Nonprofit, nonpartisan journalism. Supported by readers.

Community Voices is generously supported by The Minneapolis Foundation; learn why.

Bottom line: Women are the overlooked advantage for business success

It doesn’t take a fortune teller’s crystal ball to divine critical pressures confronting today’s business leaders. Read more… By Nancy M. Carter, Ph.D

Editor’s note: This article is reprinted by permission of “B. — The Magazine of the University of St. Thomas Opus College of Business.”

It doesn’t take a fortune teller’s crystal ball to divine critical pressures confronting today’s business leaders. Take your pick:

• Keeping pace with the exponential curve of new technologies and products

• 24/7 customer demands

• Increasingly critical link between business and ecosystems — water scarcity, climate change, habitat change

• Juxtaposition of unrelenting globalization against the difficulties of managing cross-cultural differences and coordinating across boundaries and time zones 

None of these is easy to solve. But equally challenging is the looming global talent shortage. Fortune 500 leaders at a recent Catalyst CEO-Summit[1, see footnotes below] concurred — the scarcity of talent ranks near the top of the “pressure list,” and solving it is critical to their companies’ future competitiveness.

The need for workers who can act innovatively and have appropriate skills, language abilities, and leadership experience has never been at a higher premium. Yet, in many regions of the world aging populations and low fertility rates portend an unprecedented dearth of skilled workers prodding governments and businesses to reevaluate immigration policies and work with aging employees to postpone retirement.

Ironically, the ominous talent shortage is compounded by businesses that have yet to create fully inclusive work environments in which all employees are developed and utilized. Savvy leaders at forward-thinking companies recognize that solving the talent shortage will require more than just focusing on recruitment. They recognize that attributing the talent shortage to the employee shortage in the marketplace is naive. The challenge also involves an under developed pipeline of talent within the company and an overly narrow definition of what “talent” looks like in terms of gender, race, ethnicity, nationality, religion and age.

At precisely the time companies confront a severe talent shortage, inhospitable work environments risk unprecedented turnover and difficulty recruiting employees reluctant to join companies that haven’t demonstrated commitment to talent engagement.  

In today’s ever-flattening, ever-widening marketplace smart companies know that:

• Winning new markets means winning new talent

• Ensuring long-term sustainability means fully developing the talents of all employees

• Diversity, in senior leadership and the pipeline means:

• A broader scope of ingenuity and innovation

• A wealth of perspectives and expertise

• An increased potential to attract new customers and tap into diverse markets

• And, enhanced company financial performance

The workforce of the future will be decidedly different. In the United States alone, estimates are that between 2006 and 2014 more than 68 percent of new entrants to the workforce will be women and people of color[2] — a bonanza of talent if stereotypes of what constitutes “talent” are eradicated.

Already women in the United States represent more than 50 percent of managers and professionals. Yet in senior leadership, where the talent shortage threat is most severe, they are dramatically underrepresented. Catalyst’s 2007 censuses of Fortune 500 leaders[3] indicates that women represented just 15.4 percent of corporate officers and a paltry 2.6 percent of CEOs — numbers signifying that giving women opportunities can result in immediate gains in closing the talent gap.

When confronted with these numbers leaders often ask, “Should I build the business case for women in leadership in my company?”  My response — “That’s the wrong question. The right question is why not?”

Having women in senior leadership correlates with company financial performance — and not just by a little. Both return on equity and total return to shareholders was nearly 35 percent higher, on average, among companies with the highest representation of women on their top management teams[4].

And when women are well represented in the boardroom, the financial advantage is even more pronounced.  Companies with the highest number of women on their boards outperformed those with the fewest, having, on average, a return on equity 53 percent higher, return on sales 42 percent higher, and return on invested capital 66 percent higher[5].

Whether or not to have a diverse workforce in the future is not an option for companies. Work will be more global, diverse and immediate. The opportunity to narrow the talent gap by creating workplaces where all employees cac contribute to business success is both immediate and obvious. Promoting women and other underrepresented groups is not only the right thing to do, it’s the smart thing to do.

Nancy M. Carter holds the Richard M. Schulze Chair in Entrepreneurship, and serves as vice president of research for Catalyst Inc.


[1] 2007 Catalyst CEO Summit:  Preparing Leadership for the Future.  San Francisco, CA., December 9th.
[2] Toossi, Mitra.  2007.  Labor force projections to 2016 — Civilian labor force, entrants and leavers, 1996, 2006, and projected 2016.  Monthly Labor Review.  November. (PDF)
[3] Catalyst. Census of Women Corporate Officers and Top Earners of the Fortune 500, 2007. Link 1 | Link 2
[4] Catalyst.  The Bottom Line:  Connecting Corporate Performance and Gender Diversity, 2004. Link
[5] Catalyst.  The Bottom Line:  Corporate Performance and Women’s Representation on Boards, 2007. Link

Want to add your voice?

If you’re interested in joining the discussion by writing a Community Voices article, email Susan Albright at salbright [at] minnpost [dot] com.