Companies Led By Women Make More Money, So Why Aren't More Women Leaders?
The topic of women in the workplace has been a hot one for quite some time - whether we’re talking about equal pay, sexual harassment in the workplace, or maternity leave. Advocates for gender equality agree that hiring more women into the workforce - and paying them equal wages as their male counterparts - is a win win for everyone, and getting more women into leadership roles is not simply an issue of fairness, but makes business sense as well.
A new study titled Is Gender Diversity Profitable? Evidence from a Global Study, from the Peterson Institute for International Economics and EY bolsters that case.
After analysing results from 21,980 publicly traded companies from a variety of industries and sectors in 91 countries, the research showed that having leadership positions comprised at least 30% by women adds 6% to net profit margin.
While the study did not prove whether or not female CEOs systematically outperform their male colleagues, it showed that more women with C-suite positions (senior executives) translated to higher profits.
The research showed that countries where there is a relative absence of workplace discrimination had more women leaders, as well as countries that were bigger. Surprisingly, mandated maternity leave was not a factor, but more paternity leave was. In fact, strong paternity leave is an indicator that a country offers robust support for working parents.
“In countries that are more family-friendly and have greater support for child-bearing and rearing, women experience less disruptions in their careers and are more likely to make it to the top,” Marcus Noland, coauthor of the report, told the Huffington Post.
Many studies have also shown that paternity leave policies can help women earn higher salaries, as well as lower rates of postpartum depression, so it's no surprise that women looking to start a family would be inclined to work in companies that helped lighten the burden of motherhood.
The top countries included Norway (minimum of 14 weeks for fathers), Italy (26 weeks, shared between parents) and France (26 weeks paid).
“It stands to reason that policies that allow for child care need to be met, but do not place the burden of this care explicitly on the woman, can allow women to have a greater chance of building business acumen and professional contacts necessary to advance to a level at which they would be invited to be part of a corporate board.”
When it comes to leadership roles in business, it’s no exaggeration to say it’s a man’s world. Sure, young women may have role models like Sheryl Sandberg, Marissa Mayer, and Arianna Huffington, but these excellent leading ladies are mere exceptions to the rule. So if hiring more women for C-suite positions is beneficial for everyone, why are there so little female leaders?
The research uncovered that nearly one third of companies globally have no women in either board or C-suite positions - 60% have no female board members, 50% have no female top executives, and less than 5% have a female CEO. However, having more women on boards means having more women in leadership, otherwise known as the “pipeline effect.”
"The impact of having more women in senior leadership on net margin, when a third of companies studied do not, begs the question of what would be the global economic impact if more women rose in the ranks?" said Stephen R. Howe, Jr., EY's US Chairman and Americas Managing Partner.
"The research demonstrates that while increasing the number of women directors and CEOs is important, growing the percentage of female leaders in the C-suite would likely benefit the bottom line even more."
The report also examined the "golden skirt" phenomenon, where a small number of women were stretched among multiple board positions. The the report said that "there is no evidence that board quotas have any significant impact, positive or negative, on company performance." In quota countries such as Iceland, Norway and France, about 9% of women served on multiple boards, compared with 7% of men.
When the evidence is this damning, tropes like "women are too emotional" and "they can't balance work and family" can't hold up. Money makes the world go round, and women are bringing home the bacon.
By Olivia Cassano, published on 08/02/2016