Despite efforts to increase gender parity in the workplace, organizations still face barriers to achieving equity.

While diversity in the workplace is important, research has also shown that women in positions of leadership can result in significant benefits for their companies. Overall, companies with more women in leadership positions:

  • outperform their male-dominated counterparts
  • experience less employee turnover
  • have better workplace cultures

Read on for the details!

Female leadership leads to company outperformance

On average, organizations that have a greater proportion of women in leadership positions experience superior financial performance in terms of both profitability and share price.

McKinsey & Company, a management consulting firm that has been researching women in the workplace for over a decade, found that significant female representation in an organization’s upper ranks can increase company profits and share performance by nearly 50%. Moreover, the likelihood of superior performance increases with the proportion of representation: companies with the greatest gender diversity at an executive level are 48% more likely to overperform than the least diverse companies.

Similarly, research by Pepperdine University demonstrated that promoting women to executive roles has a strong correlation with a 19% increase in company profitability. The extensive study followed 215 Fortune 500 companies over 19 years and showed that gender diversity in firms led to above average performance.

These results also translate to international firms. A working paper by The Peterson Institute for International Economics, which surveyed 22,000 companies across 91 countries, found that the average firm experiences a 15% increase in profitability when it increases its female representation in corporate leadership from 0% to 30%.

Women in leadership reduces employee turnover and increases productivity

In addition to financial performance, organizations with greater gender diversity tend to experience better working environments. According to a study by the Center for Creative Leadership, increased female leadership is associated with:

  • improved job satisfaction
  • greater organizational commitment
  • more meaningful work
  • less burnout among employees

These findings persist regardless of factors such as industry, age, company size, and more, meaning that all employees benefit from women in leadership positions.

While these factors lead to a more enjoyable work experience, they are also related to greater employee engagement and retention. Enabling women to advance toward positions of leadership can allow companies to reduce costs by reducing employee turnover and increasing worker productivity.

Senior-level women positively impact company culture

Female leadership has a meaningful impact on organizational culture through the policies and values they champion. Moreover, women in positions of leadership enable companies to improve overall gender diversity by acting as champions and sponsors to other women in the organization.

Compared to their male counterparts, senior-level women are 10% more likely to publicly advocate for gender and racial equality at work. Similarly, women in management positions are more likely to mentor other women in the workplace. A survey of more than 40,000 people from 317 companies indicated that only 23% of senior-level men mentor a woman of colour, compared to 38% of senior-level women.

Promoting diversity in the workplace helps create a more equitable society and presents a compelling business case for companies. Ultimately, increasing the proportion of women in leadership leads to greater company performance, lower employee turnover, and improved company culture.

At CP Business Solutions Inc., we recognize the benefits of women in leadership positions and strive to support, mentor and champion women in business whenever we can. Contact us if we can help.

Catherine Priestman

CEO

CP Business Solutions

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