I’m a male, and in my entire life I’ve only worked jobs that are significantly female dominated, and I like to think it has given me a great insight into the strengths (and weaknesses) of teams that have female members. At first, I thought it was just me, but apparently the evidence is growing that in the modern organization, females might play a far more than equal role in performance, potentially going beyond just the benefits of diversity. I will note, that the title is a bit misleading, as much of this research notes that it isn’t likely just being female, but rather females are more prone to competencies that benefit modern organizations. So what are the business benefits of being female?
- Increased Group Intelligence
- Improved Corporate Profitability
- Financial Acuity
Increased Group Intelligence: The most recent research to demonstrate this was published on HBR.org (Harvard Business).
HBR: But gender does play a role?
Malone: It’s a preliminary finding—and not a conventional one. The standard argument is that diversity is good and you should have both men and women in a group. But so far, the data shows, the more women, the better.
Improved Corporate Profitability: In addition to improved group intelligence, McKinsey (and others) found that having females sitting on corporate boards was linked to higher profitability.
Finding 1: McKinsey’s findings suggest that companies with higher numbers of women at senior levels are also companies with better organizational and financial performance. Although the analysis does not show a causal link, our research argues for greater gender diversity among corporate leaders.
Finding 2: The McKinsey study looked at the performance of companies with various numbers of women on their boards and found the largest gap in performance existed between those companies with no women on the board (poorer performance) and those with three or more (better performance).
Finding 3: Lastly, this is also demonstrated by the Conference Board of Canada’s research, that tracked corporate performance and found that those companies with two or more women on their boards in 1995 were more likely to be industry leaders in revenues and profits six years later.
Financial Acuity: Recently author LouAnn Lofton published Warren Buffett Invests like a Girl, where she examines the traits that made females better investors than their male counterparts. Her research highlighted:
- Women consistently make better hedge fund managers, according to a 10-year study by Hedge Fund Research, Inc.
- Less likely in the panic of 2008-2009 to lose their heads and sell at the bottom, according to a Vanguard study of 2.7 million IRA account holders.
- Female investors are less overconfident and take fewer risks (Quarterly Journal of Economics), research their investments more thoroughly (Journal of Bank Marketing), and are less susceptible to peer pressure (University of California).
In short, they exhibit many of the traits that make up the perfect long-term investor.
What does this mean? There is a definitive business case for more female leaders and developing normally overlooked competencies that make organizations more effective.
So what does HR need to do?
- Ensure recruitment processes don’t penalize females (systemic)
- Develop competencies that highlight the traits that make females successful (in knowledge workers only 25% of success is intelligence/technical proficiency, 75% is emotional intelligence).
- Improve female mentorship programs so that they aren’t just mentors, but also sponsors.
- With many successful female professionals having children, embrace work-life balance programs, and embrace technology and management strategies that support these.
- Develop a strategy to on-board women after they’ve had children. This is a significant gap in most HR recruitment/on-boarding strategies, and this is a relatively untapped market for highly skilled employees.
So, that is my take on the female advantage, and why we need to ensure that as human resource professionals our programs promote and encourage the development of female leaders throughout the organization at all levels.
Let me know if you agree, disagree, or what your organization is doing to promote the development and success of female leaders.
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