Explain: Do Companies With Female Executives Perform Better?
Nov 02, 2022 By Triston Martin

Introduction

Several studies have found that businesses run more smoothly when they are led by women than when men are in charge. Even Kevin O'Leary, the famous investor from the show Shark Tank, has admitted that he favours investing in firms that women lead since those businesses generate higher returns. Comparatively, just 65% of the companies he had invested in were successful in meeting their financial goals.

In contrast, over 95% of women-led companies were successful. In addition, a survey by The Harris Poll suggests that fifty percent of American adults would like to work for a female boss. A recent study has shown that companies that women run are more likely to have engaged, motivated, and fulfilled employees than those that men run. It has been found that companies run by women benefit not only the company itself but also the employees working there.

A Woman's Impact

There is mounting evidence, as suggested by several studies conducted over the past several years, that the presence of women in senior roles and on corporate boards can benefit a company's performance. According to these research findings, having more diversity in the C-suite is associated with higher profit margins, higher total earnings, and better returns to shareholders. According to a report published by Credit Suisse in 2016, "We find compelling evidence that organisations with a higher number of women in decision-making roles continue to earn higher returns on equity while operating more conservative balance sheets." "As a matter of fact, in organisations where women make up the majority of top management, those companies exhibit higher sales growth, high cash flow returns on investments, and reduced leverage."

They're Emotionally Intelligent

Consider it a compliment the next time a male coworker tells you that you are "being too emotional," because emotional intelligence provides a person with a significant advantage in leadership roles. Emotionally intelligent CEOs know that business is both a personal endeavour and one founded on relationships. They realise that by actively nurturing these relationships, they can also grow their companies. To such an extent, recent studies have shown that women's emotional intelligence is largely responsible for their advancement into higher-level corporate positions.

They're Multidimensional

Studies have shown that women are more likely to engage both hemispheres of their brains at the same time. According to the findings of these studies, women are more likely to be able to connect the two halves of their brains with greater ease. This means that women can think in a sequential, rational, and sequential manner while at the same time generating intuitive, holistic, and creative thought patterns. Because of this, women can use both hemispheres of their brains simultaneously, whereas men tend to use each hemisphere in turn.

They Care

Women, on average, are more empathic and sensitive to the feelings of others than males are. This is not always the case, but it is generally the case. A new study used fMRI to analyse brain activity and revealed that female participants were more empathic to the suffering of others than male participants. Women tend to be nurturers, and this innate degree of caring often extends to the work they do and the companies and teams they are a part of.

Why It's Important

Why does it seem to make a difference in a firm's performance to have gender diversity in its top leadership positions? Although the exact cause is unclear, most research agrees that women executives have access to diverse pipelines of skilled personnel and that integrating new voices into management roles can bring a fresh viewpoint. The studies also emphasise that even though it is typically more difficult for women to advance their careers into managerial jobs, those women who are successful in achieving this goal are among the most skilled.

According to Nordea's hypothesis, businesses doing well might be more open to hiring a female leader. In contrast, businesses that are doing poorly might prefer the "safe" option and appoint a man. However, Nordea stated, "It is also possible that women make more effective managers." When women deliver what they claim, it has a favourable influence on the share price, indicating that women may be more meticulous in their projections than men, which may be another reason women may outperform men in this area.

When considering investing in a firm, it goes without saying that the gender of executives in positions of power, such as the C-suite and the boardroom, should not be the primary consideration. However, an abundance of data suggests that it can play a positive role in enhancing business performance and perhaps putting more money in shareholders' pockets. [Case in point:] [Case in point:] [Case in point

Conclusion

In general, the findings indicate that women-run businesses are more successful than those led by males in achieving the requirements for total job satisfaction. It is crucial to emphasise that Peakon conducts regular polls of employees on various issues. Still, the company did not uncover any areas in which male-driven enterprises were superior to those managed by women.

Both groups had comparable scores in the remaining workplace areas, including peer relationships, management support, salary and rewards, employee growth, cultural fit, recognition, and workload. Both groups also received comparable scores. It is important to note that the variations in performance between organisations led by women and those led by males may be because industries that promote female executives may already be stronger in strategy and autonomy. Despite this, the preliminary data present a convincing case for the advantages of having a diverse leadership team.