This short series of three articles applies some transformation and innovation thinking to an issue in desperate need of drastic solutions.

The European chemicals market, made up of firms that produce, store and transport anything from plastic bottles to car batteries, is worth €499 billion . With the sector prominent in almost every value chain on the planet, these businesses represent some of our oldest and best performing global enterprises. 

Dr Ilham Kadri runs Solvay, a Belgium-based chemicals firm, with €3.1 billion in sales in the first quarter of 2022 alone .

Dr. Kadri broke the glass ceiling of European chemical companies. When she was appointed, she was the first and only female CEO of a European chemical company.

The year was 2019.

In part one of this series we looked at how and why, at current pace, the gender gap will take 217 years to close. 

It seems clear that businesses need greater motivation to speed up a global transformation in not only gender diversity, but almost every diversity initiative they are currently pursuing.

How do you increase motivation? How can you make it more attractive for a business to change and force action on diversity to the top of a business agenda? What might happen to them if they do not change? Well, let’s start with the following immutable facts about business performance and a lack of diversity.

• According to McKinsey, gender-balanced boards are more successful than mono-cultural boards on every measure.
• Recent HBR research found that firms with more women in more senior positions were “more profitable, more socially responsible, and provide safer, higher-quality customer experiences — among many other benefits .”
• A specific study, cited by McKinsey , found that teams with a male–female ratio between 40 and 60 percent produce results that are more sustained and predictable than those of unbalanced teams.
• And separate research states that companies with higher female representation in top management outperform those with lower representation to a tune of 34% greater returns to shareholders.

Put simply: if you are failing to become more diverse then you are failing to be a better business, by any traditional measure of performance.

So, businesses could simply change because it is the ‘right’ thing to do. Gender equality holds the moral high ground and there are societal and cultural benefits for us all that are outside the scope of this article. Businesses know this, and tell us so regularly in their PR statements on International Women’s Day and other events, yet change remains slow.

If the morality of the discussion is important to business, but not important enough to actually force them to make a change, then what about the practicality? If businesses don’t change and retain an internal gender gap, what are the proven performance repercussions of not seeking the above improvements, now and long into the future?

How one European nation halved its accident rate by putting women first

At the risk of being overly obvious: a key risk to business success of not closing the gender gap is that the businesses in question fail to empathise, understand and ultimately sell to approximately 50% of their audience, in many cases.

Even the most empathetic team of middle-aged white men can struggle to put themselves successfully into a female audience’s shoes. History is littered with advertising and launches which sort of ‘get it’ and yet, entirely ‘don’t get it’. PeoplePerHour’s now infamous ‘girl boss’ advert , springs immediately to mind as an example which clearly thought it was appealing to its target gender and in fact was doing the exact opposite. These decisions, it is easy to speculate, given global statistics on gender diversity, are perhaps often made because the businesses and/or teams in question are not well-diversified along gender lines.

In Caroline Criado Perez’ book Invisible Women: Exposing Data Bias in a World Designed for Men, the author recounts a practical public sector example of ignoring a key audience when deploying a ‘product’ with universal appeal. 

Snow clearing in Sweden during the winter months traditionally focuses on roads first and pavements second. But the underlying data shows that pedestrians are more likely to have accidents costing the health service money than road users. Why clear the roads first then? As Perez points out it is easier to drive a car through snow than walk, carry shopping or push a pram. Perhaps unsurprisingly, the policy looks like a male one, designed for men. The male commute is most commonly two car journeys to and from a destination, whilst women are more likely to take journeys via multiple modes of transport and with multiple stops, involving walking or public transport. The impact of the current system was that 69% of those injured in single-person accidents were women, at an estimated cost of £3.2 million in publicly-funded healthcare and lost productivity, in one season, in one Swedish county alone. When the policy was switched in one locale, clearing 200km of pedestrian and bike lanes as a priority, accidents fell by half.

Is a culture of ‘yes men’ costing your shareholders?

Perez’ Swedish example - told in much greater detail in her book, along with many more - shows what happens when we have skewed teams, with skewed data, skewed experiences and priorities. In short: we develop and sell skewed products, services and businesses that cater for and therefore appeal only to a segment of our audience, no matter what their intention.

Without the benefit of a diverse set of values, behaviours and experiences, businesses risk creating a literal culture of ‘yes men’; a predominantly male leadership, who all agree, consciously or unconsciously, that male-centric issues and approaches are the most important.

Swedens’ council’s (predominantly male-led) insistence that road users (predominantly male) were the most important aspect of their market very literally cost them money. 

In a product, service or business transformation environment it is very likely that a team of ‘yes men’ is doing exactly the same thing in your business.

The business argument for diversity

Following her appointment as CEO of Solvay, Dr. Kadri set about a transformation.

In March 2020 her priorities were “a shift towards… profitable products, a step change in [Solvay’s] environmental performance, and a social program that aims to get the best out of staff, especially women .” As another article tells it, Dr Kadri’s mandate is “to set Solvay firmly on the path of sustainability whilst ensuring profitability .” That’s no mean feat.

In a March 2022 earnings report Solvay forecast EPS was beaten by 45.90%. Year-on-year revenue was up 41% and net profit margin had improved by 128%.

Despite the gender imbalance at the CEO position, Dr. Kadri is obviously not alone and several notable examples could have been highlighted here. Karen Lynch, for example, took over US giant CVS at the height of a major transformation, during the coronavirus pandemic and whilst the company was at the heart of the US vaccine rollout. After barely a year in the job, revenues were up 11.5% and net profit margin had improved almost 40%. There are countless similar stories to tell.

You also do not have to look far to find wider statistical support for gender diversity and specifically more women in leadership roles.

According to a much-cited Catalyst study , companies with higher female representation in top management outperform those with lower representation to a tune of 34% greater returns to shareholders.

Catalyst have a full page of supporting statistics here , which include some perhaps unforeseen benefits, including the fact that gender diverse boards experience fewer instances of fraud, for example.

The business case for more female leaders and closing the gender gap seems unshakeable. If businesses cannot act on moral grounds, or for the greater good of society, then why not act on business performance grounds?

Will Dr. Kadri’s results be repeated every time a business appoints a female leader? Probably not. Should more businesses find out if they could be and is there a business case to do so? Absolutely. Do businesses have a clear idea of what they should do now? That’s where part three of this series comes in.

In part three we’ll look at big, disruptive, game-changing ideas to close the gender gap and consider why big ideas are needed as catalysts to major organisational transformations and, in this case, much-needed social and cultural change.

The third and final part of this series will be published next week.