To address issues critical to human welfare in emerging markets, representatives from the public and private sectors annually convene at the Emerging Markets Symposium at Oxford University’s Green Templeton College. Last year, the group’s focus was on gender inequality. The high-level gathering of policy makers, business leaders and academics reached two major conclusions. First, despite three decades of booming and innovative growth in emerging markets large and small, very little had been done to advance women’s interests.
The other conclusion: Things are about to change.
Gender inequality is a significant barrier to prosperity. It deprives national economies of women’s talents, constrains consumption and diminishes tax yields. It also curtails the national and personal benefits of investment in female education by forcing women into professions and occupations that make less than full use of their skills and capabilities. On the business front, gender inequality limits talent pools and deprives organizations of the distinctive skills that women bring to boardrooms, offices, shop floors, stores and farms. It limits understanding of consumer preferences and is a recipe for low morale, weak productivity, provisional loyalty and poor retention rates.
Not long ago, the issue of diversity was compliance-based and relegated to HR departments. However, the increased integration of world markets combined with the paradox of serving local contexts is driving a strategic interest in diversity, especially in emerging markets. After all, women are destined to play ever enhancing roles in business and commerce. But while progress is expected in emerging and developed markets alike, this paper argues emerging markets might just lead the way on the diversity front because mitigating gender inequality offers faster and more sustainable benefits in the developing world.
THE NEXT BIG EMERGING MARKET
There is a reason that business analysts are closely watching the economic influence of women. Growth trends indicate women as a global group will eventually represent a market larger than India and China combined. Men currently generate income of about US$25 trillion worldwide, which is more than twice the total for women. But income growth over the near term is expected to be dominated by women, who already control more than 65 per cent of the worldwide total, according to Boston Consulting Group. While these statistics are global, the trend is clearly visible in developing countries, where earned income of women is growing faster than that of men. These changes in consumer behaviour bode well for society. Indeed, as spending by women grows, more resources are expected to be directed to health, education and children’s well-being. Women as a group are also more likely to save and take less risk with investments. However, in order to take full advantage of this shift, businesses need to be more diverse and inclusive.
Evidence suggests firms with women CEOs often outperform sector peers in return on equity, EBIT operating results and stock price gains. For example, the companies in Diversity Inc.’s Top 50 index, which recognizes firms with strong diversity and inclusion measures, outperformed the NASDAQ, S&P 500 and DJIA by more than 20 per cent between 2000 and 2010. In addition to being more profitable, Fortune 500 firms with the best records of putting women at the top score higher in studies that measure organizational excellence. Women may not make better leaders, but research clearly suggests firms with women and men jointly leading (with a mix of attitudes toward risk, collaboration and ambiguity) will outperform competitors that rely on single-sex leadership.
Scandinavian countries such as Norway that reserve 10 per cent of senior management jobs for women consistently rank highly in terms of innovativeness. After analysing 2010 data from global rankings conducted by Diversity Inc., BusinessWeek and Fortune, we found an overlap between diversity, innovativeness and admirableness. Ten of the most innovative firms are also among the most diverse. When it comes to being most admired, 14 were also diverse.
Diversity clearly drives innovation. Why? Simply put, groups with a range of perspectives outperform groups of like-minded experts because innovation stems from where conflict and chaos lie. The continuous process of disagreement, reconciliation and consolidation that comes with diverse teams leads to greater capacity for understanding and learning. As a result, diverse teams often have a better chance at achieving breakthrough vision.
A company that can match its own internal diversity with the external diversity of its customers is going to satisfy more people more of the time, and prosper in the process. As a result, the benefits that stem from deploying a diverse workforce have never been greater in emerging markets, where firms are increasingly forced to cater to both the base and the top of the consumer pyramid.
But while firms operating in emerging markets are doing a fair job of redefining management practices and innovation, they could do even better by incorporating gender equality concerns.
In particular, more businesses should take advantage of opportunities to innovate gender-specific mobile technologies that enable access to information, savings, security and healthcare. The GSMA (Groupe Speciale Mobile Association) and the Cherie Blair Foundation for Women both help mobile companies empower women in developing countries through access to mobile phones. According to the Cherie Blair Foundation, if 300 million women are brought within the folds of the mobile revolution, about US$13 billion could be generated in revenues. However, firms that seek to innovate for women successfully need to employ gender diverse talent in the process.
Former Pakistan Federal Minister of Health Dr. Sania Nishtar, one of the authors of this paper, seized the opportunity to address both healthcare issues and gender inequality as the founder of Heartfile Health Financing, a mobile-enabled community that protects the poor from catastrophic expenditures on healthcare and foreign healthcare by providing both women and men equal opportunity to seek help when they need it most, all enabled through their ubiquitous mobile devices. To ensure success, budgets were earmarked specifically for women’s health needs and assistance plans factored in the need to analyse and address situations that lead women to forego care. In addition, gender sensitive data management, monitoring and management ensures that both men and women benefit equally from this program.
For its part, Nokia uses diverse ethnographic techniques, employing gender diverse anthropologists to study mobile users in emerging markets where mobile phones are having a huge impact on safety and security, farming and phone banking. Nokia values the diverse backgrounds, expertise and experience of employees which provides generally a more inspiring workplace. Specifically, the company relies on its diverse workforce to innovate and improve the company’s understanding of the diverse markets where they operate.
Diversity can be a powerful competitive advantage since it equips firms to customize products for diverse customers and helps increase creativity, innovation and productivity. As a result, we expect a worldwide increase in diversity management, which can be a major component of a firm’s Corporate Social Responsibility contract with communities, suppliers and customers. And if emerging markets lead the way, both gender equality and quality of life will improve worldwide.