Archived: Reaching Critical Mass Is Key

Achieving critical mass (or one-third) of women in leadership is essential to building “a stronger economy, better institutions and a more representative democracy,” write the authors of Benchmarking Women’s Leadership, published by The White House Project, a New York Citybased nonprofit that aims to advance women’s leadership roles in communities and sectors.

The group’s research, based on data collected from previously published sources and industry experts, found that women hold an average of only 18 percent of leadership positions in 10 industry sectors, ranging from a low of 11 percent in the military to a high of 23 percent in academia.

Although women “are trained, educated, in the pipeline and prepared to lead, women in generaland women of color in particularare vastly underrepresented,” states the study.

In corporate America, for instance, women account for 16 percent of leadership positions, defined as holding corporate officer seats. They also hold 15 percent of board seats and 3 percent of the CEO positions. Black, Asian and American Indian women and Latinas fare even worse, holding 3.2 percent of board seats and a mere 1.7 percent of corporate officer positions at Fortune 500 companies. (In contrast, among The DiversityInc Top 50 Companies for Diversity, 10 percent of women were CEOs and 24 percent held board seats.)

Not only do women lag behind male counterparts in pivotal leadership roles, their wage gap is widening as boomers age and move up the management ladder. Women earn only 78 percent of what males make annuallyan improvement of less than a half penny a year since 1963 when the Equal Pay Act was signed, note the authors. Moreover, Black women earn 64 percent and Latinas earn 52 percent of what white males make.

“Both the leadership gapand the wage gapbetween women and men persists at nearly every level of employment,” states the report. “And [it] grows wider as the status, prestige and rank of the leadership position rises.”

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The Breaking Point

According to The White House Project, “You cannot change the corporate culture and the way things work unless you have enough people with the will to change in a position to do it.”

So how many women leaders are needed to effect change “Thirty-three percent really gives us the edge,” stated President Marie Wilson to the press.

Known as critical mass, this is a concept adapted from nuclear physics that refers to the quantity need to start a chain reaction. When applied to women in the workplace, Harvard Business School Professor of Organizational Behavior Robin J. Ely found that critical mass won’t occur if women are only at entry- or middle-level positions. The key to closing the gender gap, including how women are perceived and promoted, is to reach critical mass at the senior levels.

It is possible. Take Norway, which in 2002 passed legislation instructing publicly traded companies to comprise their boards of at least 40 percent women by mid-2005. As a result, board representation of private companies in the country jumped from 11 percent to 40 percent. What’s more, there was a ripple effect. Despite the global financial crisis, Norway boasts a budget surplus of 11 percent and a nearly debt-free ledger.

The takeaway: When women are equally represented, the bottom line improves. According to the report:

*Fortune 500 companies with the high percentages of women officers experienced, on average, 35.1 percent higher return on equity and 34 percent higher total return to shareholders than did those with low percentages of women corporate officers (Catalyst)

*The stock value of European firms with the highest proportion of women in power rose 64 percent over two years, compared with an average of 47 percent for all businesses (McKinsey and Co.)

*Profits at Fortune 500 firms that most aggressively promoted women were 34 percent higher than industry medians (Pepperdine University)

*Women’s “transformative” leadership style, which helps organizational transparency, responsiveness, accountability and ethics, has been found to be more effective in leading modern businesses than men’s “transactional” approach (Harvard Business Review)

To secure women’s leadership roles, more change will be needed, the authors assert. In addition to the corporate culture, this includes “changes in which styles of leadership are recognized and rewarded as valuable and effective [and] changes in how organizations accommodate work-family balance.”

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