Women in male-dominated industries [Pt3]: The business case for gender diversity

In part one and part two of this series, we dived into the experiences of young women professionals working in office spaces and sectors predominantly occupied by men. They also told us what needs to change for their respective sectors to be more attractive to women and how they can retain their female employees.

In the third part of this series, we are going to ask why have more gender diversity in the first place? Is it for the purpose of improving an organization’s image in the public eye? Is it just about boosting indicators? Or is there an objective benefit to having a more diverse team in the office?

Several studies have shown that there is a significant business case for having more gender parity. According to a staff discussion note by the International Monetary Fund (IMF) published in 2018, reducing the gaps of labor force participation between women and men leads to large economic gains.

The IMF staff study says: “Women bring new skills to the workplace [that are economically valuable]. This may reflect social norms and their impact on upbringing, social interactions, as well as differences in risk preference and response to incentives, for example. As such, there is an economic benefit from diversity—that is, from bringing women into the labor force—over and above the benefit resulting from simply having more workers.”

The study adds that the different skills and perspectives that women bring to the economy leads to higher productivity and higher female labor force participation (FLFP) “leads to a more efficient allocation of labor.”

In a paper on gender diversity and productivity in Egyptians firms by Professor Mona Said of the AUC School of Business, more female participation in the knowledge-intensive service sector specifically had a positive effect on productivity and wages.

In similar findings to the IMF study, the paper said that the particular skills and competencies that women brought as a result of their gender socialization were behind these boosts in productivity. “Women outperform men in competencies including coaching and mentoring, influencing, inspirational leadership, conflict management, organizational awareness, adaptability, teamwork and achievement orientation.”

The World Economic Forum (WEFORUM) says that greater gender diversity could lead to an average increase of 35 percent to countries’ gross domestic product (GDP). “Four fifths of these gains come from adding workers to the labor force, but fully one fifth of the gains are due to the gender diversity effect on productivity.”

As a result of this boost to productivity, the WEFORUM also says this leads to an increase in wages for men, arguing that this should be a strong incentive to reduce barriers to women entering the workforce.

Having a more gender diverse work environment also attracts more qualified and talented females, according to the Harvard Business Review. A 2017 survey of women professionals by the multinational professional services network PricewaterhouseCoopers (PwC) showed that 61 percent of respondents looked at the gender diversity of a firm’s leadership team when deciding on where to work, suggesting that diversity attracts talent.

Other research by the Harvard Business Review also showed that greater gender diversity leads to better organizational performance as a result of the innovation and creativity it brings. “[D]iverse teams can develop more innovative ideas. When people from different contexts work together, their unique perspectives often lead to greater creativity […] leaders with diverse backgrounds and experience helped companies innovate more. Diverse leaders were more likely to create an environment where new, creative ideas were considered. And diverse teams, they found, were more likely to have some common experiences with their end user. With this advantage, teams created better products.”

According to the McKinsey Global Institute, if women’s participation in the global economy was identical to men, it would add $28 trillion, equivalent to 26 percent to annual global GDP in 2025, in comparison to the business-as-usual scenario.

In the specific case of the Middle East and North Africa, GDP could be boosted by 47 percent in 2025 in the best-case scenario, adding $2.7 trillion to the region’s economy.

The International Labour Organization’s (ILO) latest estimates from 2019 show that the labor force participation rate of Egyptian women was 21.9 percent, in contrast with the 70.9 percent rate of men.

However, these figures do not account for the informal economy and unpaid work, according to Ghada Howaidy, who says that studies on the business case for gender diversity and Egypt’s country data must be treated with caution.

“While formal employment figures in Egypt reflect modest participation of women in the formal economy, other statistics and surveys reflect the contribution of women through the informal economy. The Center for Public Mobilization and Statistics (CAPMAS) data shows that between 15 and 20 percent of households in Egypt are female led. This means the bread winner is a woman,” she says.

Howaidy also adds that the Ministry of Planning and Economic Development’s data “shows that the value of women’s unpaid work in the care economy in Egypt is equivalent to EGP 500 billion annually.”

“I believe that these statistics make the question of the business case or economic benefit of gender diversity irrelevant. The question rather becomes, given that women contribute significantly to the economy, how can we better recognize and acknowledge this contribution in order to act fairly?”

    Knowledge Partners


    School of Business
    American University in Cairo
    AUC Avenue – P.O. Box 74
    New Cairo 11835
    Email: BusinessForward@aucegypt.edu

    Copyrights © 2017 The American University in Cairo School of Business • All Rights Reserved

    Copyrights © 2017 The American University in Cairo School of Business • All Rights Reserved. Designed by Indigo.

    Copyrights © 2022 The American University in Cairo School of Business • All Rights Reserved.  Designed by Indigo.