10 Benefits of Gender Equality in Corporate Leadership

It benefits everyone to have a more equitable representation of male and female in corporate leadership. In our days post pandemic, we have seen a tremendous loss of women in leadership roles from Manager to CEO post-pandemic at much higher rates than in the past. It’s particularly important for the future of gender equality that we address this gap and correct course. But what are the specific data points that will help us advocate for gender diversity in our organizations?

Here are 10 tangible benefits:

1. Higher Profits. Gender diversity at the top improves profitability. How much more? CNBC and The Petersen Institute for International Economics report that “A profitable firm at which 30 percent of leaders are women could expect to add more than 1 percentage point to its net margin compared with an otherwise similar firm with no female leaders,” the report notes. “By way of comparison, the typical profitable firm in our sample had a net profit margin of 6.4 percent, so a 1 percentage point increase represents a 15 percent boost to profitability.”
2. Less Risk, More Change. HBR found that women lead organizations tend to invest more in R&D than M&A. These orgs tend to go from a knowledge acquiring organization to building knowledge internally. A study from the University of Arizona’s Eller College of Management cited by CNBC found that women led organizations tended to have more “innovation intensity,” and produce on average 20% more patents. So basically, diversely led organizations seem to favor organic growth through internal builds and innovation in house instead of acquiring outside firms which comes with a fair amount of risk in unknown liabilities, lack of full due diligence, overestimation of synergies, etc.
3. Improved Corporate Social Responsibility. Gender diverse led firms have higher levels of sustained corporate social responsibility. Catalyst conducted research that demonstrated showed women led companies tend to show A)higher levels of corporate responsibility, B)better quality CSR initiatives, and C)more sustainable CSR initiatives for the longer term. This may likely stem from different gender’s view of fairness and awareness of distribution of resources in a society. While the reasoning is varied, the statistical correlation is significantly positive and clear.
4. The US Can Catch Up to Other Developed Countries. We have about 330M people in the US according to the 2021 US census. The US has the ability to boost our gross domestic product (GDP) about $650 billion per year if we add 4.85 million more women (aged 25-54) to its workforce (catalyst), which shouldn’t be hard to do since we have a massive leaky pipe of female corporate leadership talent post pandemic. This would allow us as a country to reach a level proportional to women’s labor force participation in Canada, Germany, and the United Kingdom.
5. GDP Rises. Retaining and attracting more women leaders post pandemic would provide a $1 trillion boost over the next 10 years if female labor market participation grew to the levels seen in other developed economies (Catalyst & Reuters). This is a massive opportunity cost for the US if we don’t figure out a way to have women stick around and succeed in the workplace.
6. Hiring Rises, Lower Unemployment. As the International Monetary Fund points out, a byproduct of GDP rising strongly if more females return to the workforce, employment could likely follow. When companies hire more workers, people have more money as a result.
7. More Global Peace, Less Violence. Yes, we will take more of that. Scarcity can drive conflict, so the idea here is abundance can aid in stability. I’m no economist, but I do understand economic scarcity from first had experience as a female, and having enough money to cover basic needs is the more desirable, peaceful place to be. On a broader scale, the US State Department validates this with their own global research “Accelerating women’s economic empowerment is critical to ensuring developing countries can achieve economic self-reliance and transition from being aid partners to trade partners” and “The larger the opportunity gap between men and women, the more likely a country is to be involved in violent conflict. Conversely, nations in which women have equal opportunities are more likely to thrive and solve challenges peacefully.”
8. Increase in Charitable Donations. The Global Giving study found that 65% of charitable donations are made by women. With Women tending to give much more out of their pockets to charitable donations, we can safely assume women in leadership positions with high earnings would continue to give.
9. Communities Prosper Economically When Women’s Incomes Grow. Women spend much more than men in general on the welfare, caretaking and health of their families and communities. The US State Department points out that “Women’s meaningful economic participation is integral to achieving greater security and stability around the world. When women are empowered economically, they invest in their families and communities, spurring economic growth and creating more stable societies”
10. Women Can Actually Have Equal Rights. The United Nations states that “ Women’s economic empowerment is central to realizing women’s rights and gender equality.” Women’s economic empowerment includes women’s ability to participate equally in existing markets; their access to and control over productive resources, access to decent work, control over their own time, lives and bodies; and increased voice, agency and meaningful participation in economic decision-making at all levels from the household to international institutions. With many women feeling at this point in time in the US that their rights are diminishing, now is a great time for employers to empower women for the benefit of our society.

Do you agree? What did we miss?

References:

1. https://www.cnbc.com/2018/03/02/why-companies-with-female-managers-make-more-money.html
2. https://hbr.org/2021/04/research-adding-women-to-the-c-suite-changes-how-companies-think &https://www.cnbc.com/2018/03/02/why-companies-with-female-managers-make-more-money.html
3. https://www.catalyst.org/wp-content/uploads/2019/01/gender_and_corporate_social_responsibility.pdf
4. https://www.catalyst.org/research/women-in-the-workforce-united-states/ &https://www.smallbizgenius.net/by-the-numbers/male-vs-female-ceo-statistics/#gref
5. https://www.reuters.com/business/women-workers-could-drive-1-trln-rise-us-gdp-moodys-2022-03-08/
6. https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/gross-domestic-product-GDP#:~:text=In
7. https://www.state.gov/womens-economic-empowerment-3#:~:text=Women’s
8. https://www.forbes.com/sites/forbesnonprofitcouncil/2019/07/11/gender-generosity-who-gives-more-and-does-it-even-matter/?sh=5d14a40567da
9. https://www.gatesfoundation.org/ideas/articles/women-economic-impact-covid19 & https://www.newyorker.com/science/elements/the-ghost-statistic-that-haunts-womens-empowerment
10. https://www.unwomen.org/en/what-we-do/economic-empowerment/facts-and-figures & https://www.catalyst.org/research/women-in-the-workforce-united-states/#easy-footnote-bottom-17-3975