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Talent: Identifying the Risk in Not Investing in Women

Emily Erdman, a junior student at Quinlan School of Business joins our blog as a guest author. Her blog will focus on gender discrimination and its effect on Enterprise Risk Management. Please join us with your comments.


 

Talent search plays a crucial role in business. Finding qualified talent to fill necessary positions in companies and corporations is imperative to keeping successful businesses profitable — thus driving economies. Women are often overlooked, whether intentionally or by habit, in instances that can affect a company’s long-term success as well as the entire economy. It is imperative that we identify this problem at its source in order to eliminate the different consequences it has not only for women, but additionally its greater spectrum of stakeholders. Today, I would like to discuss the importance of investing in women, the role of women in talent search, and the risk with which we take when we do not invest in women.

In his report, Gender Inequality in Education: Impact on Income, Growth and Development, Ghulam Moheyuddin refers to research done by Dollar and Gatti which concludes that, contrary to popular belief, many middle-income areas estimated that return on secondary schooling in girls is sizably higher than in boys. For example, in the years 1980-81 in Thailand, the female return on investment was 20.1%, while boys’ return on investment was an estimated 11.3%. This data suggests the capital invested into girls schooling produces a higher output and higher returns which improve overall economy. Where many countries see skimming on girls’ education investment as an advantage, they are ultimately losing valuable human capital for the workforce and are creating a large economic disadvantage for themselves.

I had a chance to discuss this phenomenon with Dr. Arup Varma, a field expert and MBA Human Resources professor at Loyola University Chicago. Dr. Varma added his thoughts on the above research, explaining, “When you invest in the education of a man, he gets educated. When you invest in the education of women, she ensures that her children get educated, so the return on investment is much higher.” This is a very prevalent trend, more-so in developing countries, or those where we can still see a large disparity in social equality between the sexes. Women who are educated and used as valuable assets in the workforce are given a sense of self-entitlement and power that affects not only their lives, but also the lives of their children and the well being of their economy. As research supports, investing in women creates a positive multiplier effect for generations to come, and we must harness this effect by empowering women in the workforce worldwide.

A paramount example of a successful investment in women as a gender was in 1976 when a man named Mohammad Yunis created a system known as the Grameen Bank, for which he would receive the 2006 Nobel Peace Prize. This system provided microloans to women that allowed them to purchase items such as sewing machines and other entities that they used to construct products or perform services. Using microloans, these women became entrepreneurs by immersing themselves in the workforce. Yunis was criticized that he would never see this lent money again — on the contrary, Yunis received a near 99% return rate on his microloans. Given prospect and ambition in their work, these women became proud entrepreneurs, and likely went on to raise their succeeding generations to be the same. This type of confidence and conviction in women is something we need to employ still today.

The risk in talent does not end at merely not investing in women, the following issue is how do we mitigate talent discrimination after these women attain proper qualifications? Just one illustration of talent discrimination is the gender discrepancy in the Fortune 500 Company CEOs. Currently, only 26 of the 500 CEOs of these companies are female. So then, how do we battle talent discrimination? “We need to combat this by challenging it. Qualified women cannot sit around and wait, they have to demand,” suggests Dr. Varma. As women, we need to find out what we are worth and ask for it. Women cannot sit back and wait for those who benefit to make the changes. Women have the prerogative to change their destinies, but first they must claim it.

Companies and economies are continuing to lose out when they do not invest in women as potential talent.  As we have discussed, there is extreme risk that lies in not allowing women to live up to their full potential. It is my opinion, as well as he opinion of many that men and women alike need to see start assessing talent for what they bring to the table, not by the gender they were born, in order to flourish economies.

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