Catalyst Blog

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.

We’ve all heard the maxim that “women don’t ask.” This view is so prevalent that an entire cottage industry has sprung up to address it. The problem is that it’s simply untrue.

Our new report, The Myth of the Ideal Worker, the latest in our series on high-potential employees, makes it clear that even when women do “all the right things” they’re unlikely to earn as much or advance as far as their male colleagues.

For example, by looking at the career paths of over 4000 MBA grads from around the world, Catalyst found that women were more likely than men to ask for a variety of skill-building experiences and to proactively seek training opportunities. And we also found that women and men negotiated for a higher level position or greater compensation during the hiring process for their current job at equal rates.

Women do ask—but get little in return. Equally skilled men advance farther and more quickly than their female peers. In fact, we found that the $4600 pay gap that starts from day one grew to more than $31,000 several years down the track—even when women asked.

The problem isn’t the women—it’s the business environment. Entrenched sexism dominates, especially in talent management systems. Women are held to different standards than men: women must prove themselves multiple times to get ahead while men are promoted on promise. And gendered language still prevails, with words like “aggressive” or “bold” baked into job descriptions to describe ideal candidates. These are words more often associated with men—and this explains why women are viewed as an imperfect fit for many top jobs.

Until problems inherent in the system are fixed, there are some tactics that our research found especially beneficial to women’s advancement. For example, women who were more proactive self-promoters were better able to advance their careers and increase their salaries, and were overall more professionally satisfied, than women who were less likely to make their achievements visible.

In other words, women who toot their own horn do get ahead—and are happier at work too.

Women can make their achievements more visible by telling managers about their accomplishments, seeking credit for a job well done, requesting additional performance feedback, and perhaps most importantly, asking for a promotion when deserved.

Doing so will help attract a sponsor—an important key to advancement. Unlike mentors, sponsors advocate for you from behind closed doors and help you climb the ladder. But to attract a sponsor, women need to be visible. And companies need to do their part too—the onus is on them to identify and develop rising talent.

Smart companies hold executives accountable for the success of female rising stars. Organizations that neglect talent management issues are at risk of lagging their competitors in attracting, developing, and retaining the best candidates to serve as their next generation of leaders. And business leaders would be well served by dumping myths that propagate stereotypes and unintentionally hold women back.

The issue isn’t that women don’t ask.  Maybe it’s that men don’t have to.

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

Attention Class of 2011: Women start behind, and stay behind, equally skilled men after graduating from prestigious MBA programs.

In today’s Take 5—a new Catalyzing feature highlighting five important Catalyst findings—we look at our research into our best and brightest: MBA grads from top business schools across the globe. A level playing field does not exist even for these high-potential women. Here’s why:

1) Women MBA grads earn, on average, $4,600 less than men in their first job out of school. This is after taking into account number of years prior experience, job level, global region, industry, and parenthood.

2) Mentoring benefits men most: Men with mentors received $9,260 more in their first post-MBA jobs than women with mentors.

3) Men got more promotions than did women, even after taking into account prior work experience, time in role, starting level, industry, and region.

4) Men’s salary growth outpaced that of women, perpetuating the gender gap established in the first job.

5) Each promotion in 2008 amounted to an extra 21% in compensation for men, while each promotion for women amounted to an extra 2%.

And FYI: Pay inequity is a reality—MBA or not. The typical woman loses $431,000 in pay over a 40-year career.

What would you do with that cash?

Today is Equal Pay Day—but don’t celebrate! April 12 marks the point in 2011 women must work to equal what men earned in 2010. Here are some quick facts about this frustrating milestone:

- Women in America earn 77 cents for every dollar earned by a man.

- The wage gap has closed at a rate of less than half a cent per year since 1963, when women were paid 58.9 cents for every male dollar.

- Today, Latina women earn 60 cents, while African-American women earn 70 cents, for every dollar earned by a white man.

- Two-thirds of workers in the ten lowest paid occupations are women, while two-thirds of the workers in the ten highest paid occupations are men.

- Women’s earnings are higher than men’s in only four occupations: counselors, combined food preparation and serving workers (including fast food), bill and account collectors, and stock clerks and order fillers.

- Women MBA grads earn on average $4,600 less in their initial jobs after business school, regardless of level, prior experience, industry, and region.

- A female college graduate in the United States will earn $1.2 million less than her male peers over the course of her lifetime.

- If women earned the same as men, the U.S. GDP would be 9 percent higher, the Euro-zone’s would be 13 percent higher, and Japan’s would increase by 16 percent.

Equal pay for equal work is a right, not a privilege. So let’s do what we can to close the gap. Check out some solutions here and here, and while you’re at it, here are some clever ecards you can use to spread the word!

Let’s make Equal Pay Day history—right now.

Earlier today, I testified before the Joint Economic Committee in Congress. No, Stephen Colbert was not there right along with me!

The hearing, titled “New Evidence on the Gender Pay Gap for Women and Mothers in Management,” examined, among other topics, new findings by Catalyst on pay and corporate leadership gaps. These gaps persist across most industries—and have closed at a glacial pace.

The latest Catalyst data on women in Fortune 500 companies is alarming. Although women are 46.4% of total Fortune 500 employees, they are 13.5% of Executive Officers, hold 15.2% of board seats, and are 2.6% of CEOs. If inequities persist in America’s most powerful and influential companies, they are present in smaller businesses too.

On the issue of the pay gap, I testified how in 2009, women made up only 6.3% of top-earning Executive Officers within the F500 and discussed how our “best and brightest” women—M.B.A. grads—still earn less than equally qualified men, regardless of parenthood status. On average, women earn $4,600 less in their first post-M.B.A. job. And this pay gap widens over time.

To help explain to Congress why these gaps exist—and have remained largely steady over time—I recounted a simple test I often perform during lectures. I ask audiences to close their eyes and picture a business leader. How often do they imagine a woman or someone ethnically or racially diverse? Not very.

I doubt many lawmakers attending the hearing did either.

And this is the problem. The notion that women are less strong and less committed—and that trusting their judgment to lead is risky—remains entrenched. Too many people—women and men alike—think of a male when asked to think of a leader. It’s engrained in our conscious and reinforced by media and the images we see everyday. But it needs to change.

By shining a light on pay and leadership gaps, I hope my testimony will inspire the change-makers in Washington to rise to the challenge. Holding a hearing on these issues was a great step forward.

Last week, I wrote about Catalystos—guys who are not afraid to stand up against gender inequity. These men are active role models and partners in our challenge to stamp out sexist stereotypes, ingrained biases and the barriers holding women back from leadership.

With a view to amplifying their voices, I asked some of the men of Catalyst to tell me why they support our mission. Some appeared in my previous post; here are more. These men are part of the solution. Please help me spread their inspiring message far and wide.

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Josh, Member Relations:

I have seen the effects that a glass ceiling can have on a woman’s career and even her own self-confidence. This was the case with my mother, and the story of my “a-ha” moment. My mother has had, in my eyes, a very successful career in the financial industry, yet she doesn’t think so. The company she worked for (which will remain unnamed) passed her over for promotions into the executive level time and time again, despite her obtaining an M.B.A. and consistently excellent performance reviews.

Her company, for some reason, gave her a job level that was rarely used between the most senior directorship and VP, but would not give her what she coveted – that VP title. It is upon reflecting back at her struggle that I realize it wasn’t an issue of her not being qualified, and to be fair, I don’t think it was outright discrimination. I think as a working mother, she never joined “the boys” at the bar or on the golf course. She came home to spend time with her family. It wasn’t that she didn’t do a good job, it was that she had far fewer opportunities to connect with the right people.

The experience my mother went through in the corporate world, as well as my own awareness of discrimination as a gay man, led to my studies in gender and sexual diversity and the development of a real sense of social justice and a drive to fight for equality. I decided long ago that I needed to contribute to something positive and feel as though I am making a difference.

Thomas, Member Services:

I’ve been interested in the topic of gender since sociology courses in undergrad—it wasn’t just the classes that affected me, though. My time at college coincided with eye-opening experiences involving race, life, gender and sexuality. Things I wasn’t prepared for coming from a corn-fed, Midwestern background. Anyway, I remember when we first began talking about the global implications of patriarchy in class—in patriarchy, no one wins, not even men. Understanding the shades of inequity helped me understand that while the system we live in may benefit some, it comes at a cost to everyone.

When it comes to women in business, it seems as if the workplace is one of the most important places to deconstruct patriarchy. When women have increased economic power, many of the other realms of patriarchy can come crashing down, too.

Brian, Marketing:

I care about opportunities for women and work because my mom was actually fired from her job teaching in the early 1970s in Boston for getting pregnant! That’s right, the policy in the Dorchester School District at the time was that pregnant women were not allowed to teach. After my parents were married and my mother was pregnant with my older sister, she tried to hide it from the school principal. But after five months, it was obvious she was pregnant, and the principal pulled her aside—and fired her on the spot. She never worked in education again. I hope to prevent discrimination along these lines for others.

On a bigger level, I really believe in the concept that if you invest in women, you invest in a better world. A woman with an education can teach her children important skills. And she can open a business. That business can bring in more money for her family, and it can improve everyone’s health. The growing business can hire more people and help them financially, too. In turn, this improves a local economy, and the wider economy as well. The more visible women become in business, the more others will follow. And the more everyone’s life can improve.

I’m nobody! Who are you?
Are you nobody, too?
–Emily Dickenson

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How does a nobody become a somebody? By being sponsored.

Sponsors are like mentors—except they advocate for advancement. The latest Catalyst research on the careers of more than 4,000 M.B.A. graduates shows that more women than men have mentors, but these mentoring relationships are less likely to lead to promotions for women. A lack of sponsorship may help explain why women lag behind men in pay and promotions.

Sponsors combine power, influence, and a willingness to promote you—and they have the clout to do something concrete. The results can be dramatic.

Newly minted Supreme Court Justice Elena Kagan had a powerful sponsor, Abner J. Mikva. Mikva learned the value of sponsorship early on. During his first year of law school, he tried to volunteer with the Democratic Party. “Who sent you?” asked the man behind the desk of local party office.

“Nobody,” Mikva replied.

“We don’t want nobody nobody sent,” the man huffed.

The experience, noted The New York Times, spurred his interest in public service and in “being the somebody who sent future somebodies.”

And that’s what he did for Kagan. According to the Times, he hired her as a clerk when he was a federal appeals judge in Washington DC. Mikva then recommended Kagan for a Supreme Court clerkship for Justice Thurgood Marshall. He promoted her for a professor’s job at the University of Chicago. Then he pulled her into a role in the Clinton White House. The rest, as they say, is history.

Sponsors stick with you—they don’t ditch you at your first promotion. They protect you from enemies. They push the right buttons. They understand the Unwritten Rules. And they ensure you’re visible. In short, they shape your career.

Of course, sponsorship is not an entitlement—you have to “earn it” by being a top performer. Your sponsor won’t take care of all the heavy lifting.

Companies are starting to realize the importance of sponsorship, and so should you. Mentors are important, but a good sponsor is gold. Seek one out. Become a somebody.

Read the research—the numbers tell the whole story.

A lot of ink has been spilled over a recent New York Times article which argued that childless women had careers that tracked men’s. “Women do almost as well as men today, as long as they don’t have children,” a Columbia University professor told the Times.

The article hinged on a recent study of M.B.A. grads from the University of Chicago that probed “women’s underperformance in the corporate and financial sectors.” But what did this report really show?

The authors found a vast wage gap exists between women and men. According to the report, women earn $115,000 on average at graduation and $250,000 nine years out, while men earn $130,000 and $400,000, respectively. “Mean earnings by sex are comparable directly following M.B.A. receipt,” they wrote, “but they soon diverge.”

How’s that for an understatement? Their “comparable” earnings are a $15,000 difference. I’m not sure about you, but I’d be pretty ticked at making $15k less just because I’m a woman.

Was this dramatic finding headline news? Nope.

Instead, media coverage fixated on a detail buried deep into the report. On page 243, the authors’ state:

“Limiting the sample further to women without children, and with no career interruptions by 10 years out, makes the career paths of the women in the sample similar to those of men. For that comparison, the gender earning gap starts out slightly larger than for all women, but grows less rapidly.”

This suggests that for women without children, there’s still a gap at the start of their career after business school, and the gap still grows over time—albeit less quickly than it does for women with kids or who have taken time off.

Not really breaking news, is it? Catalyst actually reached a similar conclusion in Pipeline’s Broken Promise, which found that even among women and men without children, women still started behind men and the gap still grew over time.

The original New York Times article is accurate in saying there’s a bigger penalty for women who have kids and/or take time off (which isn’t surprising), but was misleading in suggesting to the reader that women without kids will face a level playing field with equal pay. The numbers are clear: Women are paid less than their male colleagues. They don’t call it a gender wage gap for nothing.

Gender is at the core of workplace inequity.

But you wouldn’t know this from reading The New York Times.

Citing a University of Chicago study, the Times reported this week that women who had no children and never took time off had careers that “resembled those of men.” This is misleading—here’s why.

The Chicago study found that men earn roughly $15,000 more than women upon receipt of an M.B.A. Nine years later, men earn about $150,000 more. Women who had children or took time off suffered a greater penalty over time than women without children. This is not surprising—workplaces still penalize women for dialing down or temporarily leaving a traditional career track. But, remaining childless does not level the playing field for women.

Our report, Pipeline’s Broken Promise, found that men who left a corporate job for a nontraditional assignment and then returned experienced no penalty in either position or compensation, but women did. The report also found that post-M.B.A. women start behind men in job level and salary—and they never catch up. These findings hold true regardless of previous work experience, industry, geography, aspirations and parenthood status.

What to make of the fact that the last three women nominated to the U.S. Supreme Court were unmarried and had no children? The Times article implies that not having children allowed these women to focus on their careers. But what of the many female leaders who have children?

In Women and Men in U.S. Corporate Leadership, Catalyst surveyed nearly 1,000 senior-level women and men, most within two levels of the CEO. We found that 81% of the women were married or living with a partner, compared with 97% of the men. And there was less discrepancy around whether they had children living with them:  51% of the women did, compared with 57% of the men.

The most powerful businesswomen in America are mothers, too. There are currently 14 female Fortune 500 CEOs. At least 12 of them have kids.

Blaming inequity on factors like motherhood obscures a simple truth: entrenched biases and sexist stereotypes impact all women. Misrepresenting this reality doesn’t solve the problem. It distracts all of us—including employers who lose out on great talent—from addressing core inequity.