A new study released in February 2016 confirmed what a great deal of research has already shown: having women in the top management of a company tends to significantly increase that company’s profitability. But one finding of this research stood out: The single most important factor for increasing the numbers of women in top management positions — thus increasing corporate profits — was stronger paternity leave policies. Not maternity leave, and not even quotas. Let fathers of newborns take time off, and the whole enterprise will thrive.
Let fathers of newborns take time off, and the whole enterprise will thrive.
The study buried this insight; it wasn’t mentioned until page 12, almost halfway through the report. And it is not conclusive; the research didn’t specifically link paternity leave to profitability, only to a higher percentage of women on boards and in top management positions (which in turn is linked to profitability). But the finding makes sense. It shows that sweeping issues like gender diversity can’t be solved with narrow solutions. To address these, even in a single company, companies need to think about the whole system of a society’s workforce and the cultural factors affecting everyday life.
Titled “Is Gender Diversity Profitable? Evidence from a Global Survey,” the study was published by the Peterson Institute for International Economics, a Washington-based nonprofit economic policy research group. Canvassing nearly 22,000 publicly traded companies in 91 countries, it was authored by the Peterson Institute’s director of studies Marcus Noland, research analyst Tyler Moran, and Georgetown University economics professor Barbara Kochwar. They found that increasing the percentage of women in top corporate offices from zero to 30 percent correlated with profitability that was 15 percent higher, on average, than that of other companies. (Interestingly, the only role that didn’t correlate with higher profitability was the chief executive’s office; there was no discernible difference in company performance if a company had a female CEO.)
The researchers analyzed factors that might influence female representation in top management, starting with the presence of maternity leave. “One might have expected to find a significant and positive result for maternity leave,” they wrote. In other words, “countries that provide mothers with more generous terms for caring for their babies and toddlers should have larger shares of female leaders.” But the data didn’t support this hypothesis. There was no correlation between even the most generous maternity leave policies and greater percentages of female executives.
But there was a correlation with paternity leave. With that policy in place, on average, the percentage of women in senior positions — for example, the share of board seats held by women — went up. Why would paternity leave make a difference? Because despite the many espoused policies supporting executive women in principle, corporate practices tend to be unsupportive of women’s returning to work after maternity leave. Women who come back must generally take on the double whammy of managing both a home and a demanding business role — often at great personal expense.
Paternity leave policies, as the report states, “allow childcare needs to be met but do not place the burden of care explicitly on women. [This increases] the chances that women can build the business acumen and professional contacts necessary to qualify for [a high-ranking position].” Or as Noland told the New York Times, when policies enable “women to have children while maintaining their careers in a relatively undisruptive manner, you see more women making it to the very top.” He postulated that paternity leave accomplishes this by encouraging men and women to share the duties of child care more evenly.
Paternal leave policies also subtly endorse female advancement in the workforce and male participation in domestic life. Fathers don’t have to be “revolutionary” to devote time to child care. Nor do they have to explain the practice if it’s supported by corporate policy. The authors opine that more gender-neutral family leave (and more supportive child-care institutions in general) would also end expectations by employers that young men will provide greater returns on investment in training and mentoring than young women.
The impact of paternity leave on women’s roles is particularly noteworthy because of the rarity of the practice. Even countries with laws mandating generous maternity leave, job guarantees for returning mothers, and subsidized child care — countries like France, Germany, and the Netherlands — are just beginning to expand the practice to fathers. Moreover, most paternal leaves last days instead of weeks. More equity generates habits of mutual responsibility in a marriage, and support for those habits, that can last years.
Studies like this always remind us what most women already know: Leaving the workforce to raise children is the biggest single stumbling block to progressing up the corporate hierarchy. But now we know that the solution requires not just new policies, but new thinking. The demands of raising a child are not separate from the demands of professional life; they are intimately connected. Until we realize this, and figure out ways to integrate work life and home life, finding women to fill corporate board seats or to occupy the corner office will remain difficult.