SOURCE: McKinsey & Company

McKinsey & Company

June 21, 2017 06:00 ET

Advancing gender equality could add $150 billion to Canada's GDP in next decade

At current rates, gender gaps in business and society could take 30 to 180 years to close

TORONTO, ON--(Marketwired - June 21, 2017) - In one of the most comprehensive reports to date, The power of parity: Advancing women's equality in Canada, the McKinsey Global Institute (MGI) and McKinsey & Company Canada size the economic potential of greater gender equality, map the existing gender gaps, and analyze results from their new workplace survey.

Canada could add $150 billion in incremental GDP in 2026 or 0.6 percent to annual GDP growth. That's 6 percent higher than business-as-usual GDP growth forecasts over the next decade.

Put another way, this figure is equivalent to adding a new financial services sector to the economy. Each province stands to gain between 0.4 and 0.9 percent each year, with the most potential growth in British Columbia, Ontario, Prince Edward Island, and Quebec.

"Canada is among the global leaders on gender equality, but its progress has stalled over the past 20 years, especially in the workplace. For instance, women's representation in the labour force, in high-quality STEM occupations, in management, and among business owners has either improved minimally or not improved at all. At current rates, these gender gaps would take three decades to almost two centuries to close," says Andrew Pickersgill, Managing Partner, McKinsey & Company Canada. "Narrowing gender gaps at work and in society is a $150 billion opportunity and one of the biggest levers of growth that Canada has today."

Achieving this economic opportunity would require Canada to add more women to high-productivity sectors liketechnology and raise women's participation in the labour force, each of which would account for 42 percent of the impact. Another 16 percent would come from increasing women's working hours.

MGI and McKinsey Canada found that the gender gaps are most significant in seven indicators: women represent 35 percent of managerial positions; 28 percent of science, technology, engineering, and mathematics (STEM) graduates; 23 percent of STEM workers; 20 percent of small business owners; and 29 percent of elected officials; but they take on 64 percent of unpaid care work in the home and represent 80 percent of single parents. Results are largely homogeneous across provinces and cities, pointing to common priority areas for action for the nation and for organizations.

Although 53 percent of the degree holders in Canada are female, women are a minority of corporate leaders. The workplace survey of 69 Canadian companies representing more than 500,000 employees sheds light on the barriers women face in the workplace. It found that women make up approximately 45 percent of all entry-level employees but only 25 percent of vice presidents and 15 percent of CEOs. At almost every stage of the pipeline, women's likelihood of being promoted to the next level is smaller than men's. The first bottleneck for female advancement appears to occur between the entry and manager levels, and the second between director and vice president levels where men advance three times more than women do. The loss of female talent along the pipeline is not due to lack of ambition or higher attrition -- women aspire to promotions at a similar rate and actually leave at a lower rate than their male counterparts.

However, the data do suggest that women lack the same opportunities as men. Women predominantly occupy staff positions that provide fewer paths to leadership. They are also half as likely as men to have had a senior leader support their promotion.

"This research highlights best practices in Canadian companies that others can emulate. But initiatives need to be implemented holistically and effectively, and measures to tackle gender imbalance in companies only work if they are considered to be a true business imperative. Changing attitudes takes time, and persistence is vital," says Sandrine Devillard, a Senior Partner in McKinsey's Montreal office.

Corporations could embrace a holistic set of initiatives while focusing on implementing them well and sustaining the efforts over time. In Canada, best-in-class companies use five initiatives to drive progress:

  1. Go beyond a vocal commitment to diversity by cascading a clear business case for change. Morethan half of the companies surveyed consider gender diversity a top ten strategic priority, but only 14 percent have clearly articulated a business case for change.
  2. Set targets, track performance, share results, and hold leaders accountable. Fifty-five percent of companies lack targets for female representation, and 75 percent do not track female recruitment nor reward leaders for fostering gender diversity.
  3. Create formal sponsorship programs to help promote women. Men are 50 percent more likely to attribute their advancement to a senior leader than women are, yet 80 percent of companies lack a formal sponsorship program.
  4. Make flexibility compatible with promotion. Most companies offer long-term leave or part-time programs, but 58 percent of employees believe that taking advantage of them hurts their career progression.
  5. Raise awareness of, and combat, unconscious bias to create a truly inclusive environment. Women comprise only one-quarter of senior leaders, but 80 percent of employees think their company is inclusive.

"By improving their own gender diversity and female representation at senior levels, corporations can not only improve their bottom line, but also contribute to the economy and society of Canada," says Tiffany Vogel, an Associate Partner in McKinsey's Toronto office.

Gender equality in work is linked with gender equality in society -- the former is not possible without the latter. To progress on the latter, all stakeholders, including government, corporations, not-for-profit organizations, educational institutions, media, and individuals, could undertake a portfolio of initiatives in five priority areas for action in Canada: removing barriers against women entering STEM fields; enabling more women to be entrepreneurs; reducing gender inequalities in child care and unpaid care work; amplifying women's voice in politics; and reducing gender bias and reshaping social norms. Engaging men as well as women and collaborating across organizations and sectors to tackle entrenched attitudes will be one of the most difficult but critical keys to success, ensuring Canada's continued position as a global leader on women's equality.

The report will be available for download at www.mckinsey.com/mgi/

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