Commentary & Analysis
Want Higher Profits? Hire More Women
Research consistently shows that companies with gender-diverse leadership teams have significantly higher profits than those that don’t. The reason? Different approaches to hiring, problem-solving, and relationship-building, all of which have positive benefits on the bottom line.
By Heidi Tolliver-Walker
Published: December 20, 2018
I’ll be honest. When it comes to the gender discussion, I’m tuned out. I’ve always felt that men and women complemented each other in personal life and in business, and that’s enough for me. As for deeper discussion, it’s not something I’ve felt called to engage in. That’s why this particular topic surprised me—it grabbed me.
I was interviewing the female CEO of a thriving print company, and in discussing how her gender influenced her leadership, she commented that studies show that having a diverse leadership team actually result in a higher bottom line. Studies showed that? Really? You’ve got numbers? I looked it up, and it’s true.
A study by DDI, for example, found that when women hold at least 30% of leadership roles, organizations are 1.4 times more likely to have sustained, profitable growth. According to an article in Fortune written by Tacy Byham, CEO of DDI, gender plays a particularly key role in the following areas:
- Hiring and promotion decisions
- Tendency to seek out overlooked talent
- Building knowledge through mentoring
- Seeking “out of comfort zone” opportunities
- Incorporation of more diverse perspectives
Take women’s beauty manufacturer L'Oréal. They added two more women to their board of directors in 2016, bringing the percentage of females on their board to 47%. Their 2017 annual report cited a sharp increase in net income—up 15.3% over the previous year. Is this a coincidence?
But it’s not just DDI. A 2014 study from Gallup showed that, in a retail setting, for example, gender-diverse business units have 14% higher average comparable revenue than less diverse business units (5.24% vs. 4.58%). In the hospitality setting, gender-diverse business units have 19% higher average quarterly net profit ($16,296 vs. $13,702) than less diverse business units.
Catalyst reports even higher numbers. As reported by Caroline Turner, principal of DifferenceWORKS, which helps companies improve bottom-line profits by creating a more diverse workforce, writing in the Huffington Post, “Catalyst research shows that companies with a higher percentage of women in executive positions have a 34% higher total return to shareholders than those that do not. Another Catalyst study found that companies with the most women directors outperform those with the least on return on invested capital by 26%.”
I could go on, but you get the idea. It doesn’t matter where you pull the research, it shows the same pattern: gender diversity has a positive impact on the bottom line.
At a time when we’re all looking for those hidden ways to boost profitability, this is a big one. Want to increase your revenues? Ensure you have diversity on your leadership team and throughout your company. It’s not a woman thing. It’s a numbers thing.