“It’s terrific to be with business leaders who recognize that corporate governance can be a competitive advantage–and that diversity of thought is a source of great value.” So said Deloitte Chairman Sharon Allen during an annual ceremony of the Boston Club to recognize women’s leadership on public company boards. What follows is Allen’s address yesterday that paid tribute to the Massachusetts-based companies with women directors and newly published survey data from the Boston Club that showed the number of women entering boardrooms and the C-suite to be on the decline. For more on the Boston Club’s Census click here.
The number of companies without women represented on the board or executive team was astounding to me. Clearly there is work to be done.
Today, I’d like to talk about that work.
First by examining the backdrop of our current economic situation, then by exploring the implications of the new reality we find ourselves in, and finally by considering the impact of these circumstances on women–or perhaps it might be more accurate to consider the impact of women on these circumstances.
We’ve all heard plenty of economic commentary over the past eighteen months, with a variety of pundits offering their views. When I hear them, I’m often reminded of the words of that baseball player and philosopher (and yes, New York Yankee), Yogi Berra–who said “It’s tough to make predictions, especially about the future”.
So in that spirit, let me offer two predictions with great confidence:
First, as with all economic cycles, we will emerge from this economic environment and return to growth, and second, women will play a critical role in this emergence.
Now, I realize these predictions may sound simplistic–but the issues underlying them are far from simple.
While I see some promising signs, I don’t yet know exactly how our economic situation will unfold.
What I do know, is that our business landscape has changed dramatically. And those changes have reinforced traditional needs and exposed others, all with implications for businesses today–and for the people who will lead them. Before I get to those needs, let’s take a look at our current economic environment–but, from a very different perspective.
Let’s begin by talking about some real skyscrapers…no, not like those on your skyline here in Boston, but like some others that are not far from my home in Pasadena, California.
Giant Sequoias
One of the biggest news stories to come out of California this year has been the fires that have consumed more than 500 square miles of land across the state since the beginning of July. Those fires have put some of California’s oldest and most beloved sequoia trees at risk–and, unfortunately, some have been lost.
The trees of Sequoia National Park are a marvel of nature. Growing for some 2,500 years now, these trees often extend to more than 200 feet in height and can bear an estimated 11,000 cones. In fact, the Park’s largest sequoia, the famous General Sherman Tree, is the most massive living organism on earth. It stretches taller than a 27-story building–about half the height of the John Hancock Tower.
Interestingly, sequoia trees cannot regenerate without natural forest fires. That’s because their cones grow high in the treetops and fall to the ground –but they will only open to release their seeds in the presence of intense heat. Ironically, in burning off the underbrush, fires create the very conditions that enable new sequoia trees to grow. Without fire, there can be no giant redwoods.
I mention this because something similar has been happening in our country for almost two years now. Our economic meltdown has consumed so much in its path –jobs, careers, companies, industries …plans for retirement.
The heat has been intense. And what has been left is an economic environment this country hasn’t seen in generations.
Ironically, the fire that has been our recession may have also created conditions for new growth. The question is “have these conditions sufficiently burned off old ways of thinking along with old business practices”.
As an accountant, I believe that numbers tell a story, just as they have in the report JoAnn just shared. So let me try to put the soundings I’ve heard together with the numbers I’ve seen to give you my impressions of today’s economy –and what may emerge from our new business landscape.
The Economy –A Cloudy Picture
We all know the story by now. In chasing higher yields, lenders abandoned long-held credit standards to approve millions of sub-prime mortgages, with the expectation that ever rising housing prices would improve the value of the underlying collateral and reduce risk.
But when property values began to decline rather than appreciate, all the models and attempts to engineer away risk failed, which, combined with extraordinary amounts of leverage, triggered a series of events that have touched the lives of millions of people in our country and abroad. The result was an economic environment unlike anything we have seen in 80 years. While our recession didn’t morph into a depression, it’s important to remember that for many, the nest egg didn’t just crack, it broke–and that swift and sudden loss of great value seemed to leave nothing behind but a new sense of vulnerability.
Lately, however, we’ve seen headlines that have brought some glimmers of hope.
Globally, there appear to be encouraging signs –strength, actually, in Brazil, China, and India, and a return to positive GDP growth in France, Germany, and Japan. Many economic experts, including our own economists at Deloitte, say that we’re at the “beginnings of a recovery.”
Is the recession over?
Last week, we had some very welcome news here at home, with third-quarter growth of 3.5%, the best in two years and an end to four consecutive downward quarters. Helped by the government’s “Cash for Clunkers” program and a tax credit for first-time home buyers, the numbers for auto and home sales have trended upward.
Unfortunately, there are other numbers that also continue to trend upward –unemployment, foreclosures, and the federal budget deficit. Still, the mood is one of guarded but growing optimism. We’re seeing some of that in our clients’ interactions with us, which range from more scoping exercises for new work to more commitments for new engagements.
There seem to be indications that consumers are beginning to emerge from their “bunker mentality” little more than a year after the crisis. But with tight credit, consumers probably won’t be able to spend at levels significantly greater than what they earn. As a result, this recovery will be different, and most likely will be led not by consumer but government spending.
There is so much to talk about with this economy. But I think that what everyone wants to know is what will happen next –and, if, after this recession is over, we’ll go back to “business as usual.”
My response . . .
How can we? A new reality is upon us.
First, old “norms” have vanished, perhaps forever but at least until our memories fade and another bubble forms. For now, it’s hard to imagine expectations of ever-increasing home prices, minimal levels of personal savings, and incredible leverage employed by financial institutions.
Along with changing assumptions, we’re also now faced with changing realities. Globally, there are new competitive pressures. China, for example, will soon become …the No. 1 English-speaking country in the world. India has more honors kids …than America has kids.
Here at home, much is also new and emerging –an increased regulatory environment for most of our businesses–new ways of interacting with one another through social networking sites like FaceBook and Twitter–an increased influence of Generation Y, with its commitment to make the world a better place.
But there is change underway in our society that is even more fundamental. And if you want to know what the new reality will look like in our country, you don’t have to look too far to see it up close and personal.
What Will the New Reality Look Like?
I serve on the board of Catalyst, Inc, a nonprofit research and advisory organization focused primarily on the advancement of women.
Earlier this year, Catalyst produced a short video to address the business challenges of the day. It told executives that there is an “overlooked yet effective solution to help you make your numbers, and she may be seated right next to you.”
Catalyst works hard to highlight one of our country’s most productive yet most underutilized business assets –women.
We –the people in this room, have known for years that there is great value in the leadership of women. But that value will not be fully realized until we give the issue of gender in the workplace the full respect that it’s due.
Because gender isn’t a “women’s issue.” Gender is a business issue that companies everywhere will need to address –and capitalize on.
But …when?
I’m hoping that the answer will be sooner rather than later. Not because it’s politically correct, socially just, or the “right” thing to do. Again, numbers tell a story. For example, there should no longer be the excuse that not enough qualified women are entering the talent pipeline. In a situation that has reversed itself over the past 40 years, women now represent the majority of college students. Today, for those who graduate with a bachelor’s degree, 57 percent are women.
Now, couple that with some other numbers that should have everyone’s attention:
- Currently, age 62 is the median age for retirement in the U.S.
- This year, an estimated 10,000 Baby Boomers will turn 62 –each day. And in the next 10 years, 43 percent of the working population will become eligible to retire.
- Furthermore, research conducted by Deloitte indicates that there will be fewer young people to replace retiring workers every year for the next 30 years.
While today the labor market may feel different, with these staggering labor shortages projected well into the future, businesses simply cannot afford to neglect the individuals of any demographic group …as employees –or, as candidates for future leadership.
The effects of a growing pipeline of educated women and a maturing workforce have leveled the playing field. And, now, the greatest economic crisis in 80 years has tilted that playing field toward what Maria Shriver calls the “greatest social transformation of our time.” For the first time in history, women now comprise a majority of the American workforce.
In her study released just a few weeks ago called The Shriver Report: A Women’s Nation Changes Everything, Maria Shriver reports that, today, nearly 40 percent of mothers are primary breadwinners who bring home the majority of the family’s earnings. Furthermore, nearly two-thirds are breadwinners or co-breadwinners, bringing home at least a quarter of the family’s earnings.
According to the report, this fundamental reset of our economy will drive a fundamental reset of the workplace. And I see that reset in favor of not just women but everyone who needs to cope with the demands of today’s workplace.
To meet this new reality, Maria’s report calls for all of the things that women have needed for years –more flexible work schedules, comprehensive child care policies, redesigned family and medical leave, and equal pay. And I’m proud that she has recognized Deloitte as her report’s “model employer.” In doing so, Maria cited such innovative programs as Mass Career Customization, our approach to talent management that provides a flexible lattice organization with far more options than “up or out.”
The New Reality –An Array of Needs that Women Can Meet
The new reality is that today’s business landscape demands what women have proven they can provide. How will women influence this new reality? I submit that there are two important areas to consider–their presence and position in the economy, and their proven success in governance
Let’s start with their presence and position in the economy. Take the classic business challenge of forging greater connections to clients and customers. Of course, women have the skills and talent to do that. But they also have a natural affinity working to their advantage. Because, today, there’s a greater chance than ever before that the clients and customers that businesses need to connect with are women.
The changing face of business belongs to women –and not just because of women’s recent emergence as the majority of the U.S. workforce. According to various reports, women also control more than half of our nation’s wealth. Today, women wield purchasing power in excess of $14 trillion. There are many clever names for this in today’s media, such as the “Sheconomy” or “Womenomics.”
Personally, I prefer to call it what it really is –power.
Think about it. Women are nearly half of all U.S. shareholders. Women buy half of all computers, more than half of all cars, and are responsible for a whopping 83 percent of all consumer purchases.
A few years ago, Deloitte recognized the changing face of business and wanted to better understand how women executives choose professional services providers. In fact, 91 percent of our partners, principals, directors, and senior managers that we surveyed have pitched to women clients. To help our people better understand gender differences among clients and potential clients, we worked with Marti Barletta, founder of The Trendsight Group, an organization focused on marketing to women. Using her research, we created our “Women as Buyers” workshops.
The insights we gathered on the purchasing behaviors of women are helping our people speak an important language–one that is helping us make the personal connections that build Deloitte’s most important offering–trust.
While the power of women in the economy is clear, their contributions in the executive suites and board room are equally compelling. Several recent studies–from Catalyst, and most recently, Pepperdine University–have documented this value, and the findings of these studies are impressive. Across various financial measures, companies with women on their boards or in the C-suite reported returns that were consistently greater than those of companies that exclude women from business leadership. In fact, in many cases, the returns were far greater.
(Would somebody please remember to mention this to those 30 companies in the survey without women in their boardrooms or executive suites?)
The returns associated with women and the diversity of thought they bring to leadership positions have been so persuasive that just last week, a Swiss company announced plans to create a new investment fund. You may have read about the Women’s Leadership Fund. Based in Zurich, Naissance Capital will begin this fund in January by investing in companies whose boards include women. Naissance said that it created the Women’s Leadership Fund after several studies indicated that greater diversity and independence of opinions helps companies do better.
That linkage is also crucial to meeting another need that was exposed by our financial crisis –that of greater vigilance in risk management.
Women play a vital role by helping ensure that issues debated in the board room or C-suite are approached from many different perspectives. Women can provide greater role in risk management by providing an equal but different voice–one that generates better dialogue, a richer set of ideas, and a more creative playbook of alternatives.
With our economy ringing a loud wake-up bell, demographics clearly pointing to increasing opportunity for women, the extraordinary economic power women hold and their demonstrated positive contributions as leaders and board members,I’m convinced there has never been a better time for women to thrive in business and leadership.
Will they?
It depends …on you, and others like you.
Your ongoing efforts will move the numbers and change the results of the Boston Club Census report–in fact they may be the only thing that can. But if we leave it to others, if we try to embrace hope as a strategy, if the commitment falters, years from now we may be still talking about numbers that are discouraging.
Will the New Reality Mean More Women Leaders?
Like democracy, business is participative. And leadership requires you not only to participate, but to be assertive, too. We’ve all heard that if you wait for someone to ask you to become a leader, you will never be one. That’s true. But women can demonstrate leadership and make others aware of their accomplishments without being a braggart or speaking in a loud voice.
Like the intense fires that enable the big redwoods to regenerate, many forces have converged and ignited to change our business landscape forever.
Your involvement, your engagement, and your behavior are crucial to our ability to capitalize on the “new reality.”
By supporting organizations such as The Boston Club and creating awareness among the business community of the challenge, opportunity and business value for increasing the number of women in leadership roles…
By mentoring those women who will follow you and who are looking for guidance and support as they navigate their own careers…
By casting a wider net when looking for individuals to fill important leadership positions, either in the executive ranks or the board room, and sponsoring women for these meaningful, challenging jobs…
Women can take major steps forward in becoming business leaders.
It may not be easy. But I do believe that it is possible.
As everyone here today has proven, having women as business leaders is good business–and now is the time to make what is possible into your own new reality.