The 3 reasons why more female leaders mean more company profits - Women's Agenda

The 3 reasons why more female leaders mean more company profits

Having more women in senior management positions can increase company profits by 6 per cent, according to international research. There are three very good reasons why that is the case according to Clare McCartin. 

A global study has found that having women in senior leadership positions increases company profits. It’s impressive to hear we have such a positive impact, but why would our gender boost company revenue?

The Peterson Institute for International Economics analysed results from a 2016 study comprising of 21,980 global, publicly traded companies, in 91 countries from various industries. The results showed that having at least 30 per cent of women in leadership positions adds 6 per cent to net profit margin.

So how does our gender contribute to an increase in revenue?  Here are three key skills women have that could positively affect a company’s performance.

1. A different perspective

Women represent the consumer interests of half the population, therefore we provide different ideas, insights and solutions to businesses. This understanding of female consumer interests could have a profound influence on retail and marketing businesses in particular.

2. Risk adverse 

Men are twice as likely to take risks then women – according to the findings from a study by the British Psychological Society. A women’s more careful approach to business, including company decisions and investments, could avoid large losses. It is this naturally cautious approach that can minimise the high risk decisions made by male leaders, as risky decisions can damage a company’s bottom line should the risk not pay off.

3. Better communicators

Communication is an important quality for both male and female successful leaders to have. Traditionally women are thought to communicate their ideas and opinions better than men while providing more empathy when required. Supported employees perform better for the company, according to a white paper published by the Center for Creative Leadership. When employees feel supported by leaders who demonstrate empathy as a skill, their performance will increase, therefore impacting the success of a company.

While the findings from this economic study is great news for women and businesses, the ongoing gender issue of having fewer women in senior management positions still stands.

With women representing only 27.4 per cent of key management positions in Australia, according to the latest statistics compiled by the Workplace Gender Equality Agency. It is important we continue to push for gender diversity by prioritising gender targets within all industries.

According to Dr Gillian Sparkes, the Independent Commissioner for Environmental Sustainability in Victoria and a judge for the Top 50 Public Sector Women awards, gender targets seem inevitable to get real action,

“To achieve change, we must change something. The need to achieve targets will incentivise change. I am watching with interest, the Australian Institute of Company Director’s current campaign led by Elizabeth Proust to get S&P/ASX 200 female board representation at 30 per cent by the end of 2018,” she says.

Davidson are taking a step in the right direction with the launch of the Top 50 Public Sector Women (Victoria) awards program aimed at shining a spotlight on female leaders. Through mentoring, encouragement and gender targets it is possible to achieve a gender balance in senior management positions within Australia.

The key skills that make women effective leaders are particularly valued in volatile economic times and while men can adapt and learn these skills, we have a natural advantage and it’s about time we used it.



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