Catalyst Blog

Change has flatlined—women are no further toward achieving top ranks in business than they were last year, or even six years ago. Yet equality can’t wait.

Our latest census of women atop the Fortune 500 shows continued stagnation. Men hold a staggering 83.9% of corporate board seats, 85.1% of Executive Officer positions, and 92.5% of top earner positions. While I applaud the hundreds of companies that have achieved real results, others haven’t gotten the message that valuing talented women is not a “nice-to-do,” but a “smart-to-do.” We found that 56 companies in the Fortune 500 had zero women directors and that 136 Fortune 500 companies had zero women executive officers.

These new numbers are deeply disappointing. Some companies are still sitting on their hands. It’s time to commit to action, and the best time to jumpstart this change is now.

Here’s why.

Today’s tough economic times present an opportunity. Our latest report in our Bottom Line series tracked profits at leading companies through 2008—one year into the global recession. We found that companies with three or more women board directors in four of five years outperformed companies with zero women on their boards by on average 84% return on sales, 60% return on invested capital and 46% return on equity. Given the clear correlation, it’s no wonder that Goldman Sachs recently found that closing gender gaps would yield a 9% bump to U.S. GDP!

And it’s not just about the money. Companies with more women board directors are linked to more women corporate officers five years later, and correlated with increased corporate philanthropy. In short, it pays to have women as a key part of the leadership team.

So let’s get to work and root out sexist stereotypes that impact talent management systems. Set targets with accountability, especially around proven solutions like sponsorship. And dump the myths about women’s capabilities and ambitions—our research shows that they are wrong.

When US corporations finally take their place as leaders on gender parity and advancing women in business, the benefits will spread across the globe for women, men, families, employers, communities, and societies. Defy assumptions and lead with real action.

Enough lip service. It’s what companies do that really counts.

Women drive economies. The flood of women into American workplaces over the past four decades has boosted U.S. GDP by at least 25%, and eliminating the remaining gender gaps could bump up our GDP another 9%. But where are the women?

Find out Wednesday, December 14, 2011, when Catalyst unveils our latest count of women in Fortune 500 boardrooms and C-suites. At 12pm EST, we will be holding our first official Tweet Chat to discuss the latest stats. For more information on the chat—and for the latest news on women, work and equality—check out today’s C This.

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Tweet With Catalyst

I’m thrilled to invite Catalyzing readers to join our Tweet Chat on December 14 at 12pm EST to discuss the release of the 2011 Catalyst Census: Fortune 500. Rachel Soares, Senior Associate, Research, will lead a conversation regarding the latest census of women directors and executive officers at Fortune 500 companies. Follow along via Twitter.com or use Tweetchat.com for a more streamlined view of the discussion. Please use the hashtag #ChatCat for every tweet you send during the event. Happy tweeting!

Roaring Engines

Closing gender gaps in employment can drive the world economy to new heights. New research from Goldman Sachs shows that eliminating gaps can boost the euro zone’s GDP by 13% and Japan’s by a staggering 16%. So what are we waiting for—let’s get to work!

READ: “Closing the Gap,” The Economist, 11/26/11

Best of the Best

This inspiring list of the Canada’s top women leaders in public, private and nonprofit sectors is filled with both new and familiar names. Among those who made the list are established executives like Elyse Allan, CEO of GE Canada, entrepreneurs like Margot Micallef, founder and president of Oliver Capital Partners Inc, and trailblazers including Jennie Carignan, a Colonel in the Canadian Forces.

READ: “Canada’s Most Powerful Women: Top 100,” Financial Post, 1/6/11

Stepping Up at Home?

A Census Bureau report on childcare found that 32% of fathers with working wives watched their children on a regular basis—an increase from 26% in 2002. Don’t fire the babysitter just yet, though. The same report found that families with a working mom and kids younger than 15 years old paid an average of $138 per week for childcare in 2010—up from $81 in 1985 (adjusted for inflation).

READ: “Recession and Its Aftermath Create More Mr. Moms,” The Wall Street Journal, 12/6/11

Meritocracy Mirage

An award-winning study involving 445 business managers found that personal biases can easily infect performance reward systems, even those explicitly defined as meritocracies. Tasked with dividing up a $1000 bonus among several equally skilled employees in a fictitious company, the managers gave, on average, $46 more to men. Researchers believe that when managers are told a meritocracy exists, they are less concerned about their actions being viewed as sexist. In turn, their biases surface and they reward men with more money.

READ: “Why Pay Bias Flourishes in Meritocracies,” Harvard Business Review, 12/1/11

It’s Time

Produced by Australia’s GetUp.org, this video brought many Catalyst staffers to tears. Hit play below, and be prepared to see some wonderful scenes of Sydney and a powerful message on marriage equality.

WATCH: “Possibly the Most Beautiful Ad for Marriage Equality We’ve Seen,” The Advocate, 11/25/11

Mandatory diversity?

A recent survey found that 41% of female directors surveyed in 26 countries support the idea of government quotas on the number of women on boards of directors. Only 13% of men supported the idea. Catalyst has found that quotas are one proven strategy on the road to parity—what do you think about government mandates on diversity?

READ: “Cause and Effect,” Financial Post, 12/6/11

Companies should have a conscience—gone are the days when profits, and profits alone, can grow a sustainable business. But how do smart companies boost their levels of corporate social responsibility (CSR)? As Catalyst’s Rachel Soares, Senior Associate, Research, explains, gender-inclusive leadership and increased CSR go hand in hand.

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What is the number one goal of a corporation? Seems like a foolish question—flip open any MBA textbook and the “right” answer is obvious: profit maximization. But is it really so simple?

If companies haven’t turned their ears to the Occupy Wall Street protestors yet, they should. The growing movement reflects an important trend in public opinion: 71% of Americans report an unfavorable impression of Wall Street and large corporations. It’s clear that while companies need to make money to survive, profit maximization, without regard to consequences or risks, is not a strategic business practice.

Cue corporate sustainability.

Through its focus on stakeholder relations, a key tenet of corporate sustainability is CSR, or corporate social responsibility—a consideration of the organization’s impact, both positive and negative, on the world. Companies committed to CSR pay more than lip service to their stakeholders, looking beyond the interests of quick-buck investors. They are positioned for long-term growth.

For members of Generation Y (that’s me), CSR isn’t just a passing fad. A company’s CSR activities are a visible way to judge their values. And one easily investigated metric—something that we at Catalyst measure for every Fortune 500 company each year—is the representation of women in senior leadership. Gender and Corporate Social Responsibility: It’s a Matter of Sustainability, a study I recently authored with Harvard Business School’s Christopher Marquis and Matthew Lee, shows that companies and society win when business leaders are gender-diverse.

My co-authors and I found that across a period of ten years, companies with more women board directors and more women corporate officers donated significantly more charitable funds than their less-diverse peers. Each additional woman board director translated to an added $2.3 million in annual philanthropic giving. And for every percent increase in woman corporate officers, companies gave an additional $5.7 million.

These findings can’t be explained away by factors other than gender diverse leadership. Women leaders still had a significant positive effect after controlling for financial performance, company size, and industry. While this could be a case of the chicken versus the egg, other research suggests that diverse leaders are employed before increases in CSR are observed.

So why might this be? We believe that operating with gender-inclusive leadership can provide diverse perspectives on fairness, which may broaden the company’s understanding of CSR and lead to greater philanthropy.

Obviously, CSR isn’t just about the quantity of philanthropic donations. The quality of initiatives is important too. We speculate that when leaders spotlight gender issues in their CSR strategies, for example focusing on the importance of women as customers and suppliers, they often position their organization for sustained growth, and the payoff extends beyond the company to society at large.

So the next time you are looking to invest, make a purchase, or take a job offer, consider the gender diversity of the company’s leadership. It might point you to a company that pays attention to its stakeholders, and not just the next quarter’s balance sheet.

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Rachel Soares conducts research on corporate governance and women in leadership, and oversees the annual Catalyst Census reports of the Fortune 500. She is also a member of Catalyst’s Work-Life Issue Specialty Team. Through her current role at Catalyst and prior positions, she has extensive experience working with quantitative and qualitative research methods in leadership, organizational change and effectiveness, and work-family contexts. She received her M.A. in Organizational Psychology from Columbia University, Teachers College, and her B.A. in Psychology and Sociology from New York University.

Study after study has shown how gender diversity on top correlates to greater company profits, but this isn’t the only argument for why organizations should advance women to senior ranks. It pays to diversify for an array of other reasons too. Here are my Top 5:

#1: More diversity, more innovation.

Using a sample of Fortune 500 firms, researchers found a positive relationship between board gender diversity and innovation.  They also observed a positive correlation between board racial diversity and both firm reputation and innovation.

#2: More women, fewer problems.

Analyzing 201 Norwegian firms, Sabina Nielsen and Catalyzing guest-blogger Morten Huse found that the ratio of women board directors was positively correlated with a decreased level of conflict.

#3: More women, stronger corporate ethics.

Every year, Ethisphere recognizes companies that demonstrate “real and sustained ethical leadership within their industries.” A study of the companies that make the coveted list found that they had an important factor in common: boards of directors with a high percentage of women.

#4: More women, more effective problem-solving.

A study by researchers from MIT, Carnegie Mellon University and Union College found that the number of women in a group of people significantly predicted the ability of the group overall to effectively solve problems.

#5: More women on top, more women in pipeline.

Studies by the RAND Corporation and Catalyst, among others, show a clear and positive correlation between the percentage of women board directors in a company’s past and the percentage of women top executives in its future. This suggests that one way to cultivate a healthy pipeline of women is to ensure that gender diversity starts on the top. The more women there—the more women everywhere!

Working moms earn a lot more than just a salary. According to a new study, children of working mothers have fewer behavioral problems and are less likely to be obese. Check out more myth-busting findings about working moms and dads—plus the latest stats and solutions around gender leadership gaps—in today’s C This.

Getting Hitched

On Sunday, July 24, 2011, New York became the sixth state to offer legal same-sex marriage. Don’t miss portraits of 20 couples who said “I do,” some interesting changes in wedding etiquette to consider and learn how travel providers are competing to draw gay honeymooners.

READ: “After Long Wait, Same-Sex Couples Marry in New York,” by Michael Barbaro, The New York Times, 7/24/11

Working It

A University College London study found no evidence that working mothers harm their children’s social or emotional development. In fact, the study revealed that the best arrangement for a child’s well-being was where both parents lived at home and worked.

READ: “Working Mothers ‘Do No Harm to Children’s Behaviour,’” BBC, 7/22/11

Fixing the Pipeline

In February 2011, Lord Davies of Abersoch called on FTSE 100 companies to set a target of at least 25% female board member representation by 2015. While generally lauded as a step in the right direction, some critics argued that Davies failed to address career challenges of mid-career women. “A focus on corporate culture should look at how ‘work’ can be done differently at all levels to strengthen the pipeline to the top and how to get women into the executive roles which feed into the board position world,” said Charlotte Sweeney, Head of D&I, EMEA, at Nomura.

READ: “The Davies Report: What Does It Mean for UK Women?” by Cleo Thompson, The Glass Hammer, 8/3/11

Few Asians at Top

Despite comprising roughly 5% of the U.S. population, less than 2% of Fortune 500 executive positions are held by Asian-Americans. What’s worse, roughly one-quarter of Asians surveyed said they face workplace discrimination.

READ: “Study Finds Asians Occupying Few Corner Offices,” by Kyle Stock, The Wall Street Journal, 7/25/11

Meaningful Change

How best to diversify boardrooms? Margaret Heffernan suggests six “rigorous and consistent” actions companies should implement right away, including term limits for board members and candidate lists that include 50% women.

READ: “More Women on Boards: A Great Goal, But…” by Margaret Heffernan, BNet, 7/27/11

Inspiring Entrepreneurs

You may have heard of Pepsi’s Indra Nooyi, but what about Kiran Mazumdar-Shaw? Kiran is the founder of Biocon, a biotechnology company based in Bangalore, India, who was recently named one of Time’s 100 Most Influential People in the World. Want to learn more? Here’s a quick primer on the Indian businesswomen leading the way.

READ: “Five Most Admired Women Entrepreneurs in India,” Silicon India, 7/20/11

New research shows that 29 companies in the Standard & Poor’s 500 have no women on their board of directors or among their top five highest-paid officers. The lack of women atop S&P 500 companies aligns with Catalyst research on the Fortune 500, where women hold only 15.7% of board seats and 7.6% of top-earning positions. While frustrating, these numbers point to opportunities these companies have in promoting women to the top. More news about these challenges, and solutions, in today’s C This.

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Opportunity Knocks, But Mind the Gap

MBA programs and students around the globe have been swamped by increased levels of recruiting, job postings, and job offers. While this may signal an uptick in the global economy, what hasn’t changed is the MBA pay gap: women still earn about $4,600 less in their first job out of business school, regardless of region, parenthood status, and prior experience.

READ: “Doors of Opportunity Open Again for MBAs,” by Della Bradshaw, Financial Times, 6/27/11

Where Are the Women?

New research shows that 47 companies in the Standard & Poor’s 500 have no women on their board of directors—a number that has grown since last year. What’s worse, tokenism is rife: only three companies have boards composed of more than 40% women. “If you only have one woman on a board then it can be difficult,” said Aida Alvarez, a former administrator of the Small Business Administration who now sits on corporate boards. “If you have at least some numbers, then you feel more empowered about opening up and expressing your doubts,” she added.

READ: “Boys Only Boards,” by Joel Stonington, Bloomberg Businessweek, 6/23/11

A Catalyst in Malaysia

Malaysia has joined Norway, France, and Spain, among other nations, by imposing quotas to increase the number of women atop corporations. A continuation of a similar policy set for the private sector in 2004, the Malaysian government recently imposed a policy that women must comprise at least 30% of decision-making positions in the private sector by 2016. “I believe this landmark and important decision made by the Cabinet last week will be a catalyst to an affirmative action towards gender equality in the corporate sector,” said Prime Minister Datuk Seri Najib Tun Razak.

READ: “PM: 30% of Corporate Decision-Makers Must Be Women,” by Mazwin Nik Anis, The Star, 6/27/11

The Good Fight

Three of India’s most powerful women in politics—chief ministers Mamata Banerjee of West Bengal, Jayaram Jayalalithaa of Tamil Nadu, and Kumari Mayawati of Uttar Pradesh—each struggle for social change. Banerjee is fighting to create a national ombudsman to investigate official corruption, Mayawati’s Bahujan Samaj Party aims to empower India’s lowest castes, while Jayalalithaa leads a crusade against election fraud. “What clearly unites them is the common theme of struggle,” notes journalist Jyoti Malhotra.

READ: “Politics Journal: The Trio of Female Chief Ministers Storms Delhi,” by Jyoti Malhotra, The Wall Street Journal, 6/24/11

Scandal-less Women?

Are male CEOs more scandal-prone than women? Not necessarily. “The first and most obvious reason why my male CEOs are involved in more scandals is because there are more [male] CEOs,” writes Chris MacDonald. While higher rates of testosterone have been linked to financial risk-taking, it’s harder to connect risky behavior in one domain to a tendency toward risky behavior in another. Only time will tell if the next Skilling, Madoff, or Boesky will be a  “Ms.” or “Mrs.”

READ: “Want to Avoid Scandal at the Top? Hire a Woman!,” by Chris MacDonald, Canadian Business, 6/13/11

Diverse women are double outsiders. Women of African, Asian, Hispanic, Middle Eastern and Native American descent make up about 36% of the U.S. female population, but as today’s Take 5 highlights, many are excluded from high-paying leadership positions in corporate America:

1) In 2008, African-American women earned 61 cents and Latinas earned 52 cents for every dollar a white non-Hispanic man earned.

2) Among full-time wage and salary workers in 2009, Latinas’ median weekly earnings were $509—the lowest of all racial, ethnic, and gender groups—while Asian women earned $779. White men, on average, earned $845 per week.

3) In 2010, there were only nine diverse women general counsels in the Fortune 500.

4) Today, 70.1% of F500 companies have no diverse women serving on their boards.

5) The number of diverse women in F500 leadership remains stagnant: In 2010, they held 3.0% of board seats in the Fortune 500, down from 3.1% in 2009.

Catalyst recently found that for diverse women, stereotyping, exclusion from influential networks, and difficulty gaining access to high-visibility assignments can impact access to trusting relationships with managers. Mentor and sponsor relationships—coupled with targeted diversity training and mechanisms to hold managers accountable for meeting diversity goals—can increase awareness and dismantle the challenges many diverse women face.

One year ago, we launched Catalyzing with the belief that until women achieve parity in business leadership, we will be marginalized in every other arena. More than 70 blog posts and 65,000+ page views later, we’ve only scratched the surface.

What gives me hope amid entrenched pay and leadership gaps, and setbacks like defeat of the Paycheck Fairness Act, are inspiring interactions with women and men who share our vision of changing workplaces and lives. As I blow out the candle on our 1-year anniversary, I wanted to leave you with a selection of comments from readers. Brace yourself—they are funny, angry, and even sad. Taken together, they serve as a potent call to action, and a reminder that we will not stop until we achieve our goal:

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Ilene, congratulations on using your blog to “catalyze” the use of the gender lens. The Economist’s “We Did It!” cover aside, women have a LONG way to go and corporations need to look at their advancement efforts with fresh eyes before we get to the 50% at the top that women reflect in the pipeline.

Susan Colantuono 2010/02/16 at 9:33 am

The glass ceiling is not only still here, it’s an illusion that it is window pane thin. It is about 10 meters thick and all you can see when you look up is the bottom of a man’s $350 shoes looking down at you like a gerbil treading a wheel that goes nowhere for their own amusement.

susan clark 2010/03/04 at 6:00 pm

How can you fix what you don’t know is broken?

I have a much loved uncle who, when I told him about the wage gender gap refused to believe it existed….I then spent the remainder of that Thanksgiving breaking down how it occurs, why it hasn’t stopped, etc., and by the time he left, he was writing a letter to his congressman asking why there weren’t laws against it. Hopefully there are more ah-ha moments happening every day

Shayna 2010/04/09 at 3:33 pm

We hear so much about the importance of senior men mentoring women (and it is important), but it’s very refreshing to reverse this and think about the benefits of women mentoring men.
Lynn Harris 2010/04/28 at 1:54 pm

I have implemented many mentoring-projects for women with mentoring men in Austria. Thanks for your blog, because I really think that it is time for an change. We have so many good women, who would be great mentors for open minded men.

Daniela Stein 2010/05/04 at 3:19 pm

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Catalyst’s latest Census of female leadership in the Fortune 500 and our report, Mentoring: Necessary But Insufficient for Advancement, received strong media coverage last week. Below are two clips highlighting the new research. Also in C This, new studies point to the challenges that Indian women face in the workplace, the dearth of diversity programs in American companies, and the “glass cliff” women face when getting top jobs.

Sponsors Explained

“A sponsor is somebody who is really your advocate, your champion,” said Barbara Adachi, National Managing Director for Deloitte Consulting LLP’s Human Capital practice, in this interview about Catalyst’s 2010 Census and our new study on sponsorship. “A sponsor has a stake in your success and a stake in your career,” she added.

WATCH: “What Women Need to Know to Get Ahead,” Good Morning America, ABC, 12/13/10

To Find a Sponsor

Kerrie Peraino, Chief Diversity Officer at American Express, advised women to be bold in order to find a sponsor. “It’s not enough to say, ‘I’m doing good work,’ and put your head down on your desk,” she said. “To earn sponsorship someone needs to see your work.”

READ: “Women’s Advancement in Business Flatlines, Study Shows,” by Barbara Mannino, FOXBusiness.com, 12/14/10

Get with the Program

A new survey of human resource and talent management leaders at more than 540 U.S. companies found that 43% had no formal activities or programs aimed at developing women leaders, and only 5% had “robust” initiatives. With numbers like these, it’s no wonder that the progress of women into business leadership is stuck—and has been so for years.

READ: “Why Are There So Few Women Leaders? Companies are not Trying,” by Joanne Cleaver, BNET, 12/8/10

The Cliff

Experts call it the “glass cliff”—the precarious place high up on the corporate ladder where women are judged more harshly than men. Victoria Brescoll, Assistant Professor of Organizational Behavior at Yale University, studied the phenomenon. “Stereotyping thrives on ambiguity. Mistakes create ambiguity and call the leader’s competence into question, which, in turn, leads to a loss of status,” she explained.

READ: “On the Other Side of the Glass Ceiling, a Glass Cliff,” by Belinda Luscombe, Time, 12/8/10

 Indian Ambitions

New research shows that 80 percent of Indian women want the top jobs and are prepared to work hard for them, but less than 30 percent of Indian women outside the agrarian economy are in the workplace. But, participation is likely to increase as the cultural stigmas attached to female-employment fade. “If we’re doing so well with only 30 percent of women in the work force, imagine what we’ll achieve when that goes up to 50 percent,” said Preeti Singh, a 21-year-old business management student aiming for the C-Suite.

READ: “Ambitions Meet Reality in India,” by Nilanjana S. Roy, New York Times, 12/14/10

This just in: the latest Catalyst research highlights deep challenges—and potential solutions—for women seeking to climb the corporate ladder.

For the fifth year in a row, our Census of women leaders in the Fortune 500 showed that women are stuck. Women hold only 14.4% of Executive Officer positions and 15.7% of board seats in F500 companies. A whopping 12.1% of public companies have no women serving on their boards and 27.4% have no women Executive Officers. And women hold only 7.6% of top earner spots.

While disheartening, a separate Catalyst report, Mentoring: Necessary But Insufficient for Advancement, pointed to a possible reason for the disparity. Men have more senior-level mentors who are in a position to provide sponsorship, which can lead to more promotions and greater pay increases. Women, on the other hand, are “mentored to death”—getting developed but not promoted or compensated as much as men.

There’s a big difference between sponsorship and mentorship. Mentors show you the ropes and teach you about the unwritten rules of your organization, but sponsors have clout and advocate on your behalf. They look out for you behind closed doors and ensure you’re visible when opportunities are on the table. “She can do it—trust me,” one might say.

Sponsors can make all the difference to your career. So if your company has a formal sponsorship program, you should express an interest in participating, while companies that do not should consider phasing one in.

But don’t just wait around for a sponsor to find you. Sponsorship is not an entitlement—you have to “earn it” by being a top performer. Connect with senior-level people and communicate your contributions, skills, and interests. Do a great job, get noticed, and you’ll attract a sponsor.

After all, mentors can show you the ropes, but sponsors help you climb them.

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UPDATE: To find out more about why you need a sponsor—someone “on the inside”to advocate for you—check out my new op-ed in WorkingMother.com!