For some 20 years, companies have been running women’s leadership development programs a lot like sensitivity seminars, to develop awareness in both women and men that business women are, well, “different” and to help women understand how best to integrate into the existing business culture.

The good news is that these efforts, combined with education and encouragement, have helped put women on 15% of the boards of the Fortune 500. More good news is that studies show that companies with about 30% gender diversity on their boards actually outperform those with no women by a wide margin measured through multiple metrics (e.g., an 84% return on sales).

The bad news is that 15% is paltry for the Fortune 500, and it looks like midcap firms’ leadership teams may be even less gender diverse. Worse news is that progress is slowing at exactly the time we need women’s strong leadership skills in upper management more than ever; and women — especially young, highly educated women — are bailing out of the system. They’re not all leaving the workforce to have babies either — many of the best and brightest are going to start entrepreneurial ventures.

This puts business leaders interested in recruiting and developing the next generation of leadership in quite a bind. On the one hand, we have an economy — in need of powerful up-and-comers — struggling to right itself into productivity, ethics, sustainability and profitability. On the other hand, we have an up-and-coming, educated, appropriately skilled resource in plentiful supply (representing over half the workforce) who is choosing to opt out of the system.

You see the danger ahead, don’t you? We’ve identified talent pool key to our economic success who’s not making it into leadership positions where they can deploy that positive impact, and thus our leadership class is becoming systematically weakened at the very time we most need to strengthen it.

This isn’t new news — the seminal research on this subject was published by McKinsey in 2007 — but discussion and action on this subject in the U.S. is far behind Europe and even developing nations. Are we asleep at the switch? As importantly, why are so many women taking the path of least resistance?

As many women entrepreneurs tell me, “Why should I put up with a culture that doesn’t meet my needs and let me shine? I know I’m good. I’ll go make money for myself.” And then — thanks to the Internet — they do, along with many creative-thinking, industrious young men. When I talk to women both in and outside corporations about why they have left, or are tempted to leave, corporate culture is most frequently cited as the barrier to bringing more women into leadership.

Corporate attempts to support “women’s leadership programs” are often seen as a burden — another job on top of the one they already have and the family they value. But as importantly, many women’s development programs are viewed as attempts to “fix them,” which leads many to conclude they’re just round pegs being stuffed into square holes and might as well leave, taking their talent and potential with them.

It’s easy for a corporation to throw up its (metaphorical) hands and say, “It’s our culture, we can’t change,” but I submit that there’s simply too much at stake now not to change. And this change isn’t only for social justice reasons – there are hard metrics to motivate it too. Change isn’t hard when you understand what you have to lose and what you have to gain. After all, what would your financials look like with an 84% increase in return on sales or a 46% increase in return on equity?

I believe, after scanning almost 100 research studies on the subject, that by bringing more women into leadership, their mere presence in balanced numbers (i.e., 30% or more), with men will strengthen the capabilities of any organization’s leadership culture. This phenomenon, The Woman Effect, has already been validated through the research above and has the power to revitalize our economic engines to spur yet another wave of phenomenal growth.

However, to activate The Woman Effect in our economy, we’ve got to do it in our companies; and to activate it in our companies, we’ve got to stop running sensitivity seminars to adapt the women to the existing culture. We’ve got to take on the challenge of systemically adapting our culture to bring out the strengths of both female and male leaders, working together. This is a core strategic investment in profitability and sustainability, even more strategic than implementing a new ERP system.

The good news is that many of the same change management practices we use to implement technology can help us adjust to gender-partnered leadership. My colleagues and I will be running some change management pilot programs to do this and I’ll report back here. Go ahead and get started. You won’t be alone!

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40 responses to “The business case for gender-balanced leadership”

  1. Mary says:

    Great article, especially the part about "fixing us" vs. embracing the gifts we bring that are creating the profits. Why would you hire a woman and then form her to fit the business model that isn't working?

  2. Kris says:

    Another sexest article about how women are better than men…put the shoe on the other foot and hear the hue and cry…

  3. Guest says:

    A little hypocritical I think. You talk about the number of women opting out of corporate culture to pursue their own business as an entrepreneur as if that were a bad thing yet you yourself are one of those entreprenuers.

  4. The key statement in this article is in the penultimate paragraph. I find it extraordinary that companies have not figured out they have to adapt their cultures to accommodate women at every level in order to ensure they benefit from the strengths of both men and women, and that they still think they can 'modify' women to fit into their existing ways of doing things.

  5. Hazel says:

    Hi Dana, I like this article, especially this paragraph……. to activate The Woman Effect in our economy, we’ve got to do it in our companies; and to activate it in our companies, we’ve got to stop running sensitivity seminars to adapt the women to the existing culture. We’ve got to take on the challenge of systemically adapting our culture to bring out the strengths of both female and male leaders, working together.

    I had a conversation with a female attorney recently and when discussed the importance of men and women adapting their style of communication with each other she became very upset about the whole learning to adapt. After more conversation with her what I learned was this………

    She feels that the women are taught to adapt to the male way of communicating, leading, and doing business and she has become very good at that, but her aggravation is this, even in her firm it is never the reverse. He does not attempt to adapt his communication to her style. Pointing to exactly what Peter said, teaching only her how to modify just leaves her frustrated because she never gets to be who she is in that environment. As with this young lady, women will continue to hit burn out and leave to do their own thing.

  6. Guest says:

    I think your whole comment is simply about growing up, as a person and as a society. The hard part for men is that we do not think like women (some excepotions of course) and we both try to change the other to think like us. It drives us both nuts some times. If the "relationship" becomes more clash than mesh it ends in divorce right? Same thing for a corporate environment. I think that for the man/women mix of management to really work there would either have to be a culture of patience and cooperation, or a stabilizing force (Such as a great CEO) keeping it all together. The answer is not as simple as just mixing men and women, it will only work better than a single gender management team if they both understand that they need to stop trying to change the other.

  7. RGJ1 says:

    Just a few observations: “…business women are, well, different…” Sorry, times are well past to bother with that. The difference between male and female board members is a moot issue. Board members are board members. The small percentage is simply a matter of initiative. Women have been free to elevate themselves in the business world for years. Water should seek its own level in a laissez faire economy.
    “…studies show that companies with about 30% gender diversity on their boards actually outperform those with no women…” What Studies? By whom?
    “…many of the best and brightest [women] are going to start entrepreneurial ventures.” What’s the point? So are many of the opposite sex. We are all free to do that. What evidence is there that this puts development of “…the next generation of leadership in quite a bind”? Or that “…our leadership class is becoming systematically weakened”? I think there’s none.

  8. Another guest says:

    The Women Effect seems fairly dubious to me. This article seems like a classic example of correlation without proven causality. (See The Halo Effect by Rosenzweig) Attributing outperformance to gender diversity makes a good story but is almost impossible to prove. There are dozens of explanations, many of them autocorrelated. Maybe strong leadership cultures hire more women, in which case it is the existing culture that drives performance and not diversity. Maybe successful companies can afford to spend more time and money on gender diversity than their peers. While I think women deserve every opportunity to succeed in business, to claim The Women Effect is an over-reach. Think of it this way: If you changed the Board of the business at which you work to 30% women, should you expect an 84% increase in return on sales? Or is improving return on sales more complicated than that?

  9. caroldekkers says:

    When we have a culturally diverse workplace (globalization has helped with this) – we adapt the workplace to grow with the strengths of its members. I agree with Christine that this is what many of our workplaces have neglected to do when it comes to women – particularly some of the old bastions of traditionally male professions such as engineering.

    When profits soar for whatever reason (diversity, progressive thinking, innovation) – business will get behind whatever the solution – and if the solution to greater profits is a diverse leadership force (proven) things will slowly change. It's not a matter of women better than men or men better than women, it's what makes a business better period. (The same thing might be said about an age diverse workforce!) When the bottom line improves and profits soar, then businesses change.

    Great post.

  10. Ward Churchill says:

    My opinion is that we do a very poor job of identifying leadership ability and we need to do a better job of identifying leaders before we worry about their gender or ethnicity. There is nothing worse than having to deal with a poor leader who has been promoted because of gender or ethnicity to "get work". The base of your philosophy is that because we do a poor job identifying leaders, let's try different gender or ethnicity to see if we can do better and that is precisely backwards. Leadership is an ability and having diverse leaders is not a route to better leaders, just different bad leaders.

  11. Ward Churchill says:

    You have no business discussing intellectual diversity. I'll shoot you down intellectually by saying that leadership skills have nothing to do with gender, which is clearly correct. You can't accept that statement because your professional career is based on your belief that gender does indeed affect leadership skills, which is clearly false. Real life is about people first – truth first. You'll never see that, so have a great life.

  12. Olga Kovshanova, MBA, MA says:

    Great article–Thanks!

    Olga Kovshanova, MBA, MA
    Hotel Professional Extraordinaire
    Sales/Marketing/Management
    Email: olinka@olinka.info
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    M: 230-717-5790 evenings
    LinkedIn Profile: http://www.linkedin.com/in/kovshanovaolga
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  13. Gerry says:

    All very interesting, isn't it?

    Exactly why it's cool and the focus of our thoughts! At the root of this blog discourse is a belief that for someone to advance someone else has to retreat.

    In fact, the reality is that advancement and the introduction of diverse thought benefits everyone (I.e., 1+1 = 3).

    Also note that diversity is broader than gender, including whole cohorts of men who are excluded in many realms (e.g., not Type A). It is clear from research that this diversity leads to higher performance and returns and therefore the outcome and rationale is far from soft and fuzzy. By the way, it also "feels" good in an organization that gets it,

    The challenge? Addressing embedded bias like the comments in the blog.

  14. Any biology student can tell you when you diversify the gene pool, you get stronger offspring. The same can be said for leadership and business. The more ideas and view points you bring to the table the more likely you are to find exceptional, innovative ones. Advancing women in the workplace, marketplace and community are central goals of the Women's Empowerment Principles. Gender equality is not only a basic human right, but as business, economic and development experts now agree, empowering women fuels economies and social progress. Opening avenues for business to engage in women's empowerment is a top priority of UN Women and UN Global Compact. BPW Canada in partnership with BPW International, UN Women and UN Global Compact are launching nationwide the Women's Empowerment Initiative. For more information visit http://bpwcanada.com/wep.html

  15. Patricia says:

    Women have the capabilities and desire to achieve. The employers must fully accept this premise and look at the evidence. At our recent Women Leaders conference with national women leaders as speakers and in attendance, the power of talent was palpable.

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