The uphill battle for equality in the workplace and technology’s latest solutions
It’s been 43 years since Lilly Tomlin, Jane Fonda, and Dolly Parton solved the equality issue in the seminal film 9 to 5, but somehow, we constantly find ourselves running into the same old stumbling blocks, and even some new and unexpected ones. Venture capital investments are only a tiny fraction of the business world but they are indicative of a larger issue. No matter how you slice it, women still aren’t on equal footing with men in the workplace. Despite the situation, plenty of things have changed since 1980, including attitudes towards inequality as an issue. Women are a much larger part of the workforce and they’re putting in the effort to change the game.
Someone recently tweeted about a relatively young Icelandic tech company that’d just gotten a large investment. When someone jokingly replied asking where a woman could go to find such a large sum of money, the jesting tone was lost on the original tweeter who replied that investments like this are the result of years of hard work, something that many men and women can and do earn. It’s a nice thought, isn’t it?
Except that it’s mostly men. In 2022, a report found that women-led teams accounted for 1.1 % of companies that received funding from venture capital funds. And reader – if you, like me, hoped that that number is so low because most of the teams are mixed, I regret to inform you that mixed teams received just over 10% of the funds. 88.7% of VC funding goes to all-male teams of founders.
PayAnalytics founder Margrét Bjarnadóttir has a background in operation research. Her Ph.D. focused on how we can use data and mathematical models to support decision-making. When a COO at an Icelandic bank complained about the lack of resources to close the pay gap where they worked, Margrét was the right person to hear them, at the right time. Two years earlier, the bank had realised the extent of their pay gap and vowed to make changes. Their goal was to incorporate gender equality into all hiring processes and promotions. When they assessed progress at the end of those two years, nothing had changed. For Margrét, this was the perfect research opportunity, and she created her prototype of a mathematical model that would not only analyse the extent of the pay gap, taking into account different positions and responsibilities but also provide the solution to closing the gap. When her calculations worked, providing the bank with the tools they needed to implement change, the foundation was laid for Pay Analytics. Today, the company has clients in more than 50 countries, the largest of which comprises hundreds of thousands of employees worldwide.
Since its beginnings in 2016 when the idea for PayAnalytics won the entrepreneurial competition Gulleggið, Margrét has found the conversation regarding the pay gap is changing rapidly. “When we were starting out, we needed to explain to investors that there were companies that needed this kind of service, but we donʼt anymore. There’s been an avalanche of rules and regulations all over the world requiring companies to measure pay gaps and release the results. They differ from country to country but in the EU, for instance, when you advertise a position you will soon be required to also advertise the pay range.”
When the percentage of VC funding allocated to women-led teams comes up, Margrét nods sympathetically. While acknowledging that every company’s trajectory is different, she recognises the stories of investors asking defensive questions and focusing on risks rather than potential successes when talking to women. “By now, I can send the guys out to investor meetings,” she states jokingly, referring to the CEO and the CFO. On a more serious note, she continues: “The pay gap and lack of investment in female-led companies come from the same root: implicit bias. We all have it and it taints our decision-making,” Margrét adds. Her approach is to fight bias with data. “Documentation also helps, such as writing down why people get raises. Research shows that having to provide neutral descriptions of why people get raises lessens the pay gap.”
Every successful idea raises the question: Why hasn’t someone done this before? When I pose the question to Margrét, she refers to the cultural environment. “It’s not a coincidence that we’re an Icelandic company. Iceland has always led the way in this regard. Gender equality is a topic that people of all genders in the country care about. The issue was on people’s radar much sooner than in other countries.”
For Margrét, we’re in a unique position to tackle inequality. “We’ve never talked this much about diversity, inclusion, and equity. And the regulations and legislation are being put into place to back it up.”
While Pay Analytics focus on financial equality, Empower Now offers a holistic DEI (diversity, equity, and inclusion) solution to develop people-friendly workplace cultures. This extends beyond finances to areas including employee experience, public perception, recruitment processes, parental leave, diversity, and team surveying. But the first step is to assess the current status. Sigyn Jónsdóttir is the CTO of Empower Now and in her opinion, there is still much work to be done. “The fact is that most workplaces can and should do better,” she tells me. Once Empower Now has analysed the situation and isolated the issues, they provide a solution to the challenges that come up, based on measuring, goal setting, and education. “We offer micro-learning modules on DEI topics that leave an impact. An easy example would be our short videos in mobile format that the employees can choose to watch anytime, so people gain perspective and education, which they can then apply in real life.”
Founders Dögg and Þórey have been working as DEI consultants for years but in-person consultation is impossible to scale up to an international level. The scalability comes in taking the process digital.
Sigyn explains further: “If a scandal occurs, many issues can arise, from losing valuable employees due to completely preventable bias, to affecting bottom lines, like the company’s stock tanking. Since #metoo, they’ve found that old-fashioned crisis management practices, like simply firing a CEO, don’t necessarily repair their brand image or employee trust. Nor correct behaviour and prevent it from happening again. Issues of discrimination or bias are never down to one person. Even if the issue stemmed from a single person, it is still down to culture. It becomes a scandal when it’s not immediately handled and corrected properly. If something like this has been happening at your company, people know that it’s an issue with the workplace culture. But companies are a little lost on how to correct issues when they arise and prevent them from happening in the first place. That’s where we come in.”
There aren’t many men working in the gender equality business and finding out that it was mostly women cleaning up misogyny’s messes was a glum start to my research. Sigyn, however, has a more uplifting take. “Often, we get our foot in the door because a person who has experienced inequality gets us involved, but it’s important to us that it doesn’t fall on victims of discrimination to get Empower Now integrated into their workplace. Senior leaders who want to create equitable companies need to take action. The pressure is usually on groups who are the most vulnerable to bias to fix matters, which creates an unnecessary additional burden. But they also are often the greatest drivers of change.” According to Sigyn, it makes sense for those who are susceptible to discrimination to have a voice in fixing it. “That shouldn’t change. But they can’t be tasked with the responsibility of fixing these problems. People in a position of power should focus on being allies to those with less power and support their work.”
Sigyn’s optimism is only slightly dampened at the mention of the 1.1% figure. “A recent study from Harvard Business Review shows that when pitching to VCs, men tend to get progressive questions focusing on potential gains, while women get more defensive questions focusing on risk and potential losses,” she states. “A progressive question might be something like: How do you plan to monetise this? While a similar defensive question would be: How long will it take you to break even?” Interestingly, she adds that there doesn’t seem to be a difference if it’s a man or a woman posing the questions. A dearth of women presenting their ideas can also be explained by the state of the startup world: “The startup scene has been known for its ‘bro’ culture, and that’s not a culture that supports DEI in any way.”
Empower Now is the rare instance when a women-led team gets funding based on an idea, without presenting a ready-made prototype. “Usually, teams have to be much further along in product development to get an investment. I hope that with more funds being available at the very early stages of a company’s development, that things might be changing. Unfortunately, I think, given the news in the last weeks about investments in women-led teams globally being down in 2022, it may only be an aberration.” In Sigyn’s opinion, things are changing for the better, but she has to admit the statistics don’t support her optimism. Yet.
GemmaQ is working on a gender diversity index for investment professionals, based on the mounting evidence that gender equality is not only a question of equality but can also be an indicator of a lucrative business.
Freyja Þórarinsdóttir is the founder of GemmaQ, an index which automatically rates publicly traded companies according to management diversity. The reason why investors should focus on companies dedicated to equality isn’t just moral or ethical. According to Freyja, investing in equality is good business: “There’s a correlation between diversity and an above average profitability. Although we don’t have evidence of causation, multiple studies have shown us that companies with greater representation of women in corporate leadership are more likely to outperform those with less diverse leadership.”
“First and foremost, there’s a marketing aspect to being able to state publicly that your fund is only investing in companies who’ve got it together when it comes to equality and to be able to back it up with data,” Freyja states. Before launching GemmaQ, she was with the Merrill Lynch wealth management division of Bank of America in Seattle and a director and team leader at the Central Bank of Iceland. In addition to her degrees in law and political science, Freyja received a Master’s in Economic Policy Management from Columbia University. Her work in asset management showed her that besides wanting a return on their investment, clients wanted to know where their money went and if it was making a difference. While there was a distinct generational shift in clients’ sense of responsibility, it’s clear that pension funds, for example, are set on investing in a more responsible way, as are large national funds such as the Norwegian oil fund and Japanese pension funds.
GemmaQ is a technical solution that gathers public information on companies’ management diversity and monitors changes that would jeopardise it. Officially started in 2019, the project has earlier roots as Freyja’s research project at Columbia University. With 15 years of diversity data at her disposal, Freyja explains that while things are looking up, attitude-wise, the numbers are still bleak.
“Gender Lens, the GemmaQ Fortune 500 index, tracks the gender leadership balance among Fortune 500 companies. It shows that women represent only 10.2% of Fortune 500 companies CEOs, and just 6.6% of board chairs today. With five new women taking on CEO roles in January 2023, this is becoming a record year with women in leadership roles”.
In the US, legislation differs significantly by state. Some states have required gender quotas on company boards, while some companies are required to list their gender ratios publicly. In some states, however, there are no regulations at all. “Even though there are differences between companies in the same sector depending on their location, we are seeing the same trend across states,” Freyja tells me. “Women are being promoted at far lower rates to leadership roles than men. The rate of change is unacceptably slow.”
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