When Women Lead, Firms Win

While working on material for our 100 Women website, I came across some interesting statistics that encouraged me to write this article. Thanks to a few recent studies we now have empirical evidence that companies with women leaders perform better. Yet, while the number of women in the c-suite and on boards is increasing, women continue to be significantly underrepresented.  This is at the heart of our mission with the 100 Women Movement – to broaden the pipeline of women to increase future women leaders by mentoring women through the Kenan-Flagler MBA. 

It has long been hypothesized that women have some unique skill sets that enable strong leadership. Some of these female leadership qualities include collaboration, passion for work, empathy, creativity, networking, persuasion, ability to respond to adversity, and doing the right thing (authenticity) / embracing change (Lowen, 2019; Sulpizio, 2017). 

Recently, several studies have been published that provide evidence of the positive link between women leaders (gender diversity) and business performance. The first study, published by S&P Global (Sandberg, 2019) is the most comprehensive as it studied women CEOs and CFOs and company performance across S&P 500 companies from 2002 through 2019. The study finds that firms with female CEOs generate +20% better stock performance than average and companies with female CFOs produce more profits (+6%) and higher stock returns (+8%). Likewise, the study found companies with high gender diversity on their boards were also more profitable. And finally, the study showed that women leaders cultivate more women in leadership positions. For example, firms with female CEOs had two times the number of female board members. 

A second study, published in 2016, included 22,000 companies across nearly 100 countries (Noland, Moran, and Kotschwar, 2016). The study found that while differences exist across countries, in general, companies that have women on the board and in c-suite positions are more profitable. 

In other studies, such as the McKinsey & Company Women in the Workplace 2019 study, 87% of employers and investors included in the study acknowledged diversity as a top priority believe that diversity is associated with innovation and profitability (Huang et al., 2019). Finally, in a recent study published by Stanford Professor Margaret Neale, provides support for a growing level of importance that investors place on diversity by measuring investors’ reactions to company announcements regarding diversity levels in a company through changes in stock prices (Savchuk, 2019).

What accounts for the superior business performance from women leaders? While the unique attributes women bring to leadership positions have been noted above, authors of the S&P Global study (Sandberg, 2019)  suggest that women are held to a higher standard than male peers so when they make it to the top they are better qualified or simply more talented.

Even with compelling evidence that women leaders drive company performance, women remain significantly unrepresented in leadership. For example while 57% of college students are now females and about 50% of the workforce is female, only 32% of all managers are women, 24% of all Fortune 500 C-suite jobs are held by women, 21% of S&P 500 Company board members are women and only 6% of CEOs are women. 

The 100 Women Movement is targeted at this gap. The MBA degree and strong mentorship can help women reach the top. 

*Title borrowed from Daniel Sandberg (2019)

Huang, J. Krivkovish, A., Starikova, I., Yee, L., Zanoschi, D. 2019. Women in the Workplace 2019. McKinsey & Company. https://www.mckinsey.com/~/media/McKinsey/Featured%20Insights/Gender%20Equality/Women%20in%20the%20Workplace%202019/Women-in-the-workplace-2019.ashx

Lowen, L., 2019. 4 Important Qualities of Women Leaders https://www.thoughtco.com/qualities-of-women-leaders-3533957

Noland, M., Moran, T., Kotschwar, B., 2016). Is Gender Diversity Profitable? Evidence from a Global Survey. Peterson Institute for International Economics. https://www.piie.com/newsroom/press-releases/new-peterson-institute-research-over-21000-companies-globally-finds-women

Sandberg, D., 2019. When Women Lead, Firms Win. S&P Global. https://www.spglobal.com/en/research-insights/featured/when-women-lead-firms-win

Sulpizio, L., 2017. Be a Woman of Impact with These 8 Qualities of Women Leaders. https://www.huffpost.com/entry/be-a-woman-of-impact-with-these-8-qualities-of-women-leaders_b_7228944

Savchuk, K., 2019. Do Investors Really Care About Gender Diversity? Insights by Stanford Business. September 17, 2019. https://www.gsb.stanford.edu/insights/do-investors-really-care-about-gender-diversity