Study after study confirms one very clear lesson: Companies with women in leadership positions tend to perform better. Yet few companies are acting on this valuable information.
Why women work well
Evidence abounds that companies with women leaders can deliver impressive performances. Consider that in 2010, when the Dow Jones Industrial Average rose in price by about 11%, both of its female-led components beat the average. DuPont
Longer-term studies of many companies provide even more impressive data. A report from Corporate Women Directors International listed 15 studies worldwide linking women board members to increased corporate profitability.
For example, in 2010, the folks at McKinsey found that the quartile of companies with the most women on their boards were more than twice as likely to have above-average EBITDA (earnings before interest, taxes, depreciation, and amortization), and twice as likely to sport an above-average valuation. The Catalyst research firm has found that the Fortune 500 companies with the most women in senior management had returns on equity that were more than a third higher than other companies'. Goldman Sachs researchers have estimated that by closing the employment gap between women and men, U.S. GDP could rise by 9%, and Europe's by 13%.
Female leaders tend to excel in different behaviors than men, offering several strengths that are rather useful to companies. Out of nine important behaviors identified by McKinsey, women on average were much better at people development, serving as role models, and setting expectations and rewards. They were also slightly more likely to inspire and to support participative decision-making.
The value of women to companies is actually sinking in with business leaders. McKinsey found that 61% of top management at leading companies believes that gender diversity boosts corporate performance.
Companies that understand this include Cisco Systems
Not a priority
Despite all that, though, most companies are not doing enough. McKinsey found that only 28% of companies across the world make gender diversity a priority action item.
Catalyst has noted that, based on information filed midyear in 2010, 60 companies in the Fortune 500 have no women directors on their boards. (Overall, 16% of board members are women.) And 136 of the companies have no women among their top five executives.
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Longtime Fool contributor Selena Maranjian doesn't own shares of the companies mentioned in this article. The Fool has created a bull call spread position on Cisco Systems. The Fool owns shares of IBM. Motley Fool Alpha owns shares of Cisco Systems. Try any of our investing newsletter services free for 30 days. The Motley Fool is Fools writing for Fools.