Why is it so difficult for organisations to improve gender diversity?

Being a woman in a traditionally male dominated field, I constantly question: ‘What makes diversity so hard to achieve despite extensive workplace policies and motivated leadership?’ I’ve watched in awe as Nordic countries have become leaders in gender equality, enabling non-gendered-career choices and gender diversification across all organisational levels. With Australian women being more university-educated than men, yet paid less, conventional wisdom points towards discrimination as the root cause (Elsesser, 2019). Rational economics suggests there is more credible evidence for why organisations aren’t leveraging diversity for greater innovation, productivity, and profitability?(Hunt, Dixon-Fyle, Prince, & Dolan, 2020).

Whilst gender stereotypes have manifested in attitudes towards women’s workforce participation and career choices, a persistent cause for women’s aggregate pay differential is having children, a prime example of opportunity cost. As a result of women still bearing the brunt of childcare, they are more likely to seek employment which offers flexibility. This is often at the cost of sacrificing higher salaries and career progression for the benefit of being the primary caregiver, a cost which is furthermore exacerbated by inequal access to shared parental leave when a child is born.

This opportunity cost also manifests in dominant caring role bias, as seen in Figure 1. Women are entitled to an equivalent pay of 18-weeks full-time, whereas partners can only access a 2-week minimum wage, leaving little or no opportunity for shared primary parental leave, or for families to consider shared care financially viable (WGEA, 2021). Where there is a high opportunity cost for men to provide parental care, the disproportionally high load of unpaid-care-work on women can be reduced and equally shared between parents to enable their shift into the paid economy.

The gender pay gap is also a major contributor to the lack of gender diversity in organisations. With evidence substantiating marginal benefits from gender diversity and flexible working, economic rationale can be applied to organisations, where employment rewards utility and labour market productivity. The cost-benefit principle relates to the gender pay gap as wage differentials for women is consistently lower than males in every industry and occupational category (WGEA, 2019).

For organisations to incur the marginal costs of increasing women’s pay, organisations need to embrace the marginal benefits of flexible working and increased productivity from a more diverse workforce?(Hunt, Dixon-Fyle, Prince, & Dolan, 2020).

According to Hunt et al. (2020),

“companies in the top-quartile for gender diversity on executive teams were 21% more likely to outperform on profitability and 27% more likely to have superior value creation”.

This evidence validates the cost-benefit to organisations and evidences that the benefits of a diverse workforce outweigh the cost of paying women higher wages.

The cost to organisations in implementing flexible work arrangements can also be outweighed by the benefits of improved employee satisfaction, productivity, and diversity?(Hunt, Dixon-Fyle, Prince, & Dolan, 2020). Fortunately, Covid-19 has demonstrated how flexible working has a limited effect on productivity, thus rationalising how organisations can incur the marginal cost of addressing the gender pay gap for increased productivity gains for workplaces?(Aczel, Kovacs, Tanja, & Barnabas Szaszi, 2021).

Improving gender diversity in organisations is a complex phenomenon seen across hierarchies, legislation, policy, and practices. Because the benefits outweigh the costs, it’s imperative for organisations who are serious about advancing gender diversity to focus efforts on providing equal opportunity in flexible working, shared care, and careers. Not only will these actions foster a more competitive and higher performing workforce, it will substantiate the economic payoff and lower the opportunity cost currently preventing women’s economic development.?

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Jessica is a Corporate Development Project Manager, entrepreneur and gender equality advocate. With extensive experience in engineering and management across capital-intensive industries, she is skilled in leading strategies and multi-discipline stakeholders to collaborative, future-ready solutions. Jessica is also a passionate advocate for gender diversity and is recognised in Engineers Australia's list of “Engineers at the Pinnacle of the Profession”.

This article was written as part of an Economics for a Sustainable Future course in Griffith's MBA.