It Pays To Hire Women

by Anne Ladouceur, 02/05/2011

Despite the fact that Korea has a very high rate of university-educated women in the world, its 2010 ranking in the World Economic Forum’s Global Gender Gap Report is 104th out of 134 countries. To put this in perspective, countries such as Azerbaijan, Japan, Kenya, Senegal and Zimbabwe outranked Korea. We can still say we’re better than 20 other nations in the world including Chad, Nepal, Pakistan, Syria and Yeman….a dubious boast at best.

However, omega replica as a recent study reveals, Korean companies are shortchanging themselves by limiting women’s access to managerial positions, along with the nation’s women, by this society’s neo Confucian idea that women are inferior leaders compared to men. In 2010, Harvard Business School professor Jordan Siegel along with Lynn Pyun of MIT and B.Y. Cheon of Hanshin University and the Korea Labor Institute published the result of their study of South Korea entitled "Multinational Firms, Labor Market Discrimination, and the Capture of Competitive Advantage by Exploiting the Social Divide".

The purpose of the study was to determine whether or not hiring female managers had an effect on the profitability of a company over time. IT DOES!  “The researchers found that a 10 percent nominal increase in the percentage of female managers (at the level of the then-prevailing glass ceiling) was associated with a 1 percent nominal increase in ROA. The results are pretty strong that even when you control for anything that's fixed about a company, it appears that increasing your female managers leads to higher profitability over time.”

South Korea was chosen as the focus of the study because there is no PR value and little peer/legal pressure for corporate gender equity. “Gender discrimination cases are few and far between in South Korea, but in the rare cases of women who do sue, the courts have tended to rule for the defendant. Siegel discovered one case in which a judge ruled in favor of a company that specifically had targeted women for layoffs; the judge argued that the company had no choice but to reduce its workforce for budgetary reasons-and that it made sense for the company to cut the female employees first. (After all, the company reasoned, those women probably had wealthy husbands who could support them.)”

Siegel’s study also revealed that it is multinationals operating in Korea who have realized the advantage of placing Korean women in executive positions although there are still some justify their decision not to do so with concerns such as the possible negative reaction of local male employees and/or local business partners to dealing with women managers and the fear that local customers might not trust decisions made by a woman. The data seems to refute these arguments in favour of the glass ceiling even in the case of local companies. According to the study results, “The small minority of domestic Korean companies that did employ senior female managers, particularly but not exclusively in the apparel and publishing industries, also appeared to benefit financially from doing so.

We mentioned earlier the influence of neo-Confucianism on creating and perpetuating Korea’s low glass ceiling, but Confucianism also plays a role on the other side of the equation. “Paradoxically, Confucianism teaches that women should have access to education, which, in addition to democratization, likely has helped to increase the number of qualified female candidates for management positions.

Indeed, universities in South Korea are highly meritocratic about accepting and educating women. Hence, the country sports a large number of highly educated, highly qualified women with advanced degrees in business, engineering, economics, and foreign languages-all useful in corporate management. Furthermore, Confucianism has contributed toward the assignment of certain important responsibilities to Korean women, including financial management of the home.”

At an International Women’s Day event in Seoul in March 2011, much of the focus was on the plight of ‘irregular workers’. Korean employers, from both the public and private sectors, prefer to hire ‘temporary workers’ who may remain in that category for years and years. When a two-year cap was imposed on the ‘temporary/irregular’ designation, employers came up with a number of ways to circumvent its intent since these employees are not entitled to either the benefits or salary levels of ‘regular’ workers. The majority of women in the workforce fall into the ‘irregular worker’ category. This also contributes to Korea’s low score when it comes to the gap between men and women.

For a country as advanced and as competitive as Korea to be in the bottom third of the world’s countries, particularly, when it is clear that hiring and promoting women to decision-making positions contributes to improving a company’s bottom line. Hopefully, Korean companies will wise up and see what many multinationals here have already discovered……it pays to hire women!

Reference: Harvard Business School Working Knowledge - A first look at faculty research


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