14 Ways Businesses Benefit From Having Women In Leadership Positions
There are currently 23 female CEOs in the Fortune 500, the U.S.’s 500 most profitable companies. That’s 4.6 percent of CEO positions. Expand the list and the results are little better; as of 2014, there were only 51 female CEOs in the Fortune 1000. That’s right — 1,000 companies and only 51 women in charge.
Why so few? The list of reasons runs the gamut from general sexism to gender bias in certain areas, but one thing is certain: The dearth of female business leaders in this country is not benefiting anyone. In fact, recent surveys have shown that it may be holding businesses back, as women in leadership positions have been shown to produce the following 14 benefits for their companies.
1. Better Financial Performance
A 2007 report from the non-profit research organization Catalyst found that Fortune 500 companies with more female board directors attained “significantly higher financial performance” than those with the lowest female representation. Catalyst took three important factors into account: return on equity, return on sales and return on invested capital. It found that in all three areas, the companies that had higher female board representation were doing better. These companies outperformed those with the least amount of female representation by 53 percent in terms of return on equity, 42 percent in terms of return on sales and 66 percent in terms of return on invested capital.
“Clearly, financial measures excel where women serve on corporate boards,” said Ilene H. Lang, president of Catalyst. “This Catalyst study again demonstrates the very strong correlation between corporate financial performance and gender diversity.”
2. Developing Others
In a 2011 survey conducted by Zenger Folkman and published in the Harvard Business Review, it was found that female leaders were rated more highly by their peers, bosses and direct reports than male leaders in 12 of the 16 competencies required for outstanding leadership. Developing others was one of them. The female mean percentile in this competency was 54, while the male mean percentile was 48, suggesting that female leaders are more effective when it comes to developing their employees.
The development of employees covers a vast area from career counseling to on-the-job coaching to outside classes to dedicated feedback, helping employees set goals and better themselves professionally. Highly developed employees have a greater sense of purpose and satisfaction; conversely, underdeveloped employees often fuels early exits. Developing one’s employees will lead to greater loyalty and effectiveness overall, since companies will have workers with more skills and talent in the long term and waste less time on hiring new people due to extensive turnover.
3. Developing Themselves
The same Zenger Folkman survey found that women were rated more highly than men at self-development. This means that companies with women in leadership roles have leaders who are not only willing to put in the time to develop others, but who are also dedicated enough to focus on bettering themselves. Leaders who develop themselves learn specific skills, improve their job performance and focus on results; in addition, a leader that demonstrates willingness to do the same things they ask of their employees will inspire more respect.
4. Building Relationships
Female leaders were consistently rated higher in the category of building relationships, according to the Harvard Business Review. This is an all-around good thing for companies, as people in leadership roles are responsible for keeping the organization working as a whole; better interoffice relationships are more likely to create a smooth, well-oiled machine. In addition, women who are skilled at building relationships within a company are also quite likely to do well at building outside relationships — cultivating new clients or negotiating difficult contracts, for example.
The Zenger Folkman survey found that the mean percentile of women displaying “high integrity and honesty” in leadership positions was 55; for men, that number was 48. While there will always be people who argue that to be a great leader, you need to be a psychopath, research has shown that the incidence of psychopathy in CEOs is only about 4 percent. It’s also been shown that integrity matters to followers because it’s a marker of how the leader will behave in the future, allowing followers to determine whether or not the leader’s decision is correct.
Although taking initiative is often seen as a more aggressive, masculine trait, the female leaders in the Zenger Folkman survey were rated the highest in this category above all others, while men were rated much lower. When ZF interviewed a group of women not involved in the survey and asked them why they thought their female colleagues were rated so highly on things like initiative and self-development, the responses were, “We need to work harder than men to prove ourselves” and “We feel the constant pressure to never make a mistake and to continually prove our value to the organization.”
So while the stereotype may be that men are the more aggressive, proactive group, the reality appears to be that women — whether naturally or as a conscious reaction against this stereotype — are actually the ones who are more likely to take initiative.
Women were rated more highly on their drive for results than men. And if you’re worried about their ability to strategize while driving for those results, don’t be; as Zenger and Folkman note, women are often viewed as less strategic than men simply because top leaders always score higher in this competency, and more top leaders are men than women. “When we measure only men and women in top management on strategic perspective, their relative scores are the same,” they say.
8. They inspire and motivate others
Do you want a leader that inspires you to do your best or a leader that you couldn’t care less about? If you actually want your company to succeed, you probably picked the first option, because motivation and inspiration are key characteristics of an effective leader. Women were rated more highly than men when it comes to inspiring and motivating others, Zenger Folkman found, showing that female leadership is a very good thing for those who want a productive workforce.
Recent research has shown that women are the better dealmakers in the Senate, co-sponsoring more bills with other women than men do with other men and being more likely to work across party lines. If it works for the Senate, why not for the business world? It seems that it does; according to Zenger Folkman’s survey, female leaders are rated more highly at collaboration and teamwork than men.
10. Stretch Goals
Stretch goals are seen as extremely ambitious — almost impossible — goals for the future that can “push people to new heights and inspire them to do amazing things,” according to Mind Tools. These kinds of goals need to be established carefully, however, because they are usually seen as challenging to accomplish and challenging to established parameters. Female leaders are rated more highly than men in the category of establishing stretch goals, says Zenger Folkman, so if you want a boss that will inspire creativity, exploration and improvement while pushing employees to rethink what they’re capable of, a woman is a good choice.
11. Problem Solving
When it comes to solving problems and analyzing issues, women once again have a slight advantage over men, says Zenger Folkman. Good leaders need to be able to solve problems themselves rather than constantly delegating to others — and when employees have a leader that they know they can rely on to fix issues and come up with useful solutions, they’ll be more likely to trust and value that leader.
12. They Champion Change
The Zenger Folkman survey found that women were rated more highly than men in the category of championing change. Change is essential for any successful company; being stuck in the past does no one any favors. Companies that want to grow need to embrace new methods, new technology and new ways of thinking in order to stay on top of current trends and changes in the way business is done.
More women than men were rated as being able to communicate “powerfully and prolifically,” according to Zenger and Folkman. Anyone who doubts the value of a leader’s ability to captivate and communicate their ideas clearly and memorably need look no further than Winston Churchill, a renowned writer and orator.
Men and women in leadership roles were seen as almost equal in terms of innovation, although women edged out men just a little; the female mean percentile seen as innovating was 51 percent, while for men it was 50. Innovation is a valuable quality in any leader, as it keeps the organization from growing stale and irrelevant. Companies need leaders that will continue to forge ahead, pushing the boundaries and remaining on the cutting edge of their specialty in order to expand and be seen as a leader in its own right.