Women’s leadership in the workforce is still a work in progress. But for the majority, it still isn’t advancing as quickly as it should. According to a report by Grant Thornton, almost 30% of senior management roles were held by women in 2019. However, only about 6% of the CEO positions on the Fortune 500 list were women.
While the slow rate of change may have it look like progress is impossible, investors and business owners have some say in the matter. They can put their money into companies prioritizing women’s leadership, which helps advance gender equality in the workforce. From investing in an executive women’s leadership program to other adequate courses, we share why we must invest in women in leadership.
- Higher Profits
The Peterson Institute for International Economics conducted a 2016 analysis and found that while there isn’t any statistically observable impact of having a female CEO, the correlation between firm profitability and women at the C-suite level is repeatedly demonstrated.
Analysts have projected that firms, where 30% of leaders are women, can experience a 15% boost in profitability. Moreover, a Credit Suisse report discovered that, after adjusting for industry bias, companies with over 15% of women in top management experienced a return on equity of almost 15%. Companies with fewer than 10% of women represented experienced an ROE of less than 10%.
- Higher Stock Returns (And More!)
Companies with higher gender diversity on their boards also tend to have higher stock market returns adjusted for sector bias. Moreover, these companies tend to get higher scores on the environmental, social, and governance criteria, which are a set of standards used by investors to screen organizations for ethics and sustainability.
When women are on an organization’s remuneration committee, the organizations would exhibit a much healthier moderation of executive remuneration growth.
And lastly, companies with more women on their executive committee experience better results on the nine dimensions of organizational performance. Such dimensions range from accountability to innovation!
How to Invest in Women’s Leadership
Now that you know why it’s best to invest in women’s leadership, the next question is how. Here are a few tips to follow:
- Organizations must implement organizational changes to create systems investing in and supporting women’s leadership. There needs to be an ongoing dialogue, adequate data collection, and collaboration amongst all levels of the organization.
- Unconscious bias must be managed appropriately, with organizations and individuals working to de-bias the job hiring processes and other aspects of the organization. Organizations can do this by removing extraneous information when reviewing job candidates’ information and using technology free from algorithmic bias.
- To invest in women’s leadership means to also invest in effective leadership development. This means allowing female employees to undergo leadership training programs with the chance of working their way up the organizational ladder in the long run.
Wrapping It Up
If your organization isn’t investing more in women’s leadership, it’s high time you do so!