Women continue to be underrepresented in top leadership positions across industries, with only 10.4% of CEOs in Fortune 500 companies being women. More broadly, women hold 35% of leadership positions, even though they account for 50% of the workforce in the US. Yet research shows that having women in high-level leadership and decision-making roles provides tremendous benefits not only for business performance but also for society as a whole.
Driving Financial Returns
Multiple studies have demonstrated that companies with greater gender diversity, particularly in executive-level roles, achieve better financial results. For example, a Peterson Institute analysis found that companies boasting 30% or more women in leadership roles enjoyed net profit margins up to 6 percentage points higher than companies with no female leaders. The reason seems to be that women leaders bring new perspectives that lead to innovation, better risk management, and greater resilience.
One global survey of over 21,000 companies across 91 countries by the International Finance Corporation found that companies with at least 30% female leaders had higher returns on equity as well as valuations. In addition, Credit Suisse found that companies with at least one woman on the board had an average return on equity of 12.2% compared to 10.1% for companies with no female directors.
Enhancing Corporate Governance
There is also evidence that appointing more women to boards and leadership positions improves corporate governance, ethics, and accountability. Some reasons for this include:
- Women leaders tend to adopt a more participative and democratic leadership style which encourages collaboration and consensus-building.
- Women demonstrate greater risk awareness, ethical orientation, and commitment to corporate social responsibility – all factors linked to better governance.
- Gender-diverse leadership teams are more likely to consider multiple stakeholder interests when making decisions.
Ultimately, the combination of diverse perspectives and balanced leadership styles found with women executives facilitates improved oversight, transparency, and performance.
Representing Customers and Society
With women representing over 50 percent of the population, ensuring women are proportionally represented in top leadership simply makes business sense. Women leaders can provide key insights into the preferences and purchasing behavior of the female consumer market.
They also serve as important role models and inspirations for younger women joining the workforce. Appointing more women to senior roles demonstrates a commitment to equal opportunity and challenges outdated gender stereotypes related to leadership. This is something one Minnesota online college is trying to address, by calling on female leaders to increase women’s representation in corporate executive positions.
Tapping the Full Talent Pool
For businesses to thrive, they need to identify and develop the very best talent available. But many qualified women opt out or fail to be promoted at key points in their careers.
By taking steps to eliminate biases and barriers holding women back, companies can tap into the full breadth of talent available. Initiatives like mentoring programs, flexible work arrangements, and sponsorship can help firms retain and elevate more women into leadership.
The competitive global business landscape calls for the best and brightest minds leading at the executive level. Ensuring women have an equal place at the table promises to enhance innovation, returns, governance, and representation for corporations worldwide.
