By Linda Basch, PhD, President, National Council for Research on Women

I recently tuned into a forum on reform in the financial sector organized by 85 Broads. It was reaffirming to hear women experts outline their well-developed views on the proposed Consumer Financial Protection Agency. Unsurprisingly, women are playing key roles in so many of today’s critical discussions around reform and regulation. The speakers included Elizabeth Vale, Executive Director of the White House Business Council (and a former managing director at Morgan Stanley Smith Barney), Diana Farrell, Deputy Director of the National Economic Council, and Elizabeth Warren, Professor, Harvard Law School and Chair of TARP Oversight.

In my talks and travels in recent months, I have been inspired by the resounding support for advancing more women, and diversity into leadership whether in the halls of government, Boardrooms, C-suites or at decision-making tables across sectors.

This groundswell of support is based on the overwhelming business case for advancing women into positions of power and influence: it is not only the right thing to do, it is the right business thing to do.

In fact, businesses ignore gender diversity at their own peril. Back in December, The Economist ran a special series of articles on the increasing power of women in the economy with Rosie the Riveter splashed across the cover. It recognized the achievement of an important milestone: women have surpassed 50% of the work force in the United States and are expected to outpace men in economic participation worldwide.

Here are some more interesting numbers: women are more than 40% of private sector managers, and earn more than 60% of undergraduate college degrees and 50% of master’s degrees.

• Women control an estimated 65% of annual consumer spending or about $12 trillion.

• Women-owned small businesses in the US represent the fastest growing segment of small businesses, and collectively out-produce the GDPs of France, the UK, and Italy.

• Women own half the investment wealth in the US, which means that women are rapidly becoming half the client pools of investment companies. This fact is particularly relevant to women Financial Advisors, since there is an untapped market for connecting with women clients.

As we noted in our recent report: Women in Fund Management: A Road Map for Achieving Critical Mass—And Why it Matters, research confirms that women bring many special talents, insights and perspectives to the table.

• McKinsey found that companies with higher numbers of women at senior levels tend to have better organizational and financial performance.[http://www.mckinsey.com/careers/women/social_sector_impact/~/media/Reports/Women/Mckinsey_women_matter.ashx]

• Ernst & Young research demonstrated that groups with greater diversity tend to perform better than homogenous ones, even if members of the homogenous groups are deemed more capable.[http://eon.businesswire.com/portal/site/eon/permalink/?ndmViewId=news_view&newsId=20100126007014&newsLang=en]

• A Catalyst study found that Fortune 500 companies with the highest representation of women officers experienced, on average, 35% higher ROE and 34% higher Total Return to Shareholders than companies with lower women’s representation. [http://www.catalyst.org/publication/82/the-bottom-line-connecting-corporate-performance-and-gender-diversity]

Women’s successes in the corporate sphere, and the overleveraging by historically homogeneous, male-dominated financial service companies leading up to the economic meltdown, led the Financial Times to call last spring for a critical mass of 30% women on corporate boards. The government of Norway has mandated that women must represent 40% of the boards of publicly listed companies.

The jury is still out on whether such measures as setting quotas, are really the most effective way of advancing gender diversity, as examined by a recent New York Times article that called into question the validity of these kinds of policy initiatives.

There is rising support for finding more effective ways of advancing women into top positions.

As we make clear in our report, however, there are some very persistent barriers that need to be addressed and removed:

1) Lack of Capital (or, as we like to say: “Capital Punishment”). Research shows that even the most capable women fund managers have difficulty attracting investors because of biases.

2) Cultural biases and assumptions, including hidden barriers many of us are unaware of. A 2007 Financial Times survey of women in private equity found that 75% of those queried said their gender made it more difficult for them to succeed.

3) A high pressure work environment, often characterized by “extreme jobs,” that are often hostile to women (see the research by the Center for Work Life Policy). Such jobs require upwards of 70 hours/week of work, 24/7 availability, responsibility for profit and loss, and large amounts of travel. More than half the women in one survey said they didn’t want to continue such a pace.

4) An environment dominated by male norms, which emphasize emotional toughness, high competition, and avoidance of all things feminine.

5) A lack of role models (“you can’t be what you don’t see,” as one senior executive put it) and networks for mentoring, coaching and sponsorships.

6) A very narrow pipeline. The Wharton School’s finding is somewhat typical: less than one-fifth of their women MBA students generally attend hedge fund presentations. More needs to be done to attract and maintain the interest of women pursuing careers in sectors where they are still under-represented, including in fund management and investment portfolio roles.

But the situation is far from hopeless. In our report, we lay out 10 action steps, including strengthening mentoring and networks as well as establishing industry-wide standards that include measurable benchmarks. We need to remove both the visible and invisible barriers that are getting in the way of women’s advancement. At the National Council for Research on Women, we will continue to work closely with our Corporate Circle and strategic partners, to promote more inclusive workplaces where women are welcomed and can thrive.

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