Britain’s ‘productivity puzzle’ shows no sign of improving. Last week saw the third consecutive quarterly drop in employee output, with the ONS suggesting that wages would be £5,000 higher on average if the productivity crisis were fixed.
While economists continue to puzzle over why greater employment and more people working longer hours is resulting in consistently less output per hour compared to all our major competitors, one thing is clear: companies with a significant number of senior female leaders are bucking the trend.
It’s not just that companies in the top quartile for gender diversity are 15 per cent more likely to outperform their industry peers. Research also shows that average employee productivity growth is higher for companies that employ three or more women at board level, compared to those that have just a single female director or none at all.
You would think that with results such as these, companies would be clamouring to realise the business benefits associated with greater female representation. Unfortunately, despite the growing body of evidence that gender-diverse boards lead to productivity gains, boards are failing to realise these benefits.
UK firms are set to fall short of government targets for increasing female representation on boards to 33 per cent by the end of 2020 and top firms have been criticised for taking a ‘one and done’ approach to appointing women to boards.
Critical to resolving the productivity crisis is setting meaningful diversity targets based on the business benefits that women can bring, instead of allowing this to be seen merely as a ‘tick-box’ exercise.
This requires challenging deeply held beliefs, such as the belief that those who choose to work flexibly or part-time are uncommitted, and therefore unfit for the boardroom. Too often in today’s typical company culture, an individual working late every night is perceived to be a ‘better’ and more ‘committed’ employee, than someone who can get everything done to leave work at 3pm most days, goes a long way to explaining the current productivity crisis.
Not only are women at work 10 per cent more productive than men, despite being paid 18 per cent less, but the notion that women don’t really want the top roles, because they’re too invested in their families, has no basis in reality. To suggest you can’t be committed to anything if you have any other priorities is simply confusing the issue. Many successful male board directors have plenty of competing demands on their time, without these causing others to question their dedication in the way that the commitment of working mothers is constantly viewed with suspicion.
Going forward, boardrooms must consider which business metrics are most appropriate for identifying high performers and consider whether the ability to adhere to a traditional working pattern is the most important criteria at a time when productivity and business agility are becoming increasingly important.
This really matters. As well as having a valuable role to play in making organisations more agile and productive, female leaders can also help to reduce the stress and anxiety issues associated with unhealthy working patterns, in a way that’s set to further improve productivity. In fact, a major study shows that workplaces can save up to 10.6 days of productive time per employee per year, by improving the health of their workforce.
To get the ball rolling, HR has a valuable role to play when it comes to helping the chairman and board take stock of the productivity and other business benefits that can be realised with greater female representation. Only by focusing on these benefits, and by challenging deeply held assumptions about women on boards, can they unite the board in seeking to realise the productivity and wellbeing advantages that more female leaders now have an essential role to play in creating.
Alison Gill is CEO of board evaluation consultancy Bvalco