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Monday, June 27, 2011

Positive Leadership: Why You Need Women Leading In Your Organisation – A Summary of the Data

More women in leadership measurably helps companies succeed.

Here’s a summary of some of the data out there on women in leadership and the benefits they bring to the organisations they serve, starting with the hard line performance and profitability numbers.

 •“…. Companies with three or more women in senior management functions score more highly on average (on nine dimensions of company excellence). It is notable that performance increases significantly once a certain critical mass is attained, namely, at least three women on management committees for an average membership of 10 people. “   (Women Matter, McKinsey 2007)

 •“Fortune 500 companies with the highest representation of women board directors attained significantly higher financial performance, on average, than those with the lowest representation of women board directors.” (Catalyst, October 2007)

 •“A selected group of companies with a high representation of diverse board seats (especially gender diversity) exceeded the average returns of the Dow Jones and NASDAQ Indices over a 5 year period.” (Virtcom Consulting)

 •“An extensive 19-year study of 215 Fortune 500 firms shows a strong correlation between a strong record of promoting women into the executive suite and high profitability. Three measures of profitability were used to demonstrate that the 25 Fortune 500 firms with the best record of promoting women to high positions are between 18 and 69 per cent more profitable than the median Fortune 500 firms in their industries.” (European Project on Equal Pay)

There are many other studies about the softer benefits of female leadership.

 •“The standard argument is that diversity is good and you should have both men and women in a group. But so far, the data show, the more women, the better.” (Harvard Business Review on of group intelligence, June 2011)

 •“The status and role of women is a very good clue to a company’s growth potential. When women are at the table, the discussion is richer, the decision‐making process is better and the organisation is stronger. Integrating a gender lens into investment strategies can, in my view, improve long‐term investment performance. Investors need to start taking notice.” (Joe Keefe, President,  Pax World Investments, February 2011)

 •“Female managers – as rated by their bosses, themselves and the people who work for them – were rated significantly better than their male counterparts. This difference extends beyond the ‘softer’ skills such as communication, feedback and empowerment to such areas as decisiveness, planning and setting standards.” (Pfaff & Associates, September 2009)

 •“Of particular interest is the fact that overall trust in female CEOs remains higher than trust in male CEOs, as was the case last year. And most of this increasing level of trust was experienced by non-managers, who registered an increase of a massive 11 index points in their trust for their female CEO between 2009 and 2010.” (Management Today September 2010).

 •“Women leaders are more persuasive, assertive and more willing to take risks than male leaders. Women leaders were found to be more empathetic and flexible, as well as stronger in interpersonal skills than their male counterparts. These qualities combine to create a leadership style that is inclusive, open, consensus building, collaborative and collegial.” (Caliper Corp. 2005)

Despite the fact that these studies have been published across the last decade, little has changed in our business culture.  The “30% solution” – identified by McKinsey (above) and coined by Linda Tarr-Whelan in her book, Women Lead the Way: Your Guide to Stepping Up to Leadership and Changing the World  - now commonly references the point at which individual businesses and the business sector in general will benefit from women’s special talents and skills in their leadership ranks. 

However, “(i)n (the last) 10 years the proportion of women board members on Fortune 500 companies has barely crept up from 12 to 15 per cent and 60 have no women.” (Linda Tarr-Whelan, Financial Times April, 2011)

So we’re barely half way to the tipping point and as Calvert Investments reports recently, there are still many all-white, all male boards who do not believe they have a diversity issue.

Women in the USA constitute:

 •40% of the management workforce
 •46.8% of the total workforce
 •42% of MBAs
 •59% of bachelor degrees
 •61% of master degrees
 •about 50% of of law and medical degrees.

So what do we do to get more women into leadership without overthinking? Some advice seems self-evident and very cheap.

 •Men – put your irrational fears aside. Open yourselves up to a new way of doing business and invite this plentiful resource in to help you thrive.

 •Women – you’re powerful no matter where you are or what you’re doing. The research says that your very presence in a group helps the group become more intelligent. Don’t hide your natural talents even though they look different than what the male-dominated culture around you says they should look like. It’s what they need from you even though they don’t know it. Step out and stop waiting for someone to give you permission and just shine. What are you waiting for?

Try it. See what happens.


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