When Women Lead and the Outcomes

This study is one of the most significant pieces of research conducted on gender in the C-suite. While published in 2019, it covers 17 years of the Russel 3000 group companies and provides an insightful analysis of women’s underrepresentation and outperformance in executive positions -insights that remain highly relevant today.

Summary and Methodology 

This research uses a time-horizon study to evaluate the performance of companies in financial outcomes ‘ pre’ and ‘2 years post’ the appointment of Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs) from 2002 – 2019. Of the 5825 appointments, just 578 were women. The paper also utilises a Natural Language Processing (NLP) analysis to track language use relating to an individual’s professional profile. In this way, the study can determine the talent profiles of individual executives. This study hypothesised that whilst women CEOs and CFOs may result in enhanced organisational performance that talent is distributed equally across genders. 

Headline Findings

• Organisations with women executives generated economically and statistically significant profits: For example those with a woman in a CEO role observed an improvement in value and a significant increase in share price momentum, and those with a woman in a CFO position observed 6% improvement in profitability and relatively higher share returns. 
• Gender diversity fuels further gender diversity: organisations with women CEOs have 23% women board members, compared with an average of 11%. 
• Higher gender diversity at the board level results in greater organisational profitability.  
• A driver of superior results is not that women generally have higher talents but rather that for appointment into positions, the board of directors held women to higher standards. 
• The research established that the average women executive is similar in experience and talent profile as the most successful men – those in the 90th percentile of executives.

Summary

Organisations that appointed women executives saw an increase in profit and stock performance. By contrast, the impact of men’s organisational returns was statistically indistinguishable. These results do not necessarily mean that women are more talented than men. The study instead found a positive correlation in the language used in executive biographies between all women executives and the most successful male executives. This analysis implies women are routinely overlooked in favour of men who are not as talented and that C-suite, women are judged by the performance of men in the top 90^th percentile of male executive leaders.