Gender diversity in business strong in China and Eastern Europe, but global progress is slow

It is worth considering how little has changed in the world since Grant Thornton started tracking gender diversity in business leadership in 2004.

There has been much debate and discussion over the intervening 11 years. Countries such as Norway have successfully introduced quotas; Sheryl Sandberg, chief operating officer of Facebook, has sparked debate about whether women's lack of advancement is a matter of women needing to "lean in"; and a number of countries including Brazil, Germany and Thailand elected female heads of state.

However, over that time, the proportion of the top jobs in business held by women has barely changed, increasing from 19 percent in 2004 to 22 percent today, and never reaching higher than 24 percent over the intervening period.

Slightly more encouraging is that the proportion of businesses with no women in their leadership teams has dropped from 38 percent to 32 percent.

In China, the figure for top jobs in business held by women sits well above the global average at 32 percent, the eighth-highest globally. Historically markets such as China have offered good opportunities for women to enter the workforce, often through family-owned enterprises, and remain there, due to the low-cost childcare infrastructure made available by grandparents living close by.

But China has experienced the largest internal migration in human history since 1978, with an estimated 200 million people moving from the countryside into cities. This rapid urbanization that has gone hand-in-hand with rapid economic growth has broken these traditional models of extended families, reducing the opportunity for women with children to work.

However, urbanization has also raised the career aspirations of women, many of whom are now choosing to get married and have children later, if at all. The roles held by these women do tend to follow the global pattern, with large proportions of women leading human resources (30 percent) or finance (23 percent) functions, rather than the company itself (7 percent). A further 16 percent of businesses in China have a female corporate controller.

Rose Zhou, partner at Grant Thornton China, says: "There is a pronounced tradition in many emerging markets of women running household budgets. Traits typically associated with women, such as a more rational, level-headed approach, lend themselves well to finance roles."

Above China, six of the top seven places in our league table are held by Eastern European economies, where 35 percent of senior roles are held by women and just 16 percent of businesses have no women in their leadership teams. The drivers of this relative success are drawn from history, culture and demographics.

Women were promoted into new service industries under the old Soviet bloc, which was keen to show that "equality of opportunity" under Communism included equality between genders. Barbara Stocking, president of Murray Edwards College of the University of Cambridge, says: "Equality of education was very important in the Communist era. We have a lot of Eastern European students doing maths and engineering, which are much more unusual for girls in the UK."

Similar drivers could be responsible for female advancement in China, although anecdotal evidence suggests women find it much easier to reach the upper echelons of private companies as opposed to large state-owned enterprises (which are not covered by our survey).

So if every year the result disappoints, why do we do it? Why do we, as advisers to dynamic businesses, care?

To put it simply: When women thrive, businesses thrive. If an economy is only using half its most talented people then it immediately cuts its growth potential. And economies cannot simply throw more (male) labor at the problem. A recent McKinsey report showed how aging populations and lower birth rates in many advanced economies are weighing on productivity growth, and the same is true in China, where the employee headcount is likely to decline from 2024.

Interestingly, two of the economies sitting on a ticking demographic time bomb highlighted in the McKinsey report, Germany and Japan, rank at the bottom of our index for the proportion of senior leadership roles held by women. Getting more women into the workforce will not solve the looming productivity crisis, but it would be a step in the right direction.

More broadly, businesses need to think about how they access different skill sets. We are all aware of the danger of groupthink, and diversity simply leads to better decisions in all walks of life. Business growth comes from diversity of opinion, from thinking and acting differently from the competition. As the CEO-elect of Grant Thornton UK, Sacha Romanovitch, puts it, businesses need to create "a bigger map of the world" by broadening their horizons and opening themselves up to new thinking. Gender is just one strand of diversity, but it is a major and grossly underutilized one, according to our findings.

There is also a moral issue here. Are women being given the same opportunities as men? Do women hold fewer leadership roles out of choice? Or are there cultural or social barriers to their advancement that we should not accept in the 21st century?

The author is editor of Global Research at Grant Thornton.

(China Daily European Weekly 05/22/2015 page9)