by 2020. On International Women’s Day this year, Iceland announced that it would require organizations with over 25 employees to prove they provide equal pay regardless of gender, sexuality, or nationality — the first country in the world to do so.
Many firms also participate in Rotman’s Initiative for Women in Business, which offers programs for women at different authoritative levels. The Emerging Leaders program, for example, assists women in middle management levels to learn skills that will help them progress into more senior roles.
Firms should also provide more mechanisms to enforce their policies by setting quantifiable goals and holding themselves to a greater degree of accountability. In 2015, only 14 per cent of the companies listed on the Toronto Stock Exchange employed a formal policy to increase female representation on boards, as recommended by securities regulators. In fact, most of these firms neglected to incorporate gender diversity policies altogether.
The path to closing the gender wage gap and increasing workforce gender diversity requires initiatives by both governments and businesses. Meanwhile, it is important for students to be aware of what firms are doing to improve gender diversity within their workplaces, particularly for female students making strategic decisions about where they will pursue a career. We can be a part of the solution by engaging in conversation about gender diversity issues in the workplace and raising awareness about this issue in Canada.
Naveli Gandhi is pursuing a Graduate Diploma in Professional Accounting at the Rotman School of Management.
