It is important, and indeed useful, to remind ourselves about the business case for gender balance, writes Rachel Hussey.

A lot of the recent discussion around gender balance and its importance in business presupposes that everyone believes that working towards and achieving gender balance is a good thing and that we all know why this matters.

A large body of research demonstrates that diversity is good for business. Diversity leads to better decision-making, enhances the attraction and retention of talent and, most importantly, improves the bottom line. For example, McKinsey’s recent report entitled Delivering Through Diversity shows that companies in the top quartile for gender diversity within executive boards were 21% more likely to outperform on profitability. Investors are increasingly focused on gender diversity, and Goldman Sachs in February announced that it would only underwrite IPOs in the US and Europe of private companies that have at least one diverse board member. And starting in 2021, it will raise this target to two diverse candidates for each of its IPO clients. Closer to home, the Central Bank of Ireland has called out the specific need for diversity across senior decision-making levels based on evidence of increased standards in governance practices and a more balanced risk appetite.

In many industries, a large part of the challenge around achieving gender balance is the small number of women who enrol for or graduate from the degrees relevant to the industry in question. For example, engineering companies find it more difficult to recruit women because of the small percentage of women who study engineering in college, which in turn is as a result of not enough girls taking STEM subjects in school. Furthermore, in law, over 60% of graduates are women, and in 2018 there were more women on the roll of solicitors than there were men for the first time. And this trend has continued. Data published annually by the UK’s Financial Reporting Council also indicates that the numbers of men and women opting for careers in accountancy are close to or at parity in recent years.

In contrast, the overall profile of the profession is closer to one-third women and two-thirds men. Anecdotal evidence suggests that the position is somewhat better in Ireland. However, a gender imbalance remains, particularly at more senior levels. This makes the retention of women in the professions a key business opportunity if employers are to harness the full value of the available talent.

A key lever in professional services firms is client demand. Clients are very focused on their diversity ambitions and they expect their service providers to be as well. Firms increasingly see tender documents with questions and scoring for diversity statistics and initiatives. It is not acceptable, nor prudent, to arrive at a beauty parade with an all-male team to discuss a proposal with what is usually a diverse team on the other side. And it is not only in pitch situations. Clients – and in particular, international or global ones – now frequently include requirements around diversity in their terms of engagement. Some conduct diversity audits and evaluate the composition of teams and the numbers of hours worked by both men and women. We ultimately need to focus within professional services on representing the increasingly diverse client base that we serve.

Diversity is also important from a reputational perspective. The media – and the trade press as well – have a keen focus on gender balance and new partner announcements can be the subject of criticism and comment if there is a lack of gender balance, particularly on social media.

Firms that make progress in this area, and are seen to do so, will have a real competitive advantage in what is an asymmetric market. Research carried out by the 30% Club shows equally high career ambitions across men and women. However, the same study also indicates less confidence among women regarding their potential to progress.

This is perhaps a topic for another article, where we might also talk about the practices a modern professional services workplace needs to attract and retain talent – all of which will be tested as we work through the current challenges posed by coronavirus.
I was very pleased to be invited to write articles in this publication on gender balance in business. Since my first article the world has experienced, and continues to experience, unprecedented change and uncertainty and that looks likely to continue for some time. Businesses will have very different priorities in the period ahead and I am writing on the basis that we will return to (perhaps a different) normal and that we can resume the discussion on issues around sustainability (including diversity) in that new normal.

Rachel Hussey is Chair of 30% Club Ireland and a Partner at Arthur Cox.