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USP-D White Paper Women in Management


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USP-D White Paper Women in Management

  1. 1. Carmen Klann White Paper Women in Management – A fashionable talking point, or is a mental U-turn needed to achieve successful company leadership for the long term?
  2. 2. Management requirements throughout the course of industrialization In his book ’Quiet Leadership’ (2006), David Rock highlights how much the requirements for employees and leadership have changed in the past hundred years. At the start of industrialization, employees were paid first and foremost for their physical working strength. This was also reflected in attitudes towards leadership and further education. The primary function of the management was to optimize physical processes, so as to generate the maximum possible performance from the working strength of the individual. During the 1920s, industry became increasingly mechanized. With advancing industrialization, the issue of process optimization came to the fore. Now, the employees and managers that were most in demand were those with structuring capabilities and a strong focus on process-related approaches. Today almost all processes have reached the limits of their optimization, and so increasingly, a different management attribute has gained in importance. Management members in matrix organizations, now more than ever, have to be able to involve employees in operational processes in a participative way, so as to make optimal use of all their intellectual resources and gain an advantage over the competition. Calls for a transformational leadership style have been growing ever louder. Unfortunately, many of today’s managers are still clinging on too firmly to process-driven thinking and management. Is there a difference between male and female leadership? Studies prove that there is no single ’male’ or ’female’ leadership style. But it has been demonstrated that women tend to focus more on providing support and encouragement as part of their day-to-day management behavior. These are two central aspects of the transformational leadership style which encourages employees to deliver maximum performance. This leadership style, based on trust and respect, stimulates employees to solve problems creatively and to continuously develop. This provides the basis for optimal utilization of the employee’s intellectual and creative potential. Studies also show that management in male-dominated structures is evaluated in a masculine way. This lays the groundwork for structural discrimination and gender stereotyping: both of which work counter to a self-regulating increase in the proportion of women at management levels. 2© USP-D 2013 / Carmen Klann: Women in Management – A fashionable talking point, or is a mental U-turn needed to achieve successful company leadership for the long term? The development of management styles in response to increasing industrialization
  3. 3. The effects of increasing the proportion of women at top management levels The fact that women are more likely to practice the transformational style of leadership could be one reason for the demonstrably positive effect that a higher proportion of women at management levels has on a company’s results. (Source e.g.: McKinsey study, Women Matter 2010) The following graphic shows how companies with three or more women in top management positions achieve better results, in all of the nine organizational aspects, than companies without women at top levels of management. Figure 1: Source, McKinsey, “Women Matter 2010” The McKinsey study also showed that companies with a higher proportion of women at top management levels demonstrate better financial performance. Figure 2: Source, McKinsey, “Women Matter 2010” 3 Why it is beneficial to appoint women at top management levels © USP-D 2013 / Carmen Klann: Women in Management – A fashionable talking point, or is a mental U-turn needed to achieve successful company leadership for the long term?
  4. 4. The current percentage of women at management levels in European companies Figure 3 shows that Europe as a whole still presents a very sobering picture when it comes to the proportion of women at management levels in Europe’s top 200 companies. Figure 3: Source: EU Commission database on men and women in decision-making positions. Percentage of women in management positions in Europe’s top 200 companies, 2011 How can it be that Despite compelling reasons for an increased deployment of women at management levels, they are still significantly underrepresented? In the face of demographic change, women are still not being fully utilized as a resource? The percentage of women at management levels in the various countries of the EU is still sobering, despite the fact that politicians have been discussing the issue of equality since 1957 and endeavoring to find ways to optimize it? As well as illustrating the clear underrepresentation of women as a whole, Figure 3 also shows that most Scandinavian countries are significantly ahead of the other European countries. One reason for this could be that Scandinavian countries have better policies relating to the family. However, it is also striking that Norway stands out even amongst the Scandinavian countries. How can we explain this difference? 4 Why isn’t a voluntary undertaking on the part of companies sufficient for women to become established in top management positions? © USP-D 2013 / Carmen Klann: Women in Management – A fashionable talking point, or is a mental U-turn needed to achieve successful company leadership for the long term?
  5. 5. One explanation could be that Norway was the first European country to introduce a legal gender quota, in 2003. The quota was set at 40% of women (and men). After a two-year transition period this was backed up by an administrative fine for noncompliance, defiance of which could lead to compulsory liquidation. Studies also show that voluntary undertakings without penalties for noncompliance appear to have no effect on raising the representation of women. This indicates that a political tool only has an effect if there is a significant consequence attached. The question that now presents itself is: in the medium term, can companies actually financially afford to wait for politicians to introduce compulsory measures? How can companies wanting to tackle the issue of the advancement of women independently of political targets press ahead with optimization, so as to make use of the benefits shown at the start of this document? Approaches for optimizing the representation of women Many companies trying to optimize the representation of women at their company focus their efforts on recruiting. This is an important first step, but studies also appear show that the long-term effect that this has on raising the proportion of women at a top management level is barely discernible. Figure 4: Source, McKinsey, “Women Matter 2010” 5 Is targeted recruitment sufficient as a means to increase the representation of women? © USP-D 2013 / Carmen Klann: Women in Management – A fashionable talking point, or is a mental U-turn needed to achieve successful company leadership for the long term?
  6. 6. Effective tools for achieving an increase in the representation of women at the company? Studies have shown that there are three starting points for influencing the representation of women at a company. Being able to advance To achieve a consistent advancement of women, it is essential to identify potential at an early stage, and develop women in a targeted way based mid- and long-term succession planning. This does not mean that the same is not necessary for male employees. However, the fact is that in most European countries the issue of planning a family, and the associated childcare, is still for the most part considered a ‘women’s issue’. This often has the result that women who have not been given a clear outline of their career prospects an early stage can at a certain point in their lives see starting a family as an escape route from their apparent lack of professional prospects. Companies could benefit from introducing career planning workshops or development centers at an early stage for all young management personnel; these would provide an objective screening of capabilities and potential, and allow purposeful development and transparent career planning to be established. Wanting to advance Here, the image which women themselves hold concerning the compatibility of family and a career plays a central role. On the one hand, not every woman wants to build up a career; on the other hand, it is often still the case that the responsibility for family organization falls implicitly to the woman. 6 Alternative starting points for increasing the representation of women © USP-D 2013 / Carmen Klann: Women in Management – A fashionable talking point, or is a mental U-turn needed to achieve successful company leadership for the long term?
  7. 7. It is important to identify the aspects which affect the ’wanting to’ advance. Are they genuine obstacles, or are they actually assumptions about role expectations, and anticipated problems? It is also important to clarify the extent to which the company is in a position, and willing, to offer women a positive, supportive framework for the ’wanting to’. (Childcare, flexible working models, etc.). In light of the aforementioned demographic change it would be wise in future to create more options for real compatibility of family and career. In this context it is important to note that there are virtually no discernible differences in performance between women in part-time work and their male colleagues. However, they do differ in that women invest hardly any time in maintaining their own personal network. Can the absence of personal networks really have such an effect within a formal, performance-oriented business organization? If the difference between careers is not caused by the presence of performance, but by the absence of personal networks, then something is amiss and it is not a truly performance-oriented organization. One remedy could be to formally establish special mentoring programs for women, and to encourage them to establish personal networks. Being allowed to advance This area is probably the most problematic, but also the most crucial element in the efficient and consistent advancement of women in companies. Alice Eagly and Linda Carli (2007) showed in their studies that it is not simply a case of women failing when they hit the ‘glass ceiling” of a company’s top management levels. In fact, there are many stumbling blocks that beset the female career path on the way to the top. It appears that ingrained male rituals and gender-specific stereotypes have a stronger influence on the career path than performance itself. Companies that want to make serious headway with respect to their advancement of women need, as a first step, to examine critically whether there are any barriers to the equal advancement of women that are entrenched within the company itself. What does the DNA of the company look like, in terms of diversity? Studies show that consistently enforcing the equality of men and women also changes the requirements of the leadership ideal. In Germany, the ideal of the strong-willed, commanding and decisive manager is often still prevalent. In Sweden on the other hand, the ideal manager is more often described as team-oriented and motivational, relying on intuition and striving for consensus. Apart from the fact that the Swedish ideal is more along the lines of the transformational management style described as the start of this document, it is clear from a direct comparison of the two management ideals that Germany tends to prize qualities that are more typically male, while Sweden prizes qualities that are more typically female. If you continue this line of thought it is clear that these management ideals will naturally have a huge influence on recruitment and development. 7© USP-D 2013 / Carmen Klann: Women in Management – A fashionable talking point, or is a mental U-turn needed to achieve successful company leadership for the long term?
  8. 8. So in order to put careers for women and men on an equal footing, companies need, as a first step, to undergo a critical evaluation to highlight what structural stereotyping and masculine rituals are common practice at the company, threatening to undermine all the well-intentioned efforts made towards equal career advancement. Summary As women at top management levels have a demonstrably positive effect on a company’s performance, and as political mechanisms that produce measurable results take effect only very slowly, companies should develop their own definition of equal advancement for women, independently of any formal sanctions. This requires a strong company management which is prepared to work on more than just the formalities of the issue. Instead, a new forward- looking leadership ideal should be established, with the full commitment of top management, resulting in a consistent identification and elimination of old barriers and stereotypes. A company that targets all three starting points for the advancement of women (being allowed to, wanting to, and being able to advance) has excellent prospects of optimizing use of the company’s resources, and ensuring the company’s competitiveness for the future. 8 Author: Carmen Klann USP-D Deutschland Consulting GmbH Moltkestraße 101 D-40479 Düsseldorf Tel. +49 (0)211 913 697 00 Fax +49 (0)211 913 697 10 USP-D Consulting GmbH Winckelmannstraße 8/6+7 A-1150 Wien Tel. +43 (0)1 585 55 94 Fax +43 (0)1 585 62 26 Gender diversity has to be enforced from the top down, if it is to become established from the bottom up. © USP-D 2013 / Carmen Klann: Women in Management – A fashionable talking point, or is a mental U-turn needed to achieve successful company leadership for the long term? / Image source: @Sean Prior /