Failure to actively groom women throughout the leadership pipeline is a huge risk for businesses, particularly with a growing skills shortage in many industries and an ageing workforce, but if it's done well it can represent a vast opportunity.

An increasing body of research globally shows a positive correlation between women in leadership and business performance, yet the rate at which women are being integrated into senior roles in Australia and New Zealand remains painfully slow.

Despite growing interest in workforce diversity among organisations in Australia and New Zealand, new data from Mercer confirms that employers have not made much progress when it comes to promoting women to senior leadership levels. Nor do they have a concrete strategy in place to address the challenge.

According to Mercer's survey, the top programs currently offered by Australian and New Zealand organisations that target the needs of women leaders were: flexible work arrangement; mentoring; coaching; and diversity sourcing and recruiting. These same four programs listed by survey respondents were also identified as the most effective in developing women leaders.

In addition to flexible work arrangements, women need stronger networks and coaching and mentoring as well as senior level support. Organisations that recognise the business value of having more women on their leadership team will want to step up the level of executive mentorship and set specific goals that will be measured and tied to executive and senior leaders' performance ratings.

Mercer's Women's Leadership Development Survey, conducted in conjunction with Talent Management and Diversity Management magazines in December 2010, included responses from more than 1,800 human resource, talent management and diversity leaders at organisations throughout Asia Pacific, North America, Europe, Middle East and Africa, including 99 from Australia and New Zealand. It included a broad cross-section of industries with not-for-profits, high-tech/telecommunications, financial/ banking and durable manufacturing organisations representing the largest segments. Responses, which addressed current commitment and support for women's leadership, plans for the future and obstacles to success, were fairly consistent across regions.

The survey reveals that only 1 in 4 (26%) have a clearly defined strategy to attract and retain women long enough to reach senior leadership positions.

Is flexibility the answer?
As many women give up their careers and jobs to care for children, flexible work arrangements and contracts have been the predominant strategy to retain women in the workplace. However, this approach does not necessarily mean more women end up in leadership roles.

According to the survey, Australia and New Zealand lead the world in terms of organisations offering flexible work arrangements: 84% compared to 55% in Asia and 69% in the United States. Despite these efforts, organisations' main areas of concern were retaining women so they reach leadership levels and having work-life programs that attract and retain women.

In a tight labour market, even world-leading levels of support around flexible work arrangements might not be sufficient to retain women long enough to reach mid-level and senior leadership positions, and this could impact organisations' business performance.

In Australia and New Zealand, the problem is not the lack of female talent, rather the leaky pipeline whereby women drop out at senior levels at disproportionate numbers. The region's greatest challenge is not to lose such a valuable group of people on the way to the top.

Employers need practical policies to identify high potential women in their ranks and invest in their development, including having executives who will help encourage their careers.

Programs for developing women leaders
According to Mercer's survey, 19% of Australian and New Zealand respondents said their organisation supports the development of women to a great extent, compared to the global average of only 13%. Forty per cent said their organisations supported to a moderate extent, which was more in line with the global average of 37%.

Contrary to perception, two-fifths (40%) of Australian and New Zealand organisations surveyed indicated their organisations do not offer any activities or programmes targeted to the development needs of women leaders. Twenty eight per cent of Australian and New Zealand organisations said they offer some activities or programs, and only 8% said they are planning to add programmes and activities in the future, which is slightly ahead of the survey's global average of 6%.

In order to help close the gender gap in the workplace, the report challenges employers to implement their policies and take action to nurture women throughout their careers. Having a policy in place in just one step in the right direction - implementation is what will make the difference and achieve equality in the workforce.

Mercer's tips for improving your organisation's effectiveness in the development of women leaders:

  • Recognise the importance of having more diverse leaders as critical in business
  • Identify and increase awareness of the biases in the system that make it difficult for women to accelerate their career.
  • Ensure HR metrics are reporting diversity statistics at both Executive, Group GM and Senior Manager positions and including discussions on diversity in talent reviews
  • Facilitate a detailed and committed conversation with the organisation's leaders that identifies the statistics and addresses the barriers
  • Meaningful mentorship is still one of the most effective strategies to develop and support talent