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.

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.

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!

Here we go again. Sometimes news—even good news—gets blown out of proportion. That’s what’s happening now with the gender wage gap.

Recent headlines like “What gender pay gap? Young single women making MORE money than their male peers in America’s cities,” and “Workplace Salaries: At Last, Women on Top,” imply the gender pay gap has closed for all women. But it hasn’t. The gap is alive and well.

These stories were pegged on recent market research that found that single, childless women aged 22 to 30 earn, on average, 8% more than their male counterparts in select U.S. cities. This important finding—largely reflective of increased rates of higher education among young childless women who work in cities with a knowledge-based economy—is good news. But the catchy headlines do not reflect the whole story.

The market study compared young women and men with different educational backgrounds. But what happens when you compare the salaries of women and men side-by-side with the same degree?

In Catalyst’s Pipeline’s Broken Promise, we found that women with M.B.A.s start behind, and stay behind, men with the same degree. In fact, women earn $4,600 less than equally skilled men in their first job out of business school—and this pay gap increases over time. And according to the latest U.S. Census figures, the median salary for women with Master’s degrees is actually lower than the median for men with only a Bachelor’s.

Does this seem fair to you?

I welcome research indicating that some young women in some cities are more than holding their own with wages. But for most women, it’s not yet time to break out the champagne.

Like the “mancession” stories that proclaimed new opportunities for women to advance in the absence of men, a lot of the recent pay gap coverage overstates the facts and does not take into account all the nuances of the data.

Context is king. Don’t lose sight of the larger picture and what still needs to be fixed.

Canadian and American women dominate the ice— but not the boardroom.

Our new Canadian Census reveals that women make up 47% of the labor force in Canada, but only 14% of board directors in FP500 companies. In the United States, the numbers are also low. Women comprise 47% of the U.S. labor force, but occupy just 15% of the board seats. What’s worse, these numbers have remained virtually unchanged the last few years.

You may think board directors are so high in the org-chart stratosphere that they couldn’t possibly affect you or your job path. But they do. That’s why it’s important to look for diversity when deciding where to work.

The boardroom sets the tone for the organization. The more women on a corporate board, the higher the percentage— five years later— of women in senior positions, especially senior line positions.

Companies with more women board directors, on average, financially outperform those with the fewest. In fact, the more women on board, the better the performance. And companies with three or more women on their boards, on average, perform even better! Chances are that these more successful companies afford women greater opportunity for advancement and development.

So when you are looking for a job, first check that annual report. Skip the pretty pictures, and head for the board listing. If it doesn’t include at least one woman— and preferably three or more—your odds of developing a satisfying career and rising to leadership have just taken a serious hit.

Choose an organization that invests in women. Vote with your feet.