Here, are the reasons, backed by research a, that I believe all broad chairmen and CEO’s should be basing their decisions on when looking at the make-up of their board and senior team.
Women tend to lead by using traits which engage, create collaboration and pay attention to both results and relationships. Traits which have been shown to improve business results. For more data on this see my article “Women leaders, lies, lies and damn lies” Women also get better at leading as they mature, men tend to find an approach and stick with it, causing them to plateau.
There are numerous reports on the benefits of diversity to organisational performance. Here are some of the recent findings:
A 2016 study by the Peterson Institute for International Economics and EY analysed results from 21,980 publicly traded companies in 91 countries and found that having women in at least 30% of leadership positions adds 6% to net profit margin.
According to McKinsey, companies across all sectors with the most women on their boards of directors consistently outperform those with no female board members – by 41% in terms of return on equity, and by 56% in terms of operating results.
A report by MSCI, which researched 4,000 public companies, found those with strong female leadership generated a return on equity of 10.1% per year versus 7.4% for those without. The report also shows that companies with below average gender diversity suffered 24% more ‘governance-related issues’.
Investors, who are increasingly conscious of social pressure, and their returns, are putting pressure on organisations. Helena Morrissey, Head of Personal Investing at LGIM and founder of the 30% Club, has just launched a £50m fund specifically for investors wishing to put their money into companies with gender-diverse boards.
What better way to understand your customers than employing them in decision-making roles? Studies have shown that women are the prime decision makers when it comes to purchases large and small.
Gender equality has the potential to make the single biggest difference to the world economy. If women around the world achieved economic equality with men, it would contribute $28 trillion to the global economy, roughly the size of the economies of the United States and China combined. Gender diversity has the potential to be the ultimate economic accelerator.
Women dominate on social media. In the US at least, every major social media network – Facebook, Instagram, Pinterest and Twitter – has a higher proportion of women than men using it. This is also true for the UK and other major economies. If organisations want to promote their Brand they need to understand the female perspective and appeal to the female influencers.
In research we conducted for our book ‘Brain-savvy Wo+man‘ women bring different and useful, perspectives and experiences to decision-making in senior positions. This is backed up by research published in the Harvard Business Review. Female directors ask more questions and are less willing to make decisions they don’t fully understand. They tend to seek a range of opinions before making decisions. And they bring different perspectives to issues.
So there really is no excuse for this not being reflected at senior levels in organisations (or in politics, media, science, and a whole host of other sectors). It’s just the right thing to do.
Until there is public shame for organisations who do not have senior women and public status in having them not much will change. Waiting for the next generation to mature is risky. We need pressure now that impacts the social standing of organisations.