Gender inequality in top jobs

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Written by David B Horne on 27 September 2022 in Opinion
Opinion

David B Horne investigates cognitive bias and its effect on women’s access to education and career opportunities

Cognitive bias is driven by subconscious thinking and has an impact on how people observe, interpret and analyse what their senses are taking in from the world around them. It affects how they reach conclusions. Bias is not only relevant to the conclusions people draw, but also to what information they pay attention to or choose to ignore. In effect, they construct a reality based on their thinking rather than the inputs from the world around them.
 
In 2021, across Europe women made up 46% of employees, yet only 35% of management roles were filled by women. The rates of women in management are higher in Africa, Southeast Asia and Latin America, and lower everywhere else. Rarer still are women in the top job with the largest companies: just 8% of CEO roles at the largest publicly listed companies in Europe were held by women. 
 
Bias starts from a very young age. Consider the nature versus nurture debate about children’s development. New-born babies do not show signs of bias. It is very much a nurture issue. It starts when children are young, and it stays with them into adulthood. A study commissioned by LEGO found that girls feel more confident about engaging in all types of play but are still held back by gender stereotypes as they grow older. In many cases, it is the parents who are driving the biased behaviour:
 
“Parents from this study are almost five times as likely to encourage girls over boys to engage in dance and dress-up activities, and over three times as likely to do the same for cooking/baking. Adversely, they are almost four times as likely to encourage boys over girls to engage in program games and sports and over twice as likely to do the same when it comes to coding toys.”
 
Bias continues into their adult lives and into the workplace. It plays a significant role through the impact of childcare on people’s careers. In many countries around the world, access to childcare is both difficult and expensive, and in some cases, the cost of childcare is greater than what the parent can earn by going back to work. As a result, one of the parents is forced to stay at home. Historically, in the vast majority of cases that parent was the mother, and it has impacted on her future career progression. 
 
The cold hard facts say it all: gender diversity is good for business
An article published in Harvard Business Review found clear evidence from around the world that the longer mothers take for maternity leave, the lower their opportunity for a promotion or pay rise after returning to work; similarly, that longer periods of parental leave lead to the perception the parent is less committed to their job.
 
In most cases, bias is unintentional and occurs without the person displaying it even being aware of it. Blissful ignorance, one might say. 
 
This needs to change, because there is clear evidence that gender diversity in senior management leads to significant outperformance. In a study that analysed the constituents of the MSCI ACWI index (nearly 3,000 large and mid-cap publicly listed companies across 48 countries in the developed and developing world) researchers found that companies with low diversity in senior management had profit margins of less than 10%, while companies with high diversity had profit margins of more than 13%. That is outperformance by a third.
 
Beyond any woolly cries about fairness or the requirements on companies to comply with ESG legislation, the cold hard facts say it all: gender diversity is good for business. Yet still, the percentage of women in top management roles lags far behind their male counterparts. 
 
The clever companies recognise this and are taking action to further promote women. The less gender diverse companies may one day be taken over, and their switched-on acquirers will unlock significant economic value by promoting women into management roles and driving higher profitability.
 
David B Horne is founder and CEO of Funding Focushttps://www.funding-focus.com and the author of two books: Add then Multiply and Funded Female Founders.
 
Other sources 

Dror, IE (2020) ‘Cognitive and Human Factors in Expert Decision Making: Six fallacies and the eight sources of bias’ (Analytical Chemistry, 92, pp 7,998– 8,004) 

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