By Craig Hemer, Partner
Boyden global executive search
June 2014
After decades of attention and study directed towards women's parity in the workforce, the value women bring to the C-Suite is inarguable. There is a staggering amount of evidence that more women in senior posts yields benefits for everyone. Women in leadership enhance organizational excellence and organizational excellence enhances financial performance.
These are the central conclusions from McKinsey & Company's research Women Matter, which has become one of the most visible works on the value of gender diversity. As part of its research, McKinsey identified nine criteria for organizational excellence (leadership, direction, accountability, coordination and control, innovation, external orientation, capability, motivation, work environment, and values), and asked over 115,000 employees from over 200 companies to evaluate their companies on these criteria.
McKinsey found that the best performers on these criteria were also the most profitable — in fact, the top quartile was more than twice as profitable as the bottom quartile. Of the companies that reported on gender make-up of management teams, the 13 companies with women in leadership roles outperformed the 45 companies without women in leadership roles on every single criterion. A supplemental study identified 89 large companies with significant gender diversity in leadership and assessed the financial performance of each against the average for its sector. On three different criteria for financial success, the companies with gender diversity in leadership were above average.
According to research published by the American Psychological Association, when it comes to being perceived as effective leaders, women are rated as highly as men, and sometimes higher — a finding that speaks to a shifting landscape of opportunity. There is no shortage of women leaders who have quantified their leadership effectiveness through business results in recent years. Many investors attribute Yahoo's first quarter performance, marking its best Q1 revenue ex-TAC since 2010, to CEO Marrisa Mayer's furious activity since she joined in 2012, from a flurry of acquisitions to layoffs to revamped services. PepsiCo's CEO and Chair Indra Nooyi returned $5.6 billion to shareholders and grew net revenue 14 per cent to $66 billion last year. Susan Wojcicki, a Google SVP, is the woman behind all of the search behemoth's ad products and was responsible for 96 per cent of the company's $37.9 billion revenue in 2011.
Research by Daniel Ferreira, a professor at the London School of Economics, suggests that women tend to be better "monitors" and more risk-averse than men. Speaking to the financial crisis of 2007- 08, he contends that "Women on boards would have been more vigilant and more worried about what the executives were doing ... [which] would have attenuated the crisis."
Boston Globe contributor Rebecca Tuhus-Dubrow states that "women enjoy an edge in understanding the consumer market" (by some estimates women make 80 per cent of consumer purchases), and that women may on average exhibit a different and more fruitful leadership style. Another theory is that gender diversity stimulates more vigorous discussions, resulting in smarter decision-making. Women tend to be perceptive, collegial leaders, and participatory decision-makers. My wife, who manages her own business has taught me that women are masters of opportunity management — instinctive, organized, adaptable, and seamlessly able to keep everyone aligned. The fact of the matter is businesses thrive when they welcome diverse thought-leadership and ideas. From a human resources perspective, there is still a need to tackle the issues and end the stereotypes that too often can — whether consciously or unconsciously — influence hiring decisions.
When choosing the best leaders, it is constructive to focus on leadership styles and talents — which vary from individual to individual, according to their experience, personality, skill-set, and qualifications.
I have worked with many hardworking and purpose-driven women who bring unique qualities and abilities to the workplace. Women's voices are rising across all professions. It is clear that maximizing the potential of women in the workforce is no longer simply a social imperative but a business one as well — and, increasingly, it is being looked at as a competitive advantage.
Craig Hemer is a Partner in the Vancouver office of Boyden global executive search and a member of the Women's Leadership Circle Advisory Council. Boyden has 70 offices in 40 countries around the globe and is the sixth-largest retained search firm in the world.