Do women have it tougher than men in the corporate world? Many signs point to yes, but a 2015 report released by New York analytics firm MSCI suggests companies with strong female leadership show greater returns on equity than those without.
The report found companies with strong female leadership held a 2.7% return on equity advantage over those without a similar leadership profile (10.1% vs. 7.4% respectively). And businesses that lacked gender diversity in board positions faced more governance issues than the average.
While the report doesn’t establish a clear causal link between female leadership and overall corporate performance, traits such as innovation and good decision-making were associated with gender diversity at the corporate board level. And that diversity is much more prevalent in companies with a female CEO. The report suggested the possible causes for such a link include increased social networking, greater cultural diversity, and the breakdown of the typical institutional barrier to women taking leadership roles in the workforce.
The connection between strong female leadership and higher returns on equity could have its basis in cultural diversity (board diversity in particular), greater social networking, and the breakdown of the perceived “glass ceiling” women reach in the workforce. When combined, these traits encourage inclusive thinking, innovation, a higher respect for individuals, and collaborative decision-making. With fewer societal barriers like gender inequality and discrimination, board members and employees have a better chance of working together to achieve success.
If your company is looking for a healthier bottom line, whether you have female leadership or not, consider the value these traits hold for your business and how to implement them. Think of ways to implement structural change to reduce the barriers to healthy decision-making and innovative thinking your company faces. While you’re at it, identify and eliminate other significant barriers to success such as legal liabilities or financial instability.
Female business leaders might still encounter glass ceilings in the workplace, but the fact is, their contribution can lead to higher returns on equity, increasing the value women have in the business world overall. If you want to maximize your returns on equity, begin by sitting down with us. As your Creative Business Lawyer®, we can help you identify opportunities for achieving leadership diversity. We can also help you put valuable legal and financial protections in place to ensure your company is protected, so you can focus on growth, potential, and all the reasons why you love doing business.
This article is a service of Gratia P. Schoemakers, Creative Business Lawyer®. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.