Does putting more women in charge help businesses increase their profits? Rebecca Tuhus-Dubrow explores this in her May 3, 2009 article “The female advantage” at Boston.com. From the article:
The numbers are certainly striking, but their meaning is not yet fully understood. Correlation does not equal causation: While the link between higher levels of female leadership and profits is fairly well-established, it’s less clear that women are directly responsible for the success. Rather, companies of a particular kind – forward-thinking, adaptable – may both turn higher profits and promote more women.
But if the relationship is causal, however, there are competing theories as to why. As Tuhus-Dubrow explains,
- Since women make 80% of consumer purchases, they better understand the market
- “… gender diversity stimulates more vigorous discussions, resulting in smarter decisions”
- “… women may on average exhibit a different, and fruitful, leadership style”
So what are the results, exactly?
the 25 best firms for women outperformed the industry medians on three measures. Calculated as a percent of revenue, their profits were 34 percent higher; as a percent of assets, they were 18 percent higher; and as a percent of stockholders’ equity, they were 69 percent higher.
This from a 2001 study published in the Harvard Business Review. So, why, then, are corporations still dominated by men?
Last year, women at Fortune 500 companies held only 15 percent of board director positions, 16 percent of corporate officer positions, and 6 percent of top earner positions.
I read this and think, “Well, gosh, corporate structures tend to be hierarchical, which may reflect a patriarchal organizational default. Conversely, perhaps women are more comfortable operating in flatter structures which are more difficult to find within Fortune 500 companies.” Which is to say: maybe women prefer to work at non-Fortune 500 companies?
Indeed, the article suggests that women leave F500 America in part because of frustration with it (and not necessarily the nuts and bolts of the work that they do each day) [bolding mine]:
According to much of the scholarly literature, women struggle with a number of disadvantages, such as discomfort with promoting themselves. They are much more likely to report lacking access to the informal networks that spread crucial information and advice. Disproportionately responsible for child care, they require more flexibility. As a result, many exceptional female employees languish in middle management and eventually leave in frustration.
This is the most basic reason many analysts identify for the correlation between gender diversity and corporate performance. Organizations that are sensitive to these issues, and are therefore closer to being genuine meritocracies, tend to thrive.
Reading this, I wish I could wave a magic wand and get DinnerGrrls.org back up off the ground ASAP! Alas, I must be patient.
Until then, what do you think about this article?
