Mercer President and CEO Julio Portalatin says companies need to rethink their diversity policies so that working women – and bottom lines – can thrive
By Georgia McCafferty
As the father of a daughter, and now a grandparent of a granddaughter, fostering female diversity in the workplace is an issue that’s been close to the heart of Julio Portalatin, president and CEO of Mercer, for a long time.
But as he told the audience at a recent AmCham event, the reason business leaders need to start rethinking their policies to attract and ensure women thrive in the workplace is financial, not emotional.
“One of the most significant factors limiting the growth potential of countries around the world is the fundamental participation and engagement of women in the workforce,” Portalatin says.
“What it is is a business imperative. Yes [fostering female diversity] is the right thing to do, it’s a nice thing to do, but the reality is that it’s an imperative thing to do and in our world many things really do survive because they become business imperatives.”
The IMF and the World Bank, among many others, have demonstrated the substantial economic gains that can be made when more women participate in the workforce. As Portalatin notes, it was this financial proof that helped spur Japanese Prime Minister Shinzo Abe to adopt womenomics and make increasing female workforce participation one of Japan’s present top three economic growth pillars. Yet despite the proven economic incentives from gender diversity, and the progress that has already been made, Portalatin reveals a 2014 report by Mercer found that organizations are a long way off from reaping gender equality’s financial rewards.
According to the report, which surveyed 164 leading firms across 28 countries, women are still underrepresented at all levels of the global workforce, and they hold less than a quarter of senior management roles globally. More impor-tantly, the report also found that conventional diversity policies are insufficient to create gender equality in the next decade.
Portalatin says what is required to address the lack of female representation in business is a total rethink of female diversity policies and programs. Support for this change needs to come from the employers, who Portalatin believes, have a very unique role to play as the change drivers and business leaders, who need to make a true commitment to change.
“This really is a call to action to do something just that much more than what you have already done. It is really time to act differently,” Portalatin says. “And the reason for that is because it’s absolutely true that as women thrive, societies thrive, economies thrive, and ultimately businesses thrive also.”
Portalatin points out that although Mercer’s research had highlighted the issues women faced, the report was about action not just data.
“The research that we undertook was not just to add another voice to all of the different data that’s been done around the world that points to diversity improving business results or diversity improving engagement or improving turnover – all those things that have been documented time and time again already.”
“The research was really about getting a perspective about some of the best practices around the globe that we can share as action items for change.”
When looking for these empirical results, Mercer started with three fundamental building blocks that are key to the foundation of any effective strategy to increase female participation to guide its survey: health, financial well-being, and talent management.
“If you do one of those really well, you are missing two-thirds. You must hit all three of these elements in order to have a successful diversity policy,” he explains.
To understand how organizations can best build an effective, long-lasting policy to increase female diversity, the Mercer study examined the programs and approaches the 164 companies surveyed had already undertaken and used a statistical analysis to uncover the links between action and positive outcomes.
They found that traditional diversity policies like mentorship and sponsorship programs solve part of the problem, but are not sufficient on their own. Furthermore, they often stymie progress in addressing more critical issues that hold back women from the workforce – like pay inequality – and have resulted in slower levels of improvement.
Starting from this baseline assessment, the report then identified five key drivers of gender diversity that businesses can use to increase their progress and completely rethink their approach to gender diversity
- Broad, holistic enterprise focus
Firstly, the report found that any approach to support female talent needs to be broad, holistic and implemented across an entire organization for the change to be sustainable. It needs to focus on total future impact for it to accelerate any gender diversity, not just immediate results, and it needs to breed confidence within an organization.
As Portalatin explained it, the report’s analysis linked this confidence with results. “You all know that if you think you are successful, you’re likely to do more,” he added.
- Engaged senior leadership
Secondly, leadership needs to be actively engaged in promoting and managing diversity, in a way that gets them passionate about the issue. “When senior leaders are actively involved and engaged we see better outcomes in both current representation and future trajectory,” Portalatin says. “For some executives it might take the hard data for them to see, in their own environments, that they can achieve desired results and how they can do it. For others it may need engaging them in conversation.” The third issue Portalatin highlights is the need for active and effective management of talent programs. This means introducing and actively managing programs that promote pay equity, and ensure that women have equal representation in jobs both with and without profit and loss responsibility. The research shows this type of active manage-ment results in improved, longer-term increases in workplace gender equality than more passive programs like family leave and on-site gyms. That’s not to say they are not important, but they deliver slower improvements in representation when introduced alone, and can also encourage complacency among some companies.
“Active management of policies and programs is required to avoid unintended career penalties or consequences,” he says. “Things of that nature are very important. Walking the talk and providing the resources, the training, installing annual processes to ensure success and driving real change.”
- Non-traditional solutions
The fourth area highlighted by Mercer’s research was the way in which innovative programs designed specifically with women’s unique needs in mind – especially in the areas of health programs and financial and retirement planning – provide more benefit to an organization and drive future diversity success.
“General benefits are just that – general benefits. There are different needs for our female population, just as there are different needs for the male population,” explains Portalatin. “Segmenting to the need is an important aspect to meet those needs of the people that are important to you.”
- Equal but different skills
Finally, the survey asked respondents to evaluate female and male managers against specific skills and experiences. The results showed that females bring unique abilities to the talent pool, excelling in team management and leadership, as well as being more flexible, more adaptable to change and better at teamwork and cooperation.
Organizations that recognize, value and embrace the different strengths of women and men have better diversity results and are better positioned to succeed.
“We are not saying that women should be channeled to roles that require such skills or focus on developing such skills,” Portalatin stresses. “What we are saying is that where women have such skills and want to use them then this can drive significant value for business results in companies.”
Portalatin says organizations and employers now need to take advantage of the immediate opportunity and design a gender strategy for their company based on their own workforce environment and analytics. Firms also need to align their talent strategy with their diversity strategy, and only implement new programs and benefits if they help attract and retain females in the workplace, not just because they look good.
Finally, companies need to go beyond the typical and broaden their understanding of what it takes to support women, as well as collaborate with organizations outside of the company, like schools, NGOs and industry groups, to help support and enable the future supply of female talent.
“The world will change around you, with or without you. So we have a choice, it’s a simple choice. Do you want to be part of that change, do you want to lead that change, or do you want to let change happen to you?” Portalatin asks.
“I’d rather lead, and I hope you would rather do that as well.”
Georgia McCafferty is a Hong Kong-based freelance journalist covering business and finance and current affairs. She writes for the Economist Intelligence Unit, CNN.com, Quartz.com and the Journalism and Media Studies Centre at the University of Hong Kong. Georgia has a Master of Commerce from the UNSW Australian School of Business and a Master of Journalism from the University of Hong Kong