When Women Lead and the Outcomes

A Summary On How Organisations Need To Maximise Women Leadership

The paper argues that while having women positioned as CEOs and CFOs would be more valuable for organisational performance, currently senior talent is not equally distributed between genders. 

This research evaluates the financial performance of companies before and after appointing CEOs and CFOs from 2002 to 2019. Using Natural Language Processing (NLP) to analyse language related to executives' professional profiles to assess talent distribution across genders, the paper found that out of 5,825 appointments, only 578 were women- a compelling statistic that showcases the ongoing gender disparity at the most senior levels. 

Context

 This 2019 research paper offers valuable insights into the underrepresentation and outperformance of women in executive roles. These insights are more relevant than ever, acknowledging progress while also highlighting persistent gaps: women now hold 39% of CFO roles, a step forward, yet far from parity. Notably, female representation in global mid-market CEO roles fell from 28% in 2023 to a mere 19% in 2024, a powerful reminder that closing the gender gap demands ongoing commitment and action. 

Advantages Derived from Women-Led Businesses Identified by S&P: 

Increased Profits: Organisations led by women executives see remarkable economic and statistical gains. Companies with a female CEO experience enhanced value and significant share price momentum, while those with a female CFO enjoy a 6% boost in profitability and higher overall returns. 

A Catalyst for Diversity: Gender diversity fosters further inclusion—companies with women CEOs are estimated to have 23% female board members, compared to the average of just 11%. 

Profitability through Diversity: Greater gender diversity at the board level correlates with increased organisational profitability. 

Higher Performance: This isn’t due to women having higher talent levels; rather, boards tend to hold women to more rigorous standards during the selection process. Thus, their performance results would reflect such standards. 

High Talent Levels: The research shows that the average female executive possesses experience and talent comparable to the top 10% of male executives, challenging conventional assumptions about gender and leadership effectiveness. 

Expanding on S&P’s insights is the 2023 research paper “Women Leaders Make Work Better: The Science Behind Promoting Them,” which also emphasises the necessity for transformative change and acknowledging the benefits of increased female representation in leadership. However, the 2023 paper offers a more in-depth analysis of the positive impacts that women in leadership roles have from both a business and a psychological perspective. 

 The Additional Benefits of Having Women in Leadership Roles, as Supported by Business and Psychological Research, are as Follows: 

• Transformational Leadership: Female leaders often adopt more transformational leadership styles, inspiring others and embodying positive organisational values 

• Changing Competence Perceptions: Women are now viewed as equally or more competent than men, with perceptions of intelligence shifting dramatically over time. In 1946, only 35% believed men and women were equally intelligent, while by 2018, 86% held that view. 

• Team Collaboration: Women improve team collaboration, as a greater presence of women in groups boosts collective intelligence and responsiveness among members. 

• Leadership Traits: Women ranked better or equal to men in seven out of eight leadership traits, including honesty and intelligence. 

• Fair Treatment Expectations: The presence of female leaders led to expectations of fairer treatment and higher projected salaries, fostering trust in organisations. 

• Mitigating Stereotypes: Appointing women to top management roles help challenge deep-rooted stereotypes, associating women with key leadership qualities. This shift is crucial for overcoming perceptions of women as either competent or likeable also known as the double bind. 

 Given That Women Clearly Excel as Leaders, What Steps Can Organisations Take to Help Advance Women into More Leadership Roles? 

Early Identification of Leadership Potential: 

• Provide feedback, assignments, mentoring, and coaching to develop networks and skills. 

Establish Mentorship and Sponsorship Programmes: 

• Implement mentorship programmes that also emphasise sponsorship. 

• Encourage women to seek both mentors (for guidance) and sponsors (for advocacy). 

Support Participation in Women-Led Organisations: 

• Encourage women to join women-led organisations to enhance leadership skills and networking. 

• Include professional development funds to facilitate participation. 

Focus on Allyship: 

• Train male executives to be allies in addressing gender inequality. 

• Promote allyship across various identities to support historically disadvantaged groups. 

Create a Culture of Inclusion: 

• Foster environments that prioritise inclusion and provide key experiences for growth. 

• Acknowledge progress and remain committed to continuous efforts in empowering women leaders. 

Keep a Positive Outlook: 

• With continued efforts and growing awareness, there is hope for substantial advancements in women's leadership roles over the next decade. We must believe in this change and keep advocating for it.  

Below is a visual representation of the main ways companies can support women into leadership roles: 

An increase of women in leadership positions would help address the gender disparity while also enhancing workplace diversity. Consequently, this would have a myriad of positive knock-on effects, including improved creativity, innovation, and employee wellbeing. It would also increase productivity and widen the talent pool, allowing organisations to better cater to clients from differing backgrounds.

Researchers have found that organisations with more diverse teams perform financially better than their competitors, establishing a clear correlation between workplace diversity and increased profits. It is estimated that closing the gender gap could contribute as much as $28 trillion to the global economy by 2025. However, with only around 30% of women currently in leadership positions globally, there is a significant opportunity for growth. Thus, promoting and supporting women in leadership should be a priority for organisations, as the advantages of diversity are undeniable and play a crucial role in driving success.