The Relationship Between Gender Diversity and Our Bottom Lines

  • Updated on: 10 Apr 2023
  • Published on: 11 Jun 2021
The Relationship Between Gender Diversity and Our Bottom Lines

The gender gap has been one of the toughest disparities to bridge over the past couple of years. According to the World Economic Forum’s Global Gender Gap Report 2021, closing the global gender gap has increased by a generation from 99.5 years to 135.6 years, especially now with the effects of Covid-19 in the limelight. Those are some staggering projections.

Taking a look at real-world examples reveals that this huge number is not exaggerated, but only reasonable. Even in relatively progressive countries of the West, such as Germany, women face a pay gap of about 17%, which is one of the largest in Europe. 

But it’s no secret that gender diversity is the need of the hour and crucial to making workplaces more inclusive, profitable, and innovative. But even if one were to take a cold, more statistical look at the challenge, they’d be surprised by what’s in store. Several pieces of research have concluded that there is a direct and strong correlation between gender diversity and productivity, and therefore – bottom lines. Like the famous phrase coined during Bill Clintons’ 1992 campaign – It’s the economy, stupid! – perhaps it’s time more people realized that gender diversity is more than a morally righteous call, it’s also a logically obvious decision.

Closing these gender pay gaps and encouraging equal participation in the workforce could help in increasing the size of the world economy by an astounding $160 trillion, according to a report by the World Bank. 

According to a report published by the Harvard Business Review, there was an overall 7% increase in a firm’s market value when they saw an increase on the gender diversity index by just 10%. Such examples illustrate the importance of a good relationship between gender diversity and our bottom lines, and how crucial it is for organisations worldwide to make their workplaces more inclusive. 

There are three major reasons why researchers believe gender diversity in the workplace has a direct and positive impact on bottom lines:

  • First, a diverse workforce that is inclusive and accepting is more attractive and feasible for a majority of talent
  • Second, a workforce with a greater gender diversity shows signs of competent and effective management, which is crucial for attracting relevant investors
  • Finally, gender diversity works on a deeper level – when an organisation values diversity, an interesting and unique exchange of diverse ideas occur, improving and optimising processes

Gender diversity cannot (and will not) be achieved overnight, especially in male-dominated sectors such as technology, energy, and construction. These sectors struggle with diversity efforts due to the fact that men’s contributions are generally recognised on a greater scale and level compared to their female counterparts, as discovered in a 2018 report from Namely, a US-based HR platform. Even though women make up about 50% of the working-age population, their work and effort are often unacknowledged and underrepresented, ironically in the top roles of the workforce. 

Organisations, however, can learn from these statistics and take up opportunities presented by gender diversity policies, which are advantageous to both the workforce when it comes to productivity as well as employee satisfaction. As companies become more gender diverse and inclusive, they pave way for: 

  • Higher employee retention and satisfaction
  • Greater and more room for innovation
  • Accessing and opening untapped business opportunities 
  • Significant improvement in decision making when it comes to teams

Several studies also show that the strong relationship between gender diversity and the bottom line is mutually empowering and advantageous, with diverse teams making more well-informed business decisions at the managerial and executive levels. These gender-diverse teams made business decisions that were well-framed with clear and articulate goals, sufficient information, and a series of alternative routes and options to steer clear from groupthink. 

According to Jackie Vandebrug, the managing director at U.S Trust, there is a growing body of research that states and proves that female leadership and gender diversity help the bottom line. 

Growing organisations must recognise the importance, significance, and relevance of gender diversity in the workplace to create work environments that are more inclusive and nurturing, to leverage the plethora of benefits that come along with doing so. Organizations will definitely benefit a great deal from such practices, while also being able to include more diverse viewpoints, perspectives, and insights.

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