Partner & Managing Director
Around the world, Denmark has a reputation for progressive labor policies and equitable markets. So it might come as a surprise to learn that Danish companies struggle with some of the same diversity challenges that affect companies in other parts of the world. A BCG team in Denmark recently looked into this topic—particularly in connection with the number of women in leadership roles at Danish companies.
The results will likely be familiar to executives at most developed-market companies: There are simply not enough women rising to the top. Companies show comparatively better performance in promoting women into middle management roles, but the percentage of women promoted to more-senior levels drops off sharply. Overall, just 17% of senior vice presidents at Danish companies that we analyzed are women, and just 7% of executive vice presidents are.
Rectifying this problem is not only a human resources (HR) issue but also a leadership issue. After all, the business case for women in leadership positions is clear. Compared with companies whose leadership is made up mostly of men, companies with gender-diverse management teams attract, hire, and promote from a larger talent pool; have a clearer understanding of their customers and a better ability to meet their demands (especially in sectors where women make most of the purchasing decisions); and benefit from differences in leadership styles and problem solving.
Where do Danish companies fall short? Our analysis pointed to several root problems. First, executives tend to misperceive women’s ambition and talents. Approximately two-thirds of the HR executives we spoke with—both male and female—said that women lack the motivation needed to get promoted into top leadership positions or that they have other priorities. However, this is demonstrably false. Among the female leaders we surveyed, 73% said that they either were actively seeking a promotion or had recently been promoted.
One possible explanation for the misperception is that men and women on the management track may interact with their superiors differently. Men are more likely to knock on the door and talk up their accomplishments, while women tend to believe that job performance alone will lead to greater seniority.
In addition, women frequently have different leadership styles, which some businesspeople may perceive—incorrectly—as being potentially less effective. Many organizations still cling to a very traditional definition of what they want in a leader; these organizations tend to put a premium on characteristics such as “strength” and “decisiveness.” As a female leader said, “There’s an implicit bias in how ‘talent’ is defined.”
Another obstacle we identified was a lack of female role models in senior positions, particularly women who have to manage significant family responsibilities as well as professional duties. Many female leaders reported anticipating an increasing workload at the next level that they believed to be incompatible with family obligations. As a result, some women may pull themselves out of the running for such positions.
Finally, most companies’ policies don’t give women the flexibility to take maternity leave or to step away from work to attend to other family circumstances. As a result, such breaks can significantly disrupt women’s careers. Companies that do offer less rigid work arrangements report that the programs often come at a cost. Managers and peers of the women (and men) who choose flexible work arrangements must accommodate their schedules, making it more difficult to get things done, especially on team projects.
Some of these problems may be especially common in developed markets. But the solutions we propose are applicable around the world as well. The first involves leadership. The CEO should put gender diversity on the agenda, define the business case for female leaders, and communicate that objective through both words and actions. More directly, CEOs should place women on the executive committee. Doing so will likely improve the committee’s performance, and these women can serve as senior role models for the next generation of female leaders at the company.
Second, companies should strengthen career planning for women. Managers should focus on identifying high-potential women at an early stage and encouraging them to develop long-term career plans at the company. Managers should proactively ask women about their goals and objectives, and set appropriate expectations for future roles and career paths.
Third, companies should make flexible work arrangements more accessible. In some cases, this may require an investment in technology that allows people to work remotely. It is also necessary to change certain ways of working, such as the processes that people follow, the flow of communication inside the organization, and the tools that teams use to collaborate. Policies regarding flexible work models should be clear, consistent, and actively offered (to both men and women), and there should be no penalties—either formal (such as delayed promotions) or informal (such as critical comments from superiors)—for people who opt for such arrangements. Ultimately, we believe that flexible working arrangements will benefit the entire organization, not only women.
To contest a phrase from Sheryl Sandberg’s book, it is not enough that women simply “lean in.” Companies in Denmark and around the world need to take systematic steps to increase the number of women in senior leadership roles. There is clear evidence that organizations that harness the leadership potential of women will position themselves to outperform and outcompete less inclusive rivals. Conversely, those that do not will miss out on a major opportunity to strengthen their executive leadership.
This commentary was adapted from a BCG publication.