A recent study by the Boston Consulting Group and MassChallenge, a global network of startup accelerators, takes a close look at how startups founded by woman compare to those founded by men, both in terms of how much venture capital financing they receive and how well those investments pay off. Looking at five years of investment and revenue data from the startups MassChallenge has worked with, the study found that those founded by women consistently attracted less investment, even though they actually tend to generate more revenue:
Investments in companies founded or cofounded by women averaged $935,000, which is less than half the average $2.1 million invested in companies founded by male entrepreneurs. Despite this disparity, startups founded and cofounded by women actually performed better over time, generating 10% more in cumulative revenue over a five-year period: $730,000 compared with $662,000. In terms of how effectively companies turn a dollar of investment into a dollar of revenue, startups founded and cofounded by women are significantly better financial investments. For every dollar of funding, these startups generated 78 cents, while male-founded startups generated less than half that—just 31 cents.
The findings are statistically significant, and we ruled out factors that could have affected investment amounts, such as education levels of the entrepreneurs and the quality of their pitches. … The results, although disappointing, are not surprising. According to PitchBook Data, since the beginning of 2016, companies with women founders have received only 4.4% of venture capital (VC) deals, and those companies have garnered only about 2% of all capital invested.
This gender bias may be costly to venture capitalists as well as entrepreneurs: The study calculated that VCs could have made $85 million more over five years had they invested equally in the startups founded by women and by men.
The researchers went one step further and spoke to founders, mentors, and investors to understand the origins of the gender gap in VC funding. Consistent with various other research showing that women are more likely to be challenged, questioned, and criticized in the workplace than men, they found that women founders and their presentations receive more pushback from investors than their male peers. Men are also more likely to talk back to investors when their claims are scrutinized, and to make bold, blue-sky projections in their pitches:
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The accounting firm PwC has adopted a new rule in the UK whereby shortlists of candidates for senior roles must include at least one woman, the Daily Mail reported on Sunday:
Laura Hinton, chief people officer at PwC, said: ‘Diversity in our recruitment processes is something we’ve been focused on for some time and as part of this we are ensuring we have no all-male shortlists and more diverse interviewing panels.’
PwC, which specialises in tax and advisory services, recently set a target to recruit 50 per cent women and 50 per cent men in all of their recruitment drives. The firm also has a sizeable 35.9 per cent pay gap for its Black Asian and Minority Ethnic (BAME) employees. The move comes as it emerged that the three other companies which make up the Big Four – Deloitte, KPMG and EY – had all called for greater diversity on their candidate lists.
PwC and its competitors all released their UK gender pay gap data in March in line with a law requiring most organizations in that country to do so. These firms’ partnership structures starkly illustrated the degree to which the underrepresentation of women in leadership roles compounds the gender pay gap.: PwC reported a mean gender pay gap of 43.8 percent and a median gap of 18.7 percent when partners were included, whereas the mean gap for employees of PwC Services Ltd., the legal entity that employs most of the company’s UK workforce, was just 12 percent.
Overall, the 61.4 of the roles in the top quartile of the firm are occupied by men, the report showed. Absent the underrepresentation of women in senior roles, PwC said its overall UK pay gap would be as low as 2.9 percent—a difference that “can largely be explained by time in role and skill set factors.”
Like other Scandinavian countries, Denmark has a robust social welfare system that supports gender parity in society and the workplace through benefits like subsidized child care and a generous parental leave entitlement for working mothers and fathers. Yet women still make up a small minority of top-level executives in Denmark’s business community, while Danish women’s earnings still lag well behind those of men performing similar work.
In a recent piece at the Harvard Business Review, Bodil Nordestgaard Ismiris, VP at the Danish Association of Managers and Executives, shed some light on this disconnect and suggested some reasons why Denmark’s progressive institutions have not automatically resulted in gender parity.
One problem is that Danish women suffer a motherhood penalty just like women in other countries: Their earnings drop after the birth of their first child and never recover, whereas fathers’ earnings hold steady. Other scholars have pointed to this paradox in the Scandinavian system, wherein working mothers are offered generous parental leave entitlements, but end up harming their lifetime earning potential by spending lengthy periods of time either out of the workforce or in part-time “mommy track” jobs that pay little and offer no room for advancement.
To help correct this imbalance, Denmark and other Scandinavian countries offer fathers generous parental leave as well. In the case of Denmark, Ismiris explains, new parents get 52 weeks of leave with at least partial pay, which they can divide anyway they like; new mothers are also guaranteed 18 weeks of this at full pay, while fathers are guaranteed two weeks. Despite the law encouraging couples to share parental leave, however, in practice women take the bulk of that leave: 300 days on average, compared to just 30 days among men. That means women are still taking on the majority of household and child care duties—and making greater career sacrifices to do so.
Despite the #MeToo movement bringing the problem of sexual harassment in the workplace to the forefront of the public consciousness in the US and around the world, a recent survey from the American Psychological Association’s Center for Organizational Excellence finds that most American workers don’t see their employer taking new action to prevent or stop it. The association gives an overview of the survey at Phys.org:
Only 10 percent of U.S. workers said their employer has added more training or resources related to sexual harassment since the recent increased media and public attention on this serious workplace problem. Just 8 percent said their employer implemented a more stringent policy related to sexual harassment, and only 7 percent reported that their employer hosted an all-staff meeting or town hall to discuss sexual harassment.
Research has shown training to recognize and report sexual harassment isn’t enough to change employee behavior or a workplace culture where harassment is more likely to occur. Instead, psychologists recommend a comprehensive approach that incorporates fair policies that are clearly communicated, ongoing training, leadership support of a civil and respectful culture, and the hiring and promotion of women into senior leadership roles.
It is certainly easy for companies to fall back on training as a solution when their main concern is mitigating liability. However, sexual harassment training is arguably better than no response at all; at the very least, it acknowledges that sexual harassment exists and signals to employees that the organization does not intend to simply sweep it under the rug. Without that acknowledgment from an organization and its leaders, by comparison, employee morale and confidence in the organization’s ability or willingness to handle harassment can suffer greatly. This can send organizations into a self-destructive feedback loop: Lack of acknowledgement and action from leadership discourages employees from reporting, which causes leaders to believe that their organization doesn’t actually have a harassment problem. This makes the fallout all the more damaging when it eventually comes to light that they were wrong.
In a white paper my colleague Lori Lipe and I are currently writing, we look at some of the beliefs that hinder employees from reporting sexual harassment. What we are seeing is that employees’ perception of whether harassment is actually taken seriously at the organization factors heavily into their consideration of the costs and benefits of coming forward. In our latest Global Labor Market Survey, CEB, now Gartner, found that employees are significantly less likely to report when there is a gender imbalance at the top management team, particularly when it is male-dominated. This perception likely stems from the skepticism that male leaders may not take harassment as seriously and therefore dismiss accusations or be unmotivated to pursue justice. This relationship is also evident in the findings of the APA survey:
A recent analysis from the Pew Research Center took a closer look at the gender gaps in corporate leadership in the US, focusing on top-level executive positions and the roles from which senior leaders are most commonly promoted to them. Drew DeSilver wrote up the analysis late last month at Pew’s Fact Tank blog:
Women held only about 10% of the top executive positions (defined as chief executive officers, chief financial officers and the next three highest paid executives) at U.S. companies in 2016-17, according to a Pew Research Center analysis of federal securities filings by all companies in the benchmark Standard & Poor’s Composite 1500 stock index. And at the very top of the corporate ladder, just 5.1% of chief executives of S&P 1500 companies were women.
Nor do many women hold executive positions just below the CEO in the corporate hierarchy in terms of pay and position. Only 651 (11.5%) of the nearly 5,700 executives in this category, which includes such positions as chief operating officer (COO) and chief financial officer (CFO), were women. Although this group in general constitutes a significant pool of potential future CEO candidates, the women officers we identified tended to be in positions such as finance or legal that, previous research suggests, are less likely to lead to the CEO’s chair than other, more operations-focused roles.
That women are underrepresented among CEOs and other high-level executive positions is hardly breaking news. The most interesting finding from Pew’s analysis is that three-quarters of the CEOs studied had previously held leadership roles in operations: a function where women are significantly underrepresented. At the same time, the gains women have made in obtaining executive roles in finance, legal, and HR are not putting these women leaders on the CEO track.
This finding builds on other recent research showing that although women’s representation in management has increased dramatically over the past few decades, women are still segregated into leadership roles that are less production-focused, less highly compensated, and less likely to be career stepping stones toward the top of the pyramid. We see the same thing in boardrooms: Even as more women directors are appointed, they remain less likely than their male colleagues to achieve positions of influence on the board.
Goldman Sachs on Friday reported its gender pay gap data in the UK in accordance with the law requiring most employers to do so by next month. According to Reuters, the bank reported a mean gender pay gap of 55.5 percent at its international business, with a bonus gap for that unit of 72.2 percent. The company’s data showed that within the international unit, 83 percent of those earning the highest hourly pay were men, while 62.4 percent of those earning the lowest hourly pay were women.
The median gaps were smaller than the mean, the BBC adds, coming in at 36.4 percent for hourly pay and 67.7 percent for bonuses. Goldman Sachs UK, a smaller unit that employs people in non-revenue positions, reported much smaller, though still significant, mean gaps of 16.1 percent in hourly pay and 32.5 percent in bonus pay. As other banks have reported, the disparity in bonuses widens the overall gender pay gap significantly and reflects the underrepresentation of women in senior roles with greater bonus potential.
Perhaps in anticipation of this disclosure, Goldman announced a plan last week to improve its gender balance. In a memo, Chief Executive Officer Lloyd Blankfein and President David Solomon stressed that men and women at the company are paid equally for equal work, but acknowledged that women are underrepresented, particularly in senior roles. The bank’s leaders declared a long-term goal of having women make up exactly half of the company’s workforce, Bloomberg reported on Thursday. They did not set a timeline for this ambitious goal, but as a first step, will ensure a 50/50 gender split in each class of fresh graduates Goldman hires by 2021:
Several major financial institutions in the UK have submitted their gender pay gap figures to the government in recent weeks in compliance with the law requiring them to do so by April 4. The data illustrate just how far the sector has still to go if it intends to achieve gender parity in earnings and career progression. The most recent bank to release its pay information is HSBC, which on Thursday reported a median pay gap of 29 percent and a mean gap of 59 percent based on hourly pay in 2017, the BBC reports. The bank also a median gap of 61 percent for bonus payments.
HSBC says these discrepancies are due not to pay discrimination, but rather to the underrepresentation of women in its leadership:
HSBC said its pay gap was largely down to the fact it – like its rivals – has fewer women in senior roles, with just 23% of higher positions held by women. Across the whole organisation, however, 54% of its workforce is female. HSBC has a target to try to improve its gender balance and aims to have 30% of senior roles held by women by 2020.
Barclays, meanwhile, revealed a median hourly pay gap of 43.5 percent, the BBC reported last month, greater than all but 28 of the 1,154 companies that had published their data so far. Lloyds Banking Group and the Royal Bank of Scotland reported average gaps of 33 percent and 37 percent, respectively, Bloomberg reported, highlighting that these wide gaps also reflected a dearth of women in senior roles—an imbalance the banks said they were committed to addressing:
The gender pay gap “is not where we want to be,” RBS Chief Executive Officer Ross McEwan, said in a call to reporters Friday. “We need to have more females in senior roles and we set some ambitious targets in the next three years to improve it and that’s what affects the gender pay gap.” Men make up about 70 percent of the employees in RBS highest-paid quartile, mirroring the proportion of women in the bank’s lowest-paid quartile. … Lloyds said Friday that its bonus gender gap was around 65 percent.
That the financial sector suffers from significant gender gap is not new: It’s one of the reasons why London’s overall gender pay gap is higher than any other region of the UK. Common among these firms is the concentration of women in lower-ranking roles with less bonus potential than their mostly male superiors.