In an interview with CNBC David Solomon, CEO of the global investment bank, announced that new company policy will mean Goldman Sachs will only help companies go public if there is at least one diverse board candidate and their primary focus is on seeing more women hired in that position.
The new policy, which is set to go into effect on 1st July 2020 in Europe and the US, is a great opportunity for us all to consider the direction our companies are taking towards equality, but why is gender diversity Goldman Sachs’ priority?
The evidence towards Goldman Sachs’ focus on gender diversity
Goldman Sachs stated the reason for enacting the new policy is down to fact that the performance of public offerings of US companies with at least one female director has been “significantly better” in the last four years than those without. Diversity has become a positive differentiator.
Numerous studies have also been carried out over the years which emphasise the importance of female-led companies. In one study, the returns of Fortune 1000 companies led by female CEOs were compared to those of the male-dominated S&P 500 and it found that companies with women steering the wheel drove three times the returns.
Companies also benefit culturally with gender diversity in the C-suite as the Korn Ferry Institute found that women were more likely to encourage others to achieve desired results and engage effectively with their teams, thereby creating a more positive work environment for everyone.
In spite of the ample statistics illustrating the benefits of women in top-level positions, the ‘glass ceiling’ is yet to be shattered as only 29% of senior management roles are held by women. Hence, Goldman Sachs’ new policy is a noble position to take when gender diversity among the board needs to start being taken more seriously.
Gender diversity and performing with integrity
Goldman Sachs’ call for women to be in the boardroom is a good opportunity for HR managers to consider their own organisation’s procedures and whether women can enter and maintain these leading positions in the first place.
Although it is already well established in some sectors, flexible working should be rolled out universally to allow women to juggle childcare commitments with their high-flying, demanding jobs.
Equal rights to maternity and paternity leave will also need to be more rigorously enforced within workplaces so women are not penalised for taking more time off than their male colleagues and held back in their careers.
Organisations must unshackle themselves from current corporate practices which let biases creep in. As per the World Economic Forum’s 2018 Global Gender Gap Report, where they rank nations on the percentage of women in the workforce, eight of the top 10 nations are in Africa and Southeast Asia. To stay ahead, organisations absolutely must make focused and decisive actions, like Goldman Sachs has recommended.
Following in Goldman Sachs’ direction will not only lead to greater diversity but also deliver performance with integrity and organisations will enjoy a positive reputation among customers, employees, and partners.
Although Goldman Sachs’ new policy is commendable, the HR industry cannot ignore that it is only the first step to really make workplaces more inclusive and reflective of our wider society.
Having one female member on the board does not indicate that an organisation champions equality as it disregards all the other minority backgrounds yet to be fairly represented in leadership roles.
Organisations that are more inclusive will become increasingly important when Millennials and Generation Z eventually dominate the workplace.
Research by John Zogby Strategies found that over 50 per cent believe that fair representation of race, ethnicity, and religion is paramount to creating the ideal workplace over merit and competition, so organisations should be striving towards overall diversity for the new era.
Goldman Sachs’ push for diversity is a positive move, especially considering that as a result, it may miss out on business from successful companies that are lacking in gender diversity.
However, we must be careful not to overstate Goldman Sachs’ new stance at a time when there is a need for the employment diversity quota to stretch further than just hiring women. The organisations that do go the extra mile in advocating diversity and performing with integrity will be the ones to reap the benefits.
Seema Iyer is chief human resources officer at MetricStream.
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