The Impact of Women in Leadership

Women-Led Companies Perform Better Across Key Areas

There is an established – and growing – body of evidence that when women are in top leadership positions, companies outperform in everything from financials to a healthy culture to the war for talent. 

  • Between 2002 and 2014, researchers from the Boston-based trading firm Quantopian compared the returns of Fortune 1000 companies led by female CEOs to those of the S&P 500 and found that those run by women saw returns that were 226% higher than their peers.17
  • Corporations that moved from no women in the CEO role, on the board other leadership positions to 30% female leadership, saw a one-percentage point increase in net margin, or 15% increase in profitability for a typical firm, according to the Petersen Research Institute. The findings also highlight that having women in top leadership roles translates to an increase in skills diversity and less gender discrimination, both of which help to promote innovation, a healthy workplace culture and the ability to recruit and retain top talent in an increasingly competitive marketplace.18
  • Companies with a female CEO or head of the board of directors had a 25% annualized return over eight years, compared to 11% for the broader worldwide index of firms, based on research from the Finnish Bank, Nordea.19

Women’s Leadership Key During COVID-19

More women in the top job is not only good for the bottom line, but also a boon for other critical factors like a strong workplace culture that fosters inclusion, innovation and talent retention. We’ve seen this play out in real-time over the past two years. It has been well-documented that working women were hit disproportionately hard by the COVID-19 crisis. Between when the pandemic-driven recession started in February 2020 through June of 2021 record numbers of women —– nearly 3 million — left the labor force prompting understandable concern about what this recession would mean losing many of the gains women have made in the workplace.

But there’s another side to the story.

We also know that women leaders have been a driving force of the resilience and recovery efforts that have allowed companies – and indeed entire nations – to weather the storm. At the highest levels, women-led countries like New Zealand and Germany fared best through COVID, in part because they were quick to adopt proactive and coordinated policy responses.

We have seen this same trend bear out at the corporate level in the United States. Not only are companies run by women more profitable long-term, but the pandemic has also shown that companies with women at the top are better poised to weather crisis. Case in point: according to a July 2021 report by BoardReady, S&P companies with more diverse boards fared better than their peers in terms of year-over-year revenue growth. Among their findings:

  • 54% of companies where women held at least a third of board seats, had positive year-over-year revenue growth in 2020, compared to 45% of companies with lower gender diversity.
  • Among the 194 companies with higher gender diversity, year-over-year revenue grew overall by $58 billion (1.2%) versus a $283 billion (3.9%) drop for companies with lower gender diversity,” the report found.
  • Companies with 30% or more board seats filled by non-white directors performed better than their less-diverse counterparts. Their revenue growth rates increased from 3% in 2019 to 4% in 2020. Companies with fewer than 30% of seats held by non-white members saw revenue growth drop.

Women in Power Drive Culture Change

2020 was fraught not just because of pandemic-related stress, but a long-overdue national reckoning on race, brought home by the killings of George Floyd and Breonna Taylor. Once again, the data shows that when women are in charge, they are better at leading their teams through crisis and work to drive positive culture change in the workplace. A July 2021 study from LeanIn and McKinsey found that women’s leadership was a critical factor in helping their teams manage and avoid burnout, a key factor in employee satisfaction, retention and productivity.

Among the findings:

  • 31 percent of employees say their manager who is a woman provided emotional support and 61 percent checked in on their overall well-being, more than 10 percent higher than for their male counterparts in management

Compared to male managers, women in leadership positions were also:

  • 29 percent more likely to help their employees navigate work and life challenges42 percent more likely to ensure manageable workload
  • 21 percent more likely to help prevent or manage burnout.

The study also confirmed that putting women in charge has ripple effects that create net positive change in corporate diversity, equity and inclusion:

  • Senior-level women are twice as likely as senior-level men to spend substantial time on DEI work that falls outside their formal job responsibilities, such as recruiting employees from underrepresented groups and supporting employee resource groups.
  • Sixty-one percent of women in managerial positions regularly take at least three allyship actions, including advocating for new opportunities for people of color, actively confronting discrimination, giving credit to women of color, educating themselves about the experiences of people of color and mentoring.

As we work to promote more women to the top job in companies across size and industry, understanding the full picture of their impact is key and these findings are a critical piece of the dialogue.

 

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