Over the last several decades, great strides have been made towards equality for women in the workforce. While more women are starting, growing and managing businesses than ever before, we still face significant challenges when it comes to equal pay, access to capital, and representation in top leadership positions. As the economic and social benefits become increasingly understood, it becomes ever more clear that empowering women in their work is not only the right thing to do—it's smart business.
The Economic Case for Women in Leadership
A growing body of evidence is uncovering a surefire way businesses can boost their bottom line: Women in leadership roles. A recent study by McKinsey & Company found that companies with gender-diverse executive teams are 21% more likely to experience above-average profitability than companies with less diverse teams[1]. Another study by the Peterson Institute for International Economics found that companies with at least 30% women in leadership positions had net profit margins that were 15% higher than companies with no women in leadership positions[2]. So how exactly are women driving these sorts of gains? By simply…. being women.
It is becoming harder and harder to dispute that where ladies in leadership goes, profits and efficiencies flows. Here's where their contributions are adding up for businesses:
Women are shown to be better multitaskers and delegate tasks more effectively and efficiently than their male counterparts—we all know the age-old adage (hint: “time is money”)[3].
Women tend to be more team-oriented and collaborative than their male counterparts, helping teams keep focused on achieving shared goals over competing against one another/jockeying for individual recognition and advancement[4].
Women have been found to be more concerned with the well-being of employees and customers, resulting in better employee engagement and customer satisfaction[5].
Women are more likely to be concerned with the ethical implications of their work and tend to better identify and avoid unethical business practices, which comes in handy if you’re looking to avoid costly lawsuits and/or reputational damage[6].
Female CEOs have been found to outperform male CEOs in terms of shareholder returns[7].
The Power of Investing in Women Owned Businesses & Entrepreneurs
Women make up half of the world's population and contribute massively to the global economy, yet systemic barriers and discrimination continue to limit their access to economic opportunities and resources. The World Bank estimates that women currently receive only 10%-30% of all loans from international financial institutions, and less than 5% of global venture capital funding[8]. For context, if women had equal access to capital as men, it is estimated that their business ventures would generate an additional $12 trillion in global GDP by 2025[8]. The economic impact of this disparity is significant at best. Yet against all odds, women-owned businesses are playing an increasingly more critical role in job creation and stimulating economic growth. Here’s the skinny: Women-owned businesses in the U.S. generate ~$1.8 trillion in revenue annually (equivalent to ~12% of the United States GDP)[9] and create 2.2 jobs per firm, while male-owned businesses create 1.8 jobs per firm in the[10]. It is estimated that by 2025, women will own more than $28 trillion worth of assets worldwide. Now think of the social and economic gains to be had if we resourced and empowered women to harness the full potential of that wealth.
How-To: Invest in Women
Now for the good stuff—the burning question you’ve all been waiting for.....How exactly can companies and investors tap into the power of women in the workforce? So glad you asked, we've done the legwork for you. Dig in below.
Strategies For Businesses:
1. Invest in women-owned businesses: Look for opportunities to partner with women-owned businesses for supply chain needs, collaborative ventures, and more. If your business has a need to engage a third party provider….. you know what to do.
2. Develop female talent: Offer leadership development programs, mentorship, and other resources that help women advance professionally.
3. Prioritize gender diversity: Prioritize gender diversity at all levels of your organization, including on executive teams and your board of directors.
4. Support policies that promote gender equality: Establish and enforce policies that support gender equality, such as pay equity, good meeting etiquette, family-friendly workplace policies, and access to affordable childcare.
5. Engage in philanthropy: Advance gender equity by donating to organizations that promote women's rights and opportunities.
Strategies For Investors:
1. Invest in women-led businesses: Actively seek and invest in businesses owned and/or are led by women.
2. Mentorship and networking opportunities: Provide mentorship and networking opportunities for women entrepreneurs. Help them to connect with other business leaders, learn from experienced professionals, and build-out their networks.
3. Provide funding opportunities: Create funding opportunities for women entrepreneurs (ex. seed funding, venture capital, or angel investments).
4. Support organizations that support women entrepreneurship: Support organizations dedicated to promoting and supporting women entrepreneurs. This can include funding for business incubators, accelerators, and other support organizations.
5. Educate and train women entrepreneurs: Provide education and training opportunities to women entrepreneurs (think business coaching, mentorship programs, and training workshops).
6. Advocate for policy changes: Advocate for policy changes so as a society we can better support women entrepreneurs. This can include lobbying for increased access to funding, changes in tax policy, and other regulatory reforms.
The Takeaways
The benefits of investing in women are clear: Companies with diverse leadership teams and inclusive workplace cultures perform better financially, while women-owned businesses generate significant revenue and have a multiplier effect on job creation. It's time for us to wake-up to the value women bring to the workforce. We must assume our responsibility to even the playing field because in the right conditions and with the proper resources, women will be a powerful force for economic growth and development. Let’s get to work.
Sources
1. McKinsey & Company. "Diversity wins: How inclusion matters." https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters 2. Peterson Institute for International Economics. "Gender Diversity in Leadership and Firm Performance." https://www.piie.com/blogs/realtime-economic-issues-watch/gender-diversity-leadership-and-firm-performance 3. Rubinstein, J. S., Meyer, D. E., & Evans, J. E. (2001). Executive control of cognitive processes in task switching. Journal of Experimental Psychology: Human Perception and Performance, 27(4), 763-797. doi: 10.1037/0096-1523.27.4.763 4. Eagly, A. H., Johannesen-Schmidt, M. C., & van Engen, M. L. (2003). Transformational, transactional, and laissez-faire leadership styles: A meta-analysis comparing women and men. The Leadership Quarterly, 14(6), 807-833. doi: 10.1016/j.leaqua.2003.09.004 5. Forbes. "Why Women Leaders Are Good for Business." https://www.forbes.com/sites/ashleystahl/2019/09/09/why-women-leaders-are-good-for-business/?sh=232d4d3f3a46 6. Groysberg, B., Lee, L.E., & Nohria, N. (2018). Women's work: The science and art of women's leadership. Harvard Business Review, 96(5), 68-77. https://hbr.org/2018/05/womens-work-the-science-and-art-of-womens-leadership 7. Tenbrunsel, A.E., & Smith-Crowe, K. (2008). Ethical decision making: Where we've been and where we're going. Academy of Management Annals, 2(1), 545-607. https://doi.org/10.1080/19416520802211644 8. World Bank Blogs. "Women and finance: Unlocking new sources of economic growth." https://blogs.worldbank.org/voices/women-and-finance-unlocking-new-sources-economic-growth 10. Forbes. "The Future of Female Entrepreneurship is Looking Up." https://www.forbes.com/sites/geristengel/2019/05/29/the-future-of-female-entrepreneurship-is-looking-up/?sh=3a1b0e7c6c72
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