The Case for Gender Diversity: Why Your Business Should Hire and Promote Women
Leslee M. Cohen, a Principal in the firm’s Business & Finance practice group, advises clients in a variety of federal and state securities law matters, including corporate governance, ethics and executive compensation issues. She has represented publicly and privately held companies in connection with mergers and acquisitions, tender offers, public offerings and private placements, and regularly drafts and files Securities Act Registration Statements, Exchange Act Reports, proxy statements and constituent documents. Leslee can be reached at 312.521.2707 or lcohen@muchshelist.com.
By Leslee M. Cohen
The promotion of women in leadership positions is certainly an “it” topic in today’s business world. In fact, images of powerful women abound in the media. From ABC’s popular drama “Commander in Chief” with Geena Davis starring as the President of the United States, to Newsweek’s special report on “How Women Lead” with Oprah Winfrey gracing the cover, the media’s fascination with the subject is raising a new awareness of the business case for hiring and promoting women. According to a July 21, 2005 article in The Economist, even “hard-nosed male bastions such as ABB, BP and General Electric have renewed their efforts to help women reach the higher levels, not out of any sense of corporate social responsibility but because they genuinely believe that it is good for their profits.”
This issue is also hot in the Chicago legal community, where the number of women attorneys who have made partner falls below the national average, according to the National Association for Law Placement. In early 2005, the Chicago Bar Association’s Alliance for Women responded by launching its “Call to Action,” an ambitious project to promote women’s leadership in the legal profession. Many of the key firms in Chicago, including Much Shelist, quickly signed on. The “Call to Action” asks participating firms to create and execute a plan that will lead to an increase in the number of women in leadership positions (as partners, firm committee members, practice group leaders, etc.) by 3 percent by the end of 2007.
In recognition of the “Call to Action” and this broader business trend, the female attorneys at Much Shelist have formed the Women’s Initiative. The goal of this group is to provide our female attorneys with mentoring opportunities, discuss career advancement strategies and offer frank advice. With the firm’s support, the Women’s Initiative hopes to encourage and foster the advancement of women as leaders at Much Shelist and in the community.
What does this mean to you and your business? Could a similar focus on hiring and promoting women improve your bottom line? It certainly helped Xerox. According to the October 24, 2005 issue of Newsweek, Xerox hired Anne Mulcahy as its CEO in 2001 when the company’s business was failing financially: “She cut the work force from 79,000 to 58,000, refreshed the product line and strengthened the balance sheet.” As a result, the company’s stock price rose 65 percent.
According to the Wall Street Journal, this “New Diversity” is a business imperative. A November 14, 2005 article states that diversity “isn’t simply a matter of doing what is fair or good public relations.” The article profiles PepsiCo, IBM and Harley-Davidson, all of which increased the number of women in management-level jobs (along with increases for other minorities). For IBM, the benefit to the bottom line was substantial: “With more women and minorities in its management ranks, IBM has sharply increased the amount of business it does with the growing number of small and midsize minority- and women-owned companies in the U.S. This niche accounted for more than $300 million in revenue in 2001 (the most recent number available), up from $10 million in 1998.” Moreover, an article in the July 21, 2005 issue of The Economist cites research demonstrating a “strong correlation between shareholder returns and the proportion of women in higher executive echelons.”
Thus, the so-called “business case for diversity” is not empty fodder. Recruiting, mentoring, training and promoting women in your company could greatly increase your bottom line. Ask yourself who your clients or customers are and what they look like. Are they all white males? If they are not, but that is who currently runs your business, consider making diversity initiatives a part of your recruitment process. Your company could be on its way to outperforming your less diverse competitors. Forget that it may be the right thing to do. If it worked for Xerox and IBM, it might improve your bottom line too.
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