There have been numerous studies lately that prove getting women into leadership roles doesn’t just help women, but it can have a positive impact on an organization’s bottom line.
According to Women in the Workplace, a study by LeanIn.Org and McKinsey & Co., female leadership is an imperative for organizations that want to perform at the highest levels. It’s not the first supportive evidence. Here are five data points:
1. A Catalyst report, The Bottom Line: Corporate Performance and Women’s Representation on Boards, found Fortune 500 companies with the highest representation of women board directors attained significantly higher financial performance in three important measures: return on equity, 53 percent higher; return on sales, 42 percent higher; and return on invested capital, 66 percent higher.
2. A recently published study from the Peterson Institute reports companies with at least 30 percent of female leaders – specifically in senior management – had net profit margins up to 6 points higher than companies with no women in senior management. That is a 15 percent increase in profitability.
3. McKinsey & Co. last year found companies in the top quartile for gender diversity are 15 percent more likely to financially outperform their counterparts in the lower quartile. McKinsey also found companies with more balanced leadership do a better job recruiting and retaining talented workers, leading to cost reductions associated with replacing top executives. And firms with gender-balanced executive committees had a 56 percent higher operating profit than companies with male-only committees.
4. In 2014, Massachusetts Institute of Technology researchers found a more even gender split not only leads to happier, more productive employees but also can increase revenue by 41 percent.
5. A report by Sodexo showed 42 percent better profit margins and 53 percent higher average shareholder returns when one-third of the board members are women.
New research from the Apollo Research Institute finds that women are able to have this impact on organizational bottom lines by creating stronger, more competitive organizations and redefining careers paths for aspiring female leaders. In a survey of over 200 female executives and 3,100 male and female managers, researchers found women outperformed men in several leadership skills, including communication, coaching, problem solving and creative thinking. Women also scored higher than men in empathy, transparency and inclusiveness.
Recognizing women’s impact on organizational performance is just the beginning. We need to take it a step further and actually provide opportunities for advancement. Women in the Workplace notes that if women were advancing at rates similar to men, companies would see the same share of women from one level to the next. However, that is not the case. Across levels, the expected representation of women is 15 percent lower than that of men. This suggests women face greater barriers to advancement.
To make the most of the skills women bring to the table, senior leaders need to commit to gender diversity – but commitment is not enough. Getting the message across to employees requires authenticity and accountability. Although 74 percent of companies report that gender diversity is a top CEO priority, less than half of employees believe that to be true.
Gender parity in leadership matters, and it benefits everyone. We must all work together and take active steps to create a workplace where women can see a path ahead. When we recognize and support the full potential of women, we’ve taken the first step toward equality and the positive outcomes that contribute to both personal and corporate success.
It is time to lead. By working together, we can push the doors to equal opportunity wide open, and invest time and money in gender diversity.
Nancy O’Reilly, Psy.D., is a clinical psychologist and author of “Leading Women: 20 Influential Women Share Their Secrets to Leadership, Business, and Life.” Through DrNancyOreilly.com and the WC4G Foundation, she urges women to connect to create a better world.
