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The Data Is In: Female Leadership Correlates With Higher Performance

Women-led publicly traded companies outperform their male counterparts by 25 percent according to new study.

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BY Melissa Thompson - 10 Jan 2018

PHOTO CREDIT: Getty Images

From my perspective as a woman CEO and founder, this topic is something very personal and very important. I'm a huge advocate of empowering other female leaders, and I do that by writing about this topic occasionally; but not too much, because I do believe there is much progress being made right now in hundreds of companies across the nation. I simply want to add my voice to the conversation and keep it moving forward.

While there are significantly less female CEOs than male, it's important to note that the position of CEO of a Fortune 500 and S&P 500 company is one of the very few positions in the world in which women, on average, make more than men. Why? Nobody's quite sure, but the main theory: female-led companies perform better.

In a very recent study performed with 11,000 publicly traded companies across the globe over the last eight years, Nordea Bank found that women-led companies performed better by about a 25 percent annualized return since 2009, more than double the 11 percent delivered by the MSCI World Index.

This is supported by the iconic Peterson Institute study from 2016 that correlated female management and leadership to higher performing teams. The study was unable to assert whether the increase in productivity was due to increased comfort in a workplace where discrimination was reduced, or whether women bring different skills to the table. The end result is higher profits.

Women leaders have proven themselves.

Data that women make great managers and leaders isn't new. Prior to the Peterson study, Zenger Folkman published their own results that indicate female leaders outperform men in nearly every category.

What does it take for a woman to get to the top of the corporate ladder, and why do so many fail to do so? Why does it seem like progress in executive gender equality is achieved so slowly?

Recently, Fortune published its latest Most Powerful Women list which includes the top 50 female executives in the United States. Over half of those women (twenty six, to be exact) hold the title of CEO, which is quite impressive given that only 6% of Fortune 500 companies are run by female executives.

So why are there still so few women CEOs?

Despite progress, the number of women Fortune 500 CEOs remains tiny. Many female c-suite stars don't get second opportunities, ending up in an invisible corporate purgatory. Why is business still underutilizing one of its most valuable assets? Even those who achieved the ultimate business success--a seat in the corner office--have found that achievement hard to replicate. Of the 50-odd women who have become CEOs of a Fortune 500 company since 2004, only two--Meg Whitman and Susan Cameron--have repeated as a Fortune 500 CEO.

But, those numbers aren't stable. According to Bloomberg, since 2009, 19 female CEOs of S&P 500 companies have stepped down, and been replaced by male successors. While I'm not doubting that each of those men might have been great choices for their individual companies, the overall trend is troubling. Still unconvinced? In total, there have only been 62 female CEOs in the history of the Fortune 500.

It is also a fact that female chief executives are more likely than men to leave under pressure. A study from PwC shows that between 2003 and 2013, 38 percent of female CEOs were forced out of their jobs, compared with 27 percent of male chiefs.

"The main problem is that women in top leadership roles are often held to a different set of standards," explains Gail Meneley, Co-Founder & Advisor, Shields Meneley Partners, an advisory firm for top executives in career transitions. "The smart, assertive woman who is willing to go nose-to-nose with others on tough issues is viewed as abrasive. A man exhibiting the same behavior is viewed as strong business leader." Isn't it time for us to break down this barrier? Arm yourself with data as you climb to the top of your own company's ladder -- or be supportive and advocate for those who are attempting to do so -- and be persistent.

Be Persistent (Without Alienating Peers)

Many companies are attempting to make their boardrooms more diverse, but it will take time to eliminate existing biases. We have a long road ahead before the world modifies its definition of what a leader looks and acts like.

You can help accelerate this broader view in your own company by actively pursuing promotions, advocating for better recruitment practices, and building alliances along the way. You will need to be resilient in the face of bias and office politics, but you will find advocates and mentors -- both men and women -- who want to help. Superiors are won over when you deliver great performance and build mutually respectful relationships with your colleagues that are in the best interest of the company.

While there are still relatively few women in the CEO seat, this will change over time. Write down your goal, your plan to achieve it, and take advantage of stretch assignments that are offered. Take some risks. Reach across the organization for opportunities to collaborate to help the company reach its goals. You, and other professional women like you, will change the statistics one company at a time.

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