Gender diversity at executive level likely to produce above-average profitability

There is mounting evidence to prove that firms which perform well on diversity and inclusion (D&I) also do better when it comes to profits and other key metrics. “Recent McKinsey research suggests that companies in the top quartile for gender diversity on their executive teams were 21 per cent more likely to experience above-average profitability than companies in the fourth quartile,” says Mazars consulting partner Dera McLoughlin.

“In Mazars, we can see two tangible benefits to date – the ability to recruit better and more talented people and the ability to retain higher performing staff,” she adds. “Even at the graduate level, we now regularly get asked by college leavers about our D&I policy. Ultimately, talent drives company performance and acquiring and retaining the best talent is a key focus for us.”

Organisations wishing to improve their D&I standards need to measure it properly and ensure the effort is driven from the top, according to Mazars HR consulting director Sonya Boyce. “It is imperative that organisations put tangible metrics, including but not limited to those monitoring gender, gender pay, race, disability, age, sexual orientation and family status, in place to measure D&I standards,” she says.

“It is essential that the senior management team supports D&I actions in your organisation and that the tone at the top provides the appropriate leadership for all within the organisation,” Boyce adds. “It can also be very effective to identify D&I champions within the organisation to bolster your D&I efforts further.”

Pay gap

One of the key metrics to employ is gender pay gap (GPG) reporting. “At Mazars, we were early adopters to GPG reporting and believe it is a key annual HR reporting metric,” says McLoughlin. “What you fail to measure will never improve. The purpose of gender pay gap reporting for organisations with equal pay structures is to ensure that women are equally represented at more senior grades, that women get the same opportunities to progress as their male colleagues and that they are encouraged and supported to apply for more senior roles.”

However, the pay structure is only one component of GPG analysis, according to McLoughlin. “It can also be used as a tool to identify gaps in the number of female employees in management positions and upper pay quartiles as well as to identify gaps and inconsistencies between men and women in terms of bonus structures and benefits in kind. In some industries, it can be the case that male employees generally receive significantly higher bonuses than their female counterparts, particularly in senior management and executive positions. “

“Research suggests that when a pay gap is published it forces companies to take action to promote not just pay equality but equality and diversity in general as it impacts recruitment, retention, the development of business and the brand of the organisation,” Boyce notes.

The Mazars 2019 Gender Pay Gap figure was less than 1 per cent (0.93 per cent). This compares to a national average in Ireland of 14.4 per cent. However, the firm made further progress in 2020, and its gender pay gap has increased in favour of women. On average, in Mazars, for every €1 a man is paid, a woman is paid €1.06.

“This is very consistent with the number of women in the upper (55.65 per cent) and mid-upper (68.42 per cent) income quartiles,” says McLoughlin.

“We have learned a lot from examining our gender pay gap figures, and in particular, we have learned to shift the focus from that of trying to ‘fix women’ to instead turning our focus to ‘fixing the working environment’ to support women and support female progression,” she continues. “To this end, we established a partner-led D&I committee, and this committee oversees the delivery of our D&I strategy for the firm.”

Shine a spotlight

According to Boyce, analysis of gender pay gap reports can shine a spotlight on existing practices, policies, behaviours, and organisational norms and this knowledge can be used as a springboard for overall D&I improvement.

But more needs to be done to improve D&I standards generally and gender equality in particular. “At Mazars, we believe that to break the glass ceiling and accelerate gender equality, a legislative-based approach is required to drive the change,” says McLoughlin “The introduction of mandatory gender pay gap legislation is key to achieving this aim. We welcome the announcement by the Government on International Women’s Day reconfirming its commitment to introducing this legislation in Ireland in the coming weeks. Unfortunately, we have seen Ireland fall significantly behind our European neighbours in relation to gender pay gap reporting legislation, and it has not been treated as a key business issue here as it has in many other European countries.”