Yet Another Study Ties Women in Leadership to Profitability

Yet Another Study Ties Women in Leadership to Profitability

A new working paper from three researchers at the Peterson Institute for International Economics has some bad news and some worse news when it comes to women in corporate leadership. Analyzing a survey of nearly 22,000 organizations in 91 countries, the researchers found that women made up only 14 percent of executives, 11 percent of board members, 4.5 percent of CEOs and 3.8 percent of board chairs. Sixty percent of the companies surveyed had no women on their boards and just over half had no women in executive leadership. Nearly one third of them had no women in either the boardroom or the C-suite. That’s the bad news.

The worse news is that this gender imbalance is costing firms money. The study, funded by the consulting firm EY, also found that the net revenue margins of companies where women made up at least 30% of leadership were 15 percent higher than those of organizations with no female leaders at all. The presence of a female CEO, however, had no apparent effect on profitability. This is hardly the first study to find a link between women in leadership and corporate performance; for example, research released last month by MSCI showed that companies with greater numbers of women in executive roles tended to have higher returns and fewer governance problems. If your organization is struggling to include women in its senior leadership, our research here at CEB offers some insight into the best ways to do so.

Huffington Post editor Emily Peck highlights another interesting correlation the researchers uncovered, between women’s representation in leadership and the availability of paid paternity leave:

[T]he places with the highest percentages of women in leadership, including in the boardroom and at the executive level, offered fathers 11 times more paternity leave days than those countries at the bottom. The top countries included Norway (at least 14 weeks for fathers) and Italy (26 weeks, shared between parents) and France (26 weeks paid). …

Strong paternity leave is an indicator that a country offers robust support for working parents, Marcus Noland, executive vice president and director of studies at the Peterson Institute, told The Huffington Post. “In countries that are more family-friendly and have greater support for child-bearing and rearing, women experience less disruptions in their careers and are more likely to make it to the top,” said Noland, who coauthored the report.

That support includes paternity leave, but likely also includes other policies — like subsidized child-care — that the report did not examine. “Maternity leave is rather common across countries,” Noland said. “Paternity leave is less so.” The United States is one of only two countries in the world that doesn’t provide women with paid maternity leave. Or, as Noland put it: “The U.S. is terrible.”