Year after year, the case for promoting women gets stronger. In 2019 a study by Zegner Folkman published in the Harvard Business Review found that women outperform men in 17 of 19 leadership competencies, including, among many others, initiative, resilience, and integrity.
In 2020 during the first wave of the pandemic, the world watched as those countries that were led by women (New Zealand, Germany, Finland, Iceland, Denmark, Norway and Taiwan) experienced far fewer deaths than those led by men, Zegner Folkman repeated the study. Women scored even higher this time than men in leadership competencies.
Yet in 2021 only 8.2% of Fortune 500 CEOs were women. And women of color held only 1% of CEO positions across the Fortune 1000. Despite the fact that companies know that promoting women is good for business, we still have a long way to go. So let’s take every opportunity to remind as many people as we can about the benefits of having women in leadership roles.
When I first started designing and directing leadership development programs at the University of Oxford’s Saïd Business School, I remember having an AHA moment and asking my partner and co-designer, “are we basically teaching men to be more like women?”
The reason that I asked is that the research repeatedly shows that women know how to motivate, inspire and develop employees. In her book “The Authority Gap,” Mary Ann Sieghart shares research showcasing the many ways in which women are better at people management. They mentor, empower and encourage employees to develop their full potential far more successfully than men. Women in leadership positions build trust on their teams and create the psychological safety necessary for others to contribute their views. They are also more likely to use rewards for good performance. These are some of the key leadership competencies we teach.
Recently, Gallup provided its State of the American Manager report in which they surveyed 27 million employees. Gallup found that those who work for a woman are 26% more likely than those who work for a man to strongly agree that, “There is someone at work who encourages my development,” and 29% more likely to strongly agree that, “in the last six months someone at work has talked to me about my progress.” We know that one of the biggest factors leading to greater engagement at work by employees is their belief that their manager encourages them and helps them grow in their roles.
Importantly, while both men and women report being more engaged with female bosses, the biggest gap is between women who work for women (35% engaged) and men who work for men (only 25% engaged). Overall the Gallup report says, “female managers eclipse their male counterparts at setting basic expectations for their employees, building relationships with their subordinates, encouraging a positive team environment and providing employees with opportunities to develop within their careers.”
Organizations facing the Great Resignation may want to take a deeper look at who holds positions of leadership in their organization and how good they really are at people management. My suggestion is to promote more women.
Catalyst, an organization dedicated to fostering workplaces that work for women, recently shared the vast body of research that documents the relationship between diversity and improved financial performance. McKinsey looked at more than 1,000 large companies in 15 countries, and found that the most gender diverse companies were 25% more likely to earn above average profits than the ones with very few women. Researchers from the Peterson Institute for International Economics conducted a global survey of financial and governance data from over 20,000 firms in 91 countries and found a positive correlation between women in senior leadership and profitability. These are just two examples from the research that make the business case.
It is more than just about financial performance, however. Diverse organizations are more successful at recruiting and retaining talent. This is a strategic imperative for businesses that want to scale. Catalyst shares research that includes:
Employee engagement is a huge predictor of organizational success and getting to gender balance in leadership is a proven way to improve engagement and financial success.
Finally, there is strong evidence that more diverse teams make better decisions, even if it feels harder at the time. Homogeneity is easier. When we see the world the same way, we don’t need to debate or innovate because we all agree. But easier is not better.
Companies want teams that are creative, innovative and open. Research by the Boston Consulting Group shows that all of this improves with gender diversity. For example, the study found that companies with the greatest gender diversity (defined as 8 out of every 20 managers being female) generated about 34% of their revenues from innovative products and services. This number reduced to 25% for companies that had only 1 out of every 20 managers being female.
Diversity also reduces groupthink, which is the practice of making decisions in a way that discourages creativity because there is pressure to all agree and be alike. Teams that include different viewpoints and thinking styles solve problems faster, more innovatively and produce better intellectual property.
Of course this too requires work. When teams are comprised of individuals who are different, they must cultivate a shared understanding of the team’s diversity and its positive benefits to the group performance. This includes openness to different ideas and experiences, and work climates that value diversity. When this happens, teams learn to listen to one another and challenge each other to grow. This inclusivity greatly enhances the team’s performance.
There is a double bonus to this as well. Teams that work together to foster climates of inclusiveness are doing exactly what is required to create psychological safety. That is the belief that the team is safe for interpersonal risk taking. And research is proving time and again that psychological safety is also one of the most important predictors of a team’s, and therefore an organization’s, success.
The evidence is clear. Having more women in leadership positions is better for people, business and decision-making. Yet, we are asked, repeatedly, to make the case for getting to gender balance. The amount of research that banks, consultancies, investors and organizations continue to do to prove this point is, frankly, getting absurd. Nonetheless, change is slow and hard and like so many other things, women find themselves having to prove their contribution with data that is not required of men. Be that as it may, you have the evidence to demonstrate to your organization that the more women promoted into management positions, the more likely the organization is to succeed.