Womenomics: Firms with female execs perform better, study finds

An analysis by Goldman Sachs found firms that have more women in senior positions as managers or on their boards outperform in their sectors [FILE: …

Companies with a higher presence of female executives have historically rewarded their equity investors with better performance, said Goldman Sachs Group Inc. strategists as they unveiled a basket of European firms that employ an elevated number of women.

“Over more or less any period since the global financial crisis, having more women in senior positions as managers or on the board is associated with company outperformance relative to the sector,” the strategists led by Sharon Bell wrote in a note on Tuesday. They added that this doesn’t apply to all industries and that academic research isn’t yet conclusive on this trend.

Goldman analysts rolled out a new basket of European companies with the most women at all levels, called Womenomics (GSSTWOMN Index), which includes firms such as LVMH Moet Hennessy Louis Vuitton SE, Swedbank AB, Nestle SA and AstraZeneca Plc. French and Nordic companies dominate the list, said the strategists, as France has a quota system for female board members while the Nordic region has historically had higher female labor participation.

Europe is beating the U.S. in its push to make women a more equal part of the workforce, and although the pay gap between men and women remains large in the region, it’s smaller in all major countries in Europe than in the U.S., Canada and in Japan, according to Goldman. Workforce participation rates among women in Europe have been rising, while in the U.S. they’ve been flat since the late 1990s, said the strategists.


The research weighs in on the market debate regarding the importance of investing based on environmental, social and governance principles. Europe has been seeing a boom in appetite for such investing this year, with about 50% of all new exchange-traded funds in Europe, the Middle East and Africa this year ESG-related and accumulating about $4.2 billion in assets, according to Citigroup Inc. data. That compares with $3.8 billion for new non-ESG funds.

ESG Flows

Inflows into ESG-focused strategies may have contributed to the better equity performance among companies with higher female presence, Goldman said.

“The price outperformance may be a function of flows into ESG funds targeting diversity metrics, rather than more women producing better outcomes or lower risks,” the strategists said. “But even if this were the case, we continue to believe investors will value higher social and governance scores for companies, so companies that do perform well on these metrics should continue to attract both flows and a premium.”

As a to-be-sure, Goldman strategists also added that they weren’t able to find a correlation between higher female presence and returns on equity. While the outperformance of companies with more women is “pretty robust” for different time periods, in industries like technology it doesn’t work, according to Goldman, as the sector has been slow to improve its diversity.

They also said that academic research hasn’t been conclusive on whether employing more women means better performance.

Goldman’s Europe Womenomics index is down about 7.8% this year, compared with a drop of 11% for the benchmark Stoxx Europe 600 gauge. Over the past five years, the difference is much more significant, with Womenomics up 22% compared with a gain of around 4.2% for the Stoxx 600.

Covid-19 Effect

The companies in the basket have on average 46% female employees, compared with 36% for the benchmark Stoxx Europe 600 Index. In addition the selected companies have 40% female managers and 42% women on the board.

Goldman doesn’t believe females in the workforce will be more adversely affected than men by the fallout from Covid-19. While women are more heavily represented in such industries as travel, media and retail, which have seen strong profit declines during this year’s crisis, more women are employed by the public sector, where salaries have held up better.

Longer-term social changes as a result of the pandemic could also benefit women, according to Goldman.

“There is likely to be less commuting, more online work and working from home, and this should enhance flexibility for both men and women,” the strategists said. “It is the flexibility of both women and men that we think has been a determinant in increasing women’s participation in the workforce in recent years.”

Getting Rid of Gender Bias in Venture Capital

Getting Rid of Gender Bias in Venture Capital …. Deepening these networks could be one way of strengthening social capital and cultivating strong …

The gender gap in VC doesn’t merely reflect society’s sexism. It’s an alarm bell, warning of an industry’s obsolescence.

A headline-grabbing statistic has been making the rounds for a while – only 2.3 percent of the total VC pot of money ($131 billion in the United States in 2018) goes to women-led businesses. Granted, if you are generous enough to include founding teams that include at least one woman, the number rises to 10.4 percent. But the fact remains that over 80 percent of VC money goes mainly to all-male teams. Digging deeper into the problem makes us question the VC approach as a whole and contemplate a possible overhaul of the process.

So where are the women?

To be sure, the entrepreneurship space is not a completely level playing field to begin with. Yet as new ventures progress through the pipeline, the gender imbalance goes from appreciable to appalling.

In business schools, for instance, women typically account for around 35 percent of the total cohort.

Prominent accelerators like MassChallenge and Founder Institute have confirmed that 30 to 40 percent of their programme participants are women. In the US, 39 percent of all privately held businesses are owned by women. And a report titled “Moving Toward Gender Balance in Private Equity and Venture Capital” shows that 64 percent of Chinese firms have at least one female owner and five of the nine female-led unicorns (since 2010) have been founded in China.

However, things take an interesting turn when women have to choose how they fund their business. That same report suggests that women-led businesses are nearly twice as prevalent in earlier funding rounds than in later rounds – almost 12 percent at accelerator and incubator stages, dropping to 8 percent at seed stage. By early-stage VC funding, women represent only 4 percent of investments.

Do women find it harder to ask for money or is unconscious bias seeping in? According to research conducted by HP on the confidence gender gap, men apply for jobs when they have 60 percent of the skills required while women only do so if they have 100 percent of the skills. While asking for money is never an easy task, women may find it harder.

That said, once women entrepreneurs have mustered the courage to put themselves through a ‘shark tank’-like experience in front of the VC, the numbers are not always encouraging. Women who pitch their venture successfully get less than half the average investment that men receive and the valuations for women-led businesses are far lower than that of men-led ones. To build their businesses with smart capital, women have to work much harder than men.

Where does the problem lie?

The predictable answer to that question often notes how male-driven the VC industry continues to be. Only 11 percent of VCs have women on their investment committee and only 7 percent of VC firms in the US have equal gender representation. Thus, it is tempting to believe the problem with VC is that an ‘old boys’ club’ culture reinforces biased deal mechanics.

But if you look a bit deeper, you will find that women-led funds also end up largely investing in men. Take for example Spero Ventures, a social impact fund with a majority of female decision makers. Only one of their first 17 investments was run by a woman. It is worth distinguishing a fund like Spero with a fairly broad investment mandate from the likes of Golden Seeds, BBG Ventures or The JumpFund that are specifically set up to back women-led start-ups. These funds definitely play an important role in rectifying the imbalance but such a stark division across VCs does not seem healthy or right.

Perhaps the problem lies in the delivery of the investment pitch. A pitch is an opportunity for founders to showcase their company, their work, their talent and make a bold, audacious ask for capital. As experience tells us, while women are cautiously optimistic, men exude irrational exuberance about their start-up idea and believe they can deliver the impossible. As Kamal Hassan, partner at Loyal VC, recounts, where a woman describes her business as one that could potentially employ 100 people, a man goes on to pitch his “billion-dollar business”. Similar ideas, different framing.

Studies also show that women are less likely to persist in situations where they face successive rejections – like the pitch process.

But evidence also points to an element of unconscious bias that no amount of false bravado or persistence on the part of women entrepreneurs could resolve. In a study involving an audio-based pitch competition, the same narrative was read out by a man or a woman. Sixty-eight percent of the audience backed the venture pitched by the male voice. When experimenters provided a photo of the entrepreneur, participants also favoured the man, all the more so if he was attractive. The male-narrated pitches were perceived as more “persuasive”.

How do we fix this?

It is evident that the imbalance is worth addressing for various reasons. VC firm First Round reported that its investments in female-founded companies performed 63 percent better than those in all-male venture teams. Women also run more capital-efficient companies achieving 35 percent higher ROI. Women-owned businesses are growing much faster. Studies have found a statistically significant correlation between the diversity of management teams and overall innovation.

Women-led and women-only ecosystems may be an interim solution. Funds like Halogen Ventures, Rethink Impact and Aspect Capital – all led by accomplished women – are charting a whole new course and the tide may turn as a result, but not anytime soon. Offering a safe circle for women to pitch to women funders may increase the chances that female entrepreneurs will seek funding. In addition, women-focused networks and physical spaces like The Wing help build communities of working women. Deepening these networks could be one way of strengthening social capital and cultivating strong female entrepreneurial talent.

Other VCs have chosen to reconfigure how investment decisions are made. Loyal VC has an unusual approach – entrepreneurs come in through networks of referrers. Each CEO has to provide two references who have worked with them for months to get a small initial stake. Further funding is then based on what the companies deliver month over month, not how they pitch. Loyal VC’s portfolio has almost 40 percent women CEOs. In place of the binary ‘go big or go home’ choices, Indie VC offers support to a small cohort of selected entrepreneurs who have one main task: growing revenue over 12 months. Rethink places its emphasis on social impact reporting. Admittedly limited in number, these VCs may indicate where the industry needs to go in order to remain profitable and socially productive.

Maybe the whole VC industry needs revamping. The 2.3 percent figure mentioned at the beginning of this article suggests something is glaringly wrong. The sector’s logic and process reflect its origins in the 1950s, while the entrepreneurs, their companies and their ideas belong to a new era. Perhaps it is time to redefine how VCs fund companies.

Monisha Varadan (INSEAD MBA ‘10D) is a Partner at Zephyr Ventures.

Kamal Hassan (INSEAD MBA ‘93D) is a Founding Partner of Loyal VC.

Claudia Zeisberger is a Senior Affiliate Professor of Entrepreneurship & Family Enterprise at INSEAD and the Academic Director of the school’s Global Private Equity Initiative. She is the author of Mastering Private Equity: Transformation via Venture Capital, Minority Investments & Buyouts and Private Equity in Action: Case Studies from Developed & Emerging Markets.

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Trahan brings Uber skills to drive change in Congress

Lori Trahan felt a rush of nerves as she accepted her first fare as an Uber driver. Seeking to find out why the ride-hailing service lacked female drivers, …

Lori Trahan felt a rush of nerves as she accepted her first fare as an Uber driver. Seeking to find out why the ride-hailing service lacked female drivers, the then-consultant found herself about to let a total stranger into her car. A new, potentially unknown location popped up for her to drive to, with little time to adjust and a waiting passenger in the back seat.

“There’s definitely that first-time hurdle where you hit the accept and you’re driving to pick up someone new and there’s an adrenaline and there’s an anxiety that goes along with that,” said Trahan, now the congresswoman from Massachusetts’ 3rd District. “The second you get over that, it’s unbelievable that after you do it once so much of that hesitation and that reticence, it just melts away.”

Trahan said she was able to use her experience to provide insight for her client, Uber Technologies Inc., in addressing its lack of female driver representation. Later, she saw the lack of female representation in Congress and decided to run, in part, so she could find out herself some of the barriers that keep women out of office. From the corporate world to Congress, Trahan’s own experiences and a belief in the benefits that diversity brings remain significant influences.

Trahan’s turn to politics came after former Rep. Niki Tsongas retired, vacating a district that included Trahan’s native Lowell. Trahan said she immediately knew she wanted to run for Congress after Tsongas announced her exit. Still, she had concerns: How would she make it work? What about her job leading a consulting firm and her children?

Trahan ran for the seat, narrowly winning the Democratic primary and prevailing in the general election to join Congress among a historically diverse class of new members. Now she hopes that diversity will be a model for women’s advancement in other areas, including in corporate America, where she previously worked as a technology company’s lone female executive.

Women “can think of a million reasons because we are empathetic; we are the caretakers,” Trahan said. “You’ll think of a million reasons to talk yourself out of it. And if anything, I hope what 2018 did was just give women the license and the confidence to just take that step because you’ll figure everything else out.”

The value of hard work

Trahan, 45, grew up in Massachusetts where her father was an iron worker and her mother had “scrappy” working jobs to supplement his paycheck, she said. As one of four daughters, Trahan said she developed a “swagger and an outspokenness” and learned the value of hard work from her family and of diversity in school in Lowell.

She’s now raising her own two daughters as well as three stepsons with her husband, David Trahan, a home builder.

After attending Georgetown University on a volleyball scholarship, Trahan worked on the Hill for Massachusetts Deocratic Rep. Martin T. Meehan, eventually serving as his chief of staff. She then turned to the business world and worked in leadership positions including chief revenue officer at former digital advertising and data company ChoiceStream, before leading consulting firm Concire Leadership Institute as chief executive.

In her business work, Trahan experienced being one of few women in leadership. Companies are grappling with a lack of diversity among executives and board members amid pressure from investors and lawmakers.

“It is a heavy burden when you’re one,” said Trahan, who experienced being a company’s only female executive while at ChoiceStream. “You changing the conversation alone — bringing that every day, every meeting — is a tall, tall order.”

That’s a problem Trahan homed in on at Concire. She was an early partner helping to launch the business and eventually joined full-time, said co-founder Anne Morriss, who has since launched The Leadership Consortium. Morriss said Concire’s original mission was to improve employee morale, boosting customers’ experiences in the process. Under Trahan’s leadership, the business focused on creating work environments where diversity can flourish.

Clients ranged from San Jose, Calif.-based  eBay Inc., a public tech company, to privately held Louisiana hospital operator Ochsner Health System, according to a spokesperson for Trahan. There was also Concire’s work with San Francisco-based Uber — which faced allegations of sexual harassment and discrimination in its workforce and unethical business practices — on recruiting women drivers, when Trahan signed up to drive herself.

“I know that experience gave her insight that she couldn’t get otherwise,” said Morriss, who donated to Trahan’s campaign, “and I know that it took her 30 seconds to reach the conclusion that that was the right thing to do. As close as she could get to walking in someone else’s shoes, she’s going to do it.”

Trahan’s Uber driving impacted Concire’s final recommendations to the company. The firm hypothesized safety concerns were a barrier for women. Trahan’s time driving showed her that while that was one component, other issues contributed too. Experiencing the anxiety of the first ride herself, she “instantly understood” that preparedness, training and getting through ride one were also contributors.

Trahan’s work at Concire, which closed when she returned to politics, often involved trying to find when and why women left their companies and fix root causes. Advice she gave companies seeking to diversify included “clumping” — hiring several female board members, for example, rather than one so that conversations would naturally change. It’s a “win-win” for women and companies because businesses get a better return on a bold diversity investment and women are set up for more success when they’re joined by other women, she says.

To benefit from diversity and avoid groupthink, companies need to be sure they proactively seek perspectives from women and give people a “safe space” to share different viewpoints, Trahan said. Women with children often face additional barriers when workplace cultures value employees for things like working more hours or coming in early, which can be more complicated for them, she added.

A particular focus for public companies has been on gender diversity in boardrooms. Among members of Russell 3000 company boards, 18.5 percent are women, according to Equilar Inc. The topic has become a policy question as well: California became the first U.S. state to set a quota for board diversity, requiring public companies in the state to have at least one female board member by the end of this year and instituting higher mandates for larger boards over the next two years. A Democrat in New Jersey is proposing a similar mandate.

These diversity efforts are gaining emphasis as studies show having more women and racial and ethnic minorities among corporate leadership correlates with better business results. For example, a McKinsey & Co. report said companies with more gender diverse executives are more likely to outperform their industry average than companies with fewer women leaders. There was an even higher likelihood of better results for businesses with more ethnically diverse executives.

Trahan said it’s an important time for women to shape conversations in boardrooms and the ranks of senior leadership.

To raise representation of women in the workforce, Trahan advocates changes to the minimum wage, strengthening pay equity laws through the Paycheck Fairness Act (which the House passed Wednesday), creating a paid family leave system and education changes, including universal pre-Kindergarten and Kindergarten programs. She’s in favor of ending the use of nondisclosure agreements and mandatory arbitration in cases of sexual harassment, practices some companies are re-evaluating amid the #MeToo movement.

Trahan supports a fellow Democrat’s bill mandating public companies disclose executive and board diversity to shareholders and the public and convening an advisory council of companies and investors to work with regulators in establishing best practices.

Companies having more regulation to comply with is a small price to pay for cultural change, Trahan said. “It’s a small hurdle for companies to have to clear in terms of administrative cost or compliance for us to do the right thing and make sure that people feel safe and valued and equal in the workplace.”

The largest lobbyist for American businesses, the U.S. Chamber of Commerce, argues against several of these changes, including the Paycheck Fairness Act, which it says could punish employers for legitimate pay differences. The organization supports requiring board diversity disclosure.

“We think it’s important to have gender and race diversity on boards,” said Tom Quaadman, executive vice president of the U.S. Chamber Center for Capital Markets Competitiveness. “We think it is something where the business community needs to be a constructive part of the solution and that by bringing people together, it helps to drive solutions to the problems rather than having one mandated by Congress. So we think this is one where stakeholders really need to join together to resolve these problems.”

Brenda Trenowden, global chair of the corporate gender diversity advocate 30% Club, said transparency about women in corporate leadership would help improve diversity, along with other supportive legislation. Ultimately, she believes businesses need to voluntarily diversify based on business benefits but says countries that are most successful have supportive policies that make it easier for families in the workplace and increase disclosure.

Many of Trahan’s policy objectives are in line with Democrats’ aims in the House, where the party holds a majority. The Republican-controlled Senate is less likely to act on these issues. Trahan said she hopes passing legislation in the House will create pressure on the Senate to act.

As Trahan works to execute her goals in Congress, she’s emphasizing the importance of women having a voice in each debate, echoing her calls for change in the corporate world. She wants the diversity the 2018 election ushered into Congress to serve as a model for businesses and other fields.

Trahan is one of 127 women in the 116th Congress, the highest representation of women in the legislature in U.S. history, according to the Pew Research Center. Her background in business adds another facet.

Watch: Ilhan Omar: Diversity in Congress Leads to Better Policy

Judith Durant, chair of the Lowell Democratic City Committee, first supported another candidate in Trahan’s crowded primary because she wanted a more progressive representative. She backed Trahan after she won the party’s nomination and said she’s doing an “awesome job” so far. Durant said she likes that Trahan brings additional experience beyond a political background to the office.

Her business background brings “another piece of experience to the House,” Durant said. “We’ve got people from all kinds of backgrounds, and I kind of like it that she hadn’t just been in politics all the while.”

Several months into her first term, Trahan said she’s seen the diversity of the Democratic Caucus influence discussions within the party and she has learned from the varied views on almost every issue and policy.

“I would so much prefer to sit in that room than a room where there’s instant agreement — we’re only talking about a couple things because we’re so homogeneous that there’s only two other ways to maybe think about this problem,” Trahan said.

“Look, sometimes it’s going to be tense and sometimes it’s going to be even frustrating,” she added. “But I think as long as we always hold on to our diversity is what makes us stronger and leaning into that rather than considering it like an anchor, I don’t think it’s going to weigh us down. I think it’s going to lift us up.”

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IBM to train over 1 millionn girl students

IBM also announced a two-year Advanced Diploma Programme in emerging technologies created in collaboration with the Ministry of Skill …

New Delhi: IT company IBM said it will collaborate with with Central and State governments to upskill around one million girl students in science technology, engineering and maths fields over a period of three years.

“We can see 100 per cent jobs are going to change. You need more women in workforce. We are announcing for 2,00,000 from grade eight to twelve, we are going to prepare them for STEM over a three year period,” IBM Chairman, president and CEO Ginni Rometty said at a company event.

She said the programme is not about conducting technical training session, but to focus on basics of critical thinking, life skills, among others.

“All of us are capable of teaching our employees sort of hardskills. It is softskill, in technology world that we have to learn. Collectively our programs are doing one million in numbers and helping four million teachers,” Rometty said.

The company will collaborate with seven State governments across India to prepare over 200,000 girls and women in government schools over the next three years for “new collar” jobs through the exploration and study of STEM subjects in classrooms and online, a company official said.

As part of its ongoing engagement with the government, around 4,000 mentors and 6 lakh mentees will benefit from IBM’s AI-powered mentor platform which will include 5 lakh women students.

Rometty announced IBM’s collaboration with Kendriya Vidyalaya school network to support maths teachers across India with its artificial intelligence platform ‘Teacher Advisor With Watson’ that will cater to around 3 lakh female students.

IBM also announced a two-year Advanced Diploma Programme in emerging technologies created in collaboration with the Ministry of Skill Development and Entrepreneurship which will be available to 100 Industrial Training Institutes (ITI), including 50 all-women ITIs, over the next three years.

The company will also offer internships of up to five months to some students under the programme.

Under the skills and educational program, IBM will offer science training resources to four million teachers in the Indian Open Educational Resources community for STEM.

Niti Ayog CEO Amitabh Kant, who was also present at the occasion, said women in India have performed exceptionally well whenever they are given opportunities.

“It is not possible for India to grow at 9-10 per cent without focussing on women. Every single place where we have given opportunity to women, they have performed better than men. Government has to play the role of facilitator, but it’s the men who have to change their mindset that women should get place in organisations,” Kant said.

Gender Wage Gap Persists as Women Continue to Undervalue Themselves — Adzuna’s Research …

… of eBay, Gumtree, Qype and Zoopla, and is backed by leading Venture Capital firms Passion Capital, The Accelerator Group and Index Ventures.

– Women are much less informed about their earning potential – only 31% of uploaded resumes are from female job seekers, compared to 69% from males

– Women persist in underselling themselves by leaving out core skills, such as time-management, and leadership

– Few women rise above the ranks — only 11% of those earning above the $100,000-mark are female

In spite of the tumultuous wave of recent social activist movements advocating for greater gender equality and pay parity between the sexes, the end-goal is still miles away. The job aggregating service, adzuna.com found that salary prospects for both sexes follow disparate trajectories, with a 1:9 ratio of women earning over $100,000 per annum.

Data from ValueMyResume has shed light on women’s perceptions of their worth in the open market. According to Adzuna, female job seekers diminish their talents and abilities by perpetually omitting valuable information about their core skills, and fail to acknowledge key achievements. When competing for high paying jobs, modesty is a slippery slope. As employers rarely trouble themselves to correctly guess a candidate’s strengths and accomplishments, leaving them has had a detrimental effect on many women’s job applications.

According to Adzuna’s research, positive change won’t ensue until women get vocal about their demands and take pride in their abilities. To attain equal pay, women must exude the same level of confidence as their male colleagues – starting with a resume that does justice to their talents and achievements.

According to the US Census Bureau, on average, a woman makes 80.5 cents for every dollar a man earns, and women’s median annual earnings are $10,086 less than men’s. And while it is true that male-dominated industries tend to have higher wages than industries and occupations made up mostly of female workers, the fact remains that women continue to be underpaid in similar jobs which require identical qualifications as from their male counterparts. As things stand, an equally qualified woman earns 97.8 cents for every dollar earned by a man for doing the same job.

Lily Valentin, US Country Manager at Adzuna, comments: “The gender wage gap affects women’s progress at all levels and in all career sectors. Crucially, women must learn to stand up for themselves in the often difficult salary negotiations. This is particularly important for young women who are on the cusp of entering the workforce. As the first salary often dictates upward mobility, it can result in a slower trajectory if women aim too low to begin with.”

“There is no easy fix to even out salary levels, but employers must show more support to female employees. The number of women in executive level positions remains far too low. Employers can win the war for talent by empowering women in the workplace by helping them return to work after career breaks, allowing more flexible working options, and supporting highly skilled female staff into higher paid, higher level roles. Keeping women working, and allowing them to reach their full potential will fire-up productivity levels and promote a more diverse workforce.”

About Adzuna:

Adzuna is a search engine for job ads used by over 11 million visitors per month that aims to list every job, everywhere. We search thousands of websites so our users don’t have to, bringing together millions of ads in one place. By providing smarter search options and powerful data about the job market, we give jobseekers the information they need to take control of their careers.

Adzuna was founded in 2011 by Andrew Hunter and Doug Monro, formerly of eBay, Gumtree, Qype and Zoopla, and is backed by leading Venture Capital firms Passion Capital, The Accelerator Group and Index Ventures.

Adzuna’s mission is to be the best place to start looking for a job. We love using the awesome power of technology to help match people to better, more fulfilling jobs and keep America working.

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