How do you get companies to treat women equally and pay them fairly for the work they do? Researcher Jatinder Sidhu compared several large corporations and discovered some crucial details.
NAME: Jatinder Sidhu
STUDY: Delhi School of Economics, India, Tinbergen Institute, Erasmus School of Economics
CAREER: Associate professor Strategic Management & Entrepreneurship at the Rotterdam School of Management, Erasmus University (RSM).
The position of women in the labour market is nothing to brag about. The battle over equal pay for equal work and hiring women for top jobs seems hardly successful, a few victories aside. The wheels of change are turning slowly, too slowly if you ask most women. And so, the debate about whether hiring quotas work at all flares up time and again. Jatinder Sidhu is an associate professor and researcher at the Rotterdam School of Management (RSM). Within his field of diversity in top management teams he has been working on a paper that aims to introduce a new angle to the debate. His study, for which he compared American corporations on the famous Fortune 500 list, show that having a female president of the supervisory board can make a big difference. It allows the gender diversity within the supervisory board to influence the strategic course of the company.
The pressure is on
Diversity is hot. But social awareness is not exactly a new thing, says Sidhu. The history of the women’s movement and feminism shows as much. The focus on diversity in top positions in the business world, however, has narrowed during the last fifteen years. ‘Companies and organisations know the pressure is on. Clients and employees, as well as society at large, are driving that pressure up. Everybody’s paying attention to the role companies play in society, the same way they’re taking stock of a corporation’s sustainability record, for example. No longer can companies turn big profits while at the same burning down the Amazonian forest. You don’t get away with that as easily anymore.’ That process is gaining momentum. People and ideas are moving faster than ever, causing companies to engage in diversity topics like ethnicity, age, sexual orientation, as well as gender. Sidhu makes a distinction between diversity with and without inclusiveness. ‘I think we need to move towards gender inclusiveness. It’s not just about the numbers, or how many women are part of the supervisory board, it’s also about whether or not women have an equal voice and similar opportunities to wield influence or move up in the company as compared to men.’
What will motivate a company to change? Do they care more about social awareness, or increasing profits?
Sidhu: ‘It’s hard to tell. The available research is inconclusive. No clear data exist on the effects, so for now we can’t say for sure whether including more women on supervisory boards has a positive economic effect.’
And yet, it’s often said that diverse companies perform better.
‘It’s socially desirable for companies to reflect the diversity in society. To encourage that, the point is often made that more diversity means higher profit margins. It’s interesting to see how the logic that is currently being applied to promote diversity in top management – namely, the idea that men and women have different characteristics that enhance each other in business leadership – used to be the exact reason why we found so few women in the higher echelons of management. Men were seen as more assertive, aggressive and competitive, while women were considered caring and empathetic. So men appeared to be better suited to lead a business, and women were shunned from those positions. Those stereotypes are deeply ingrained in society. Anyway, it’s conceivable that some companies hire more women for their supervisory boards because they expect to do better financially, while other companies are simply trying to avoid issues with investors and the general public.’
Would you say these stereotypes are the cause of a lack of women on supervisory boards?
‘Many of our ideas about what is male and female are derived from age-old social constructs. The history of a nation also matters. Even in European countries women weren’t expected to have jobs before World War I. So a lot has changed over the last few decades. Globalisation is another reason why companies around the world are finding it harder to keep women out of positions of power. And then there’s this added pressure of giving a voice to minorities.’
‘Google is fighting a lawsuit because they pay female employees less. Why? Stereotypes still have power’
Do you think a lack of women at the top is caused by the idea that they are less competent?
‘One does notice that women are valued less in the business world. As we speak, Google is fighting a lawsuit because they systematically pay female employees less. And why is that? Because stereotypes still have power. Expecting women to get just as far as men when you’ve only hired them to meet a quota, just doesn’t cut it. Once you hire women or other groups, you need to make sure they have as much of a say as the majority has. This is the paradox we examine in our study.’
You’re saying: diversity in and of itself is not enough. It may have unwanted side effects.
‘Yes, inclusiveness is equally important. Diversity can cause problems. Imagine there are several women on a supervisory board, none of whom have an equal say. The result may well be that all decisions are made by a small group of influential men. Which is not in the best interest of the company.’
How do you make sure women’s voice are heard on a board?
‘Some studies show having one or two women on a board is not sufficient. There should be three at the least. But no satisfying empirical evidence has been found to support that. Quotas are not enough. If we aim for inclusiveness, we need to take other things into account as well. Our research shows gender inequality decreases once companies appoint a female president to their supervisory board.’
Meaning Erasmus University is right on track with a woman at the helm.
‘It’s a good sign, at the very least. Although academia is different from the business world, so you can’t draw conclusions about that from our research. Similarly, it’s impossible to superimpose any knowledge about diversity in the top of an organisation on lower echelons of that same organisation. Dynamics there may be very different, because gender stereotypes about male and female capacities carry more weight in relation to top jobs.’
Can anything else be done, besides appointing a female president of the board?
‘A female president is a powerful symbol. Think about Americans taking down Confederate statues – in the business world it works the same way. Imagine you’re walking the halls of an company office – do you notice anything at all that refers to the importance of women within the company? Has a building been named after a woman? This extends to use of language. Chairman is no longer commonly used, chairperson is better. That goes for other terminology as well. Why not use neutral terms, or female terms? All these things have consequences, we’re still social creatures. We need to pay attention to the language and symbols we use, because they affect us.’
So what’s the deal with diversity among your coworkers?
Sidhu laughs. ‘My research team is very diverse. Two out of five people working on this paper are female, and there’s a wide variety in ages and backgrounds. Fortunately, or my credibility would be down the drain.’
TEXT: Yasmina Aboutaleb
PHOTO: Aysha Gasanova