Investing in Women's Leadership: 1% Can Make A Huge Difference
Patricia Lizarraga of Hypatia Capital says investing in women’s leadership is key.
When and how does 1 percent add up to $270 billion?
According to Patricia Lizarraga, managing partner at Hypatia Capital Group, it is when “all investors allocating just 1 percent of their investable assets” invest in women’s leadership.
And exactly how does that happen?
By making that easier for companies with a change in governance and by creating a digital platform brand that would make investing in women’s leadership simple and swift, that goal is attainable. According to Lizarraga, it will all become clear at the second annual “Investing in Women in Leadership Summit” in New York March 13.
“Patricia Lizarraga of Hypatia Capital says investing in #womensleadership is key.”
In collaboration with OgilvyRED, Hypatia Capital will present new research and a call to action for public and private opportunities to Invest in Women in Leadership and discuss how to build a platform to unite intent and drive action.
If every female investor in the United States did invested 1 percent of investable assets in women’s leadership, the amount would surpass $135 billion, a total that exceeds the assets of the top 10 activist investors in the United States.
“If every female investor in the United States invested 1 percent of investable assets in women’s leadership, the amount would surpass $135 billion. #womeninvestors”
“We believe in talent and performance,” according to Hypatia’s site. “We know that in order to become a high level executive of a Fortune 1000 company, talent, drive and stellar performance records are a must. If you are a woman, the bar is just that much higher. Our chosen talent pool are proven performers.”
Founded in 2007, Hypatia Capital is a independent private equity firm focused on sponsoring female CEOs. The partners, including Lizarraga,who was named one of the 17 women to watch in 2017 by the Center for Women & Wealth, believe “there should be more women at the helm of America’s largest corporations. We strive to make this a reality by finding and partnering with the top female executives to acquire businesses which they will lead to great success.”
According to the site, Hypatia “will carefully acquire businesses one by one, but we will not be satisfied until women are as well represented in the CEO suite as they are in the workforce overall.”
State Street Global Advisors, the sponsor of SPDR SSGA Gender Diversity Index ETF – SHE, the largest ETF promoting women in leadership, is a leadership sponsor of Hypatia Capital’s summit.
Participating in the summit also is CalSTRS, a pension fund that has committed over $250 million to gender lens investing. With over $220 billion in Assets Under Management, CalSTRS is the second largest pension fund in the United States.
CalSTRS is part of the Summit and will participate on our governance panel to discuss trends and, in their own words, how they use their proxy to “to support certain corporate directors or shareholder proposals to introduce necessary changes that will enhance the company’s long-term shareholder value.”
In a McKinsey & Co. report, data shows “a strong correlation between the presence of women in company top management and better financial results. Following a meticulous analysis of 300 companies around the world, we found a difference in return on equity of 47 percent between the companies with the most women on their executive committees and those with none, and a 55 percent difference in operating results.”
By closing the gender gap by 2025 more than $12 trillion can be added to the global gross domestic product, according to the McKinsey report.
Leadership parity across all sectors by 2025 is the mission of Take The Lead, according to Gloria Feldt, president and co-founder. The four keys to parity are embedded in the programming, content and messaging of Take The Lead, as prepare, develop, inspire and propel, according to Feldt.
Investing in women’s business and in bringing on board women in leadership, can offset a talent shortage.There are 655 million fewer women than men in the workforce, according to McKinsey, and more than 240 million women can be added.
According to McKinsey, “the global economy can anticipate a worrying talent shortage by 2020. The talent gap will amount to 38 to 40 million higher-education graduates, representing 13 percent of the global demand for skills at that level. In the mature economies, the shortfall could be in the order of 16 to 18 million graduates. In a world where qualified talent is becoming scarce, the premium will go to the companies that have been able to recruit, develop, and retain the best employees. Tapping the reservoir of underutilized skills among women will become a key priority in the talent war.”
“By closing the gender gap by 2025, more than $12 trillion can be added to the global GDP: Mckinsey report.”
A new study shows that while there is a gender bias in investment, women entrepreneurs are more likely to secure investing if their ventures have a social impact mission, according to the Harvard Business Review.
Laura Huang, s Associate Professor of Business Administration at Harvard Business School, writes with co-author Matthew Lee of INSEAD, “Across 43 ventures and 421 evaluations, we found that on average, female-led ventures were perceived as less viable than male-led ventures. However, female-led ventures that more heavily emphasized their social impact managed to avoid this gender penalty. (Male-led ventures were unaffected.) These patterns were the same regardless of whether evaluators were male or female.”
The authors continue, “This is also somewhat disappointing in that it confirms other recent research showing that women have to conform to gender stereotypes to be perceived as competent. The fact that this is happening is a consequence of persistent gender biasesthat continue to play an outsized role in venture capitalism. While this research reiterates that women are judged differently than men, the silver lining is that those in the field of social impact can use this to their advantage.”
“Persistent gender bias plays an outsized role in venture capitalism. #womeninvesting”
More news on the necessity for investing in women in leadership comes from a new Grant Thornton International report, Women in Business 2018, as it reveals a 12 percent decrease in American companies without any women in senior management.
“The percentage of U.S. businesses with no women in senior management decreased from 31 percent in 2017 to 19 percent in 2018. The percentage of businesses globally with no women in senior management decreased from 34 percent in 2017 to 25 percent in 2018. The proportion of senior roles held by women in the U.S. decreased to 21 percent, which is down two percentage points from 2017, and is up only one percent since the start of the research 14 years ago. The total number of women in senior management in the U.S. decreased two percentage points since 2017. This indicates there are fewer women in management in U.S. businesses overall, but more solitary women in companies previously lacking gender diversity,” according to the report.
“The lack of progress when it comes to women’s representation in senior roles is disconcerting, particularly in the past year, when there has been so much collective dialogue about the benefits of gender diversity—and the perils of its absence,” says Nicole Blythe, National Managing Partner, People Experience at Grant Thornton.
The goal of the summit is to make investing in women’s leadership easier as well as beneficial to all parties.
About the Author
Michele Weldon is editorial director of Take The Lead, an award-winning author, journalist, emerita faculty in journalism at Northwestern University and a senior leader with The OpEd Project. @micheleweldonwww.micheleweldon.com