Last week I spoke on a panel on gender diversity and high flying teams for the Gallos community of security and risk professionals. It was not my typical audience, so for my contributions to the discussion, I went back to my comfort zone: academic research.
We all know that the gender split between men and women in leadership and board positions is still woefully imbalanced. When preparing for the panel, I looked back through my research for evidence that would convince business leaders in a male-dominated industry that it was worth having women in leadership positions in their organisations. In doing so, I found some interesting connections.
Let's look at women in board positions first. There's a lot of research here, but I've chosen one study as an example.
A study published in 2020 examined the performance of FTSE 100 companies with various levels of gender diversity on their boards over a 10-year period. It found that:
Gender diversity on a firm's board has a positive and significant influence on firm performance.
The relationship between diversity and performance is stronger and greater when there are three or more women on the board.
Stronger firm performance is also linked to the experience of the women on these boards; performance is greater when the women on the boards themselves have C-suite or executive leadership experience.
The key learning here is that it makes financial sense to have at least three women on your board, preferably with C-suite experience. And as it turns out, it also makes financial sense for a business to have more women in these positions.
A McKinsey report from 2020 looked at diversity and inclusion in leadership in 1000 large companies across 15 countries. They found a relationship between diversity on executive teams (not just gender diversity) and financial outperformance, which has gotten stronger since McKinsey started publishing reports on this topic in 2015.
In terms of gender diversity, the report found that the higher the representation of women on the executive team, the higher the likelihood of outperformance.
Companies with more than 30 percent women on their executive teams are significantly more likely to outperform those with between 10 and 30 percent women, and these companies in turn are more likely to outperform those with fewer or no women executives.
All in all, they found a 48% difference between the performance of the most and least gender diverse companies.
All of this impacts women entrepreneurs.
Individuals who have previously held C-suite leadership roles are more likely to become entrepreneurs.
Having more women in positions of power means more women as mentors, more women with access to capital, available as investors. It also means more women with influential networks who can open doors for female founders. Having access to a quality network is one of the positive influences on a female founder's success.
And seeing more women in leadership positions or as entrepreneurs will only increase the number of young women who want to go into these fields.
There is even more research evidence on why diversity is good for a business, but that's the topic for another blog. The point here is that putting women in leadership positions isn't just about equality – it's a proven strategy for better business performance, and every successful woman in the C-suite or boardroom creates a powerful ripple effect that opens doors for the next generation of female founders and leaders.
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