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Why Women-Led Companies Are Better For Employees

Here's the evidence showing that having women at the top is not only good for business but also benefits employees.

Why Women-Led Companies Are Better For Employees

Numerous studies show that women-led companies tend to perform better than those led by men. Even Kevin O’ Leary of Shark Tank fame admits preferring to invest in companies helmed by women because they produce superior returns. Out of more than 40 companies he invested in, about 95% of the women-led companies met their financial targets, compared with just 65% for businesses with male leaders. Not only that, but research conducted by The Harris Poll shows that half of Americans want to work for a female leader. Now, a new survey reveals that women-led organizations are also more likely to have engaged, inspired and satisfied employees than male-led firms. It turns out that companies led by women aren’t just good for business; they are also good for employees.

Greater performance

Several research studies indicate that women-led companies outperform those led by men. One fascinating analysis found that women CEOs in the Fortune 1000 drove three times the returns as S&P 500 enterprises run predominantly by men! Another study by one of the biggest banks in Europe, Nordea, showed that companies with a woman in the chief executive or chairman role performed far better than a major global index over an eight-year period. Credit Suisse also unveiled a research report showing that companies with more female executives in decision-making positions continue to generate stronger market returns and superior profits. In short, the link between gender diversity and better results is undeniable.

More desirable

Fifty percent of Americans say they’d prefer to work at a female-led company over a male-led company because they’re more purpose-driven, more likely to have access to childcare, and are more likely to offer equal pay, according to a study conducted by Berlin Cameron, The Harris Poll and The Female Quotient. Millennials in particular place a high demand on work culture. They want to work at organizations that champion values like compassion, collaboration, and the freedom to be yourself. The study also found that 71% of both men and women feel that having a female in an executive position makes them believe that they can also achieve a leadership role. Shelley Zalis, CEO of The Female Quotient, said,

“The rules were written more than 100 years ago for and by men, and are no longer working in today’s modern workplace. This research shows that more than half of Americans prefer to work with female-led companies, illustrating that leadership norms are changing to help create cultures of care.”

Increased engagement

Peakon, a real-time HR insights platform, works with hundreds of organizations around the world to collect employee feedback and analyze the results to help them improve employee engagement. While constantly surveying the global workforce across 40 key categories, Peakon recently isolated five of the areas in which women-led companies are clearly thriving relative to male-led companies: strategy, mission, belief, communication and autonomy. An anonymized subset of data spanning almost 60,000 employees under 3,000 managers was analyzed. Forty-three countries are represented in the data, with most of the respondents from the U.S. and U.K.

Here are the key findings:

  • Employees at women-led companies are more positive relating to their organization’s corporate strategy and mission, and its ability to communicate on these topics when compared to male-led companies.
  • Women-led companies seem to be better at inspiring belief in their products or services, leading to more overall employee engagement, when compared to male-led companies.
  • Employees at women-led companies seem to enjoy more autonomy and are specifically more satisfied with work-from-home policies when compared to male-led companies.

Overall, the results show that women-led companies appear better at meeting overall job satisfaction needs than those led by men. It is important to note that Peakon regularly surveys employees on a number of factors, but did not find any areas where male-led companies surpassed women-led ones. The two groups scored similarly on other workplace categories such as peer relationships, management support, compensation and rewards, employee growth, cultural fit, recognition and workload. It is worth noting that the differences between women and men-led companies could be because industries promoting female leaders might already be higher-performers when it comes to strategy and autonomy. Nonetheless, these initial findings provide a compelling argument regarding the benefits of a diverse leadership team.

Gender diverse companies stand out in more ways than one. Research continually shows that gender diversity results in increased productivity, greater innovation, better decision-making, and higher employee retention and satisfaction. Having more females in executive roles is not only fair, but it’s good for business and employees. If organizations around the world can commit to making gender diversity a priority, everyone will win.

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