Board diversity can boost bottomlines, says study

In a world where every bit of competitive advantage counts, greater diversity on the board could be the secret ingredient companies are looking for. There is growing evidence that women executives have a positive effect on the bottomline, according to Liz de Wet, course director of the Women in Leadership programme at University of Cape Town Graduate School of Business (GSB), South Africa.

Greater gender diversity at the board level can bring a competitive advantage to companies, suggests research. Data from 1,500 US companies show a strong positive association between return on assets and return on equity, on the one hand, and participation of women in top roles, on the other.

A recent McKinsey study reported that companies with three or more women on senior management teams scored higher on the nine organisational criteria for success than companies with no senior-level women.

Given that women are still under-represented in most organisations and governments around the world, there is plenty of scope for forward thinking organisations to capitalise on this, she adds. According to the latest numbers from Fortune 500 companies, women remain critically under-represented at the decision-making tables, with men holding just over 80 per cent of all seats on boards.

Changing Landscape De Wet says that while old models of business may have worked in the past 150 years, the business landscape has shifted dramatically in the past decade, requiring far greater engagement, collaboration, innovation, and diversity of thinking for success.

According to Tony Schwartz, CEO of The Energy Project and author of Be Excellent at Anything , women are particularly well adapted to this task. Writing in the Harvard Business Review he notes: “An effective modern leader requires a blend of intellectual qualities — the ability to think analytically, strategically and creatively — and emotional ones, including self-awareness, empathy and humility. Great leadership begins with being a whole human being and I meet far more women with this blend of qualities than I do men.”

Gender and Qualities Gender does not, he says, ensure or preclude specific qualities and he has hired men who are just as self-aware, authentic and capable of connection as women. Just as he has encountered senior women executives who have modelled themselves after male leaders, perhaps feeling they must do this to survive, and are just as narrow and emotionally limited as their worst male counterparts.

“But for the most part,” Schwartz says, “women bring to leadership a more complete range of the qualities modern leaders need.”

Schwartz is backed by a study published in the Harvard Business Review in which 7,300 leaders were rated by their peers, supervisors and direct reports. Women scored higher in 12 of 16 key skills – not just developing others, building relationships, collaborating and practising self-development, but also taking initiative, solving problems and analysing issues.

TECTONIC SHIFT To shift corporate culture so that it can reap the benefits of greater representation of women at the top, Schwarz says more courage is needed – from both men and women. Male leaders need the courage to stand down and comfortably acknowledge their shortcomings and women need the courage to step-up, fully own their strengths, and lead with confidence and resolve.

According to de Wet, appropriate coaching and training can play a key role here.

“Women leaders undoubtedly benefit from specialist knowledge, and coaching and networking support that allows them to translate their qualities, ideas and insights into sustained action for increased impact and visibility,” says de Wet.

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