The Female Factor: Why Women Leaders Increase Profits


Last week I presented a new piece of research into women's networks at the Annual 20% Conference of the Chartered Financial Analyst Society of the UK.  Alongside my research, a panel of powerful women from across the financial services discussed issues including female investors, the Women in Leadership Index and the influence of sponsors on their careers. But the overarching message of the evening was the importance of female leaders. The numbers are clear. Hedge funds run by women outperform those run by men.  Companies with more women on the board are just more profitable. And shares in those companies even fetch a higher price. It's not just huge corporates that need women at the top. The case for diverse leadership is equally strong for start-ups. US "Shark" Kevin O'Leary has money in 27 smaller companies of which 55% have female CEOs. And guess who's bringing in the returns? All his profits in the last six months have come from female run companies. That's right. In fact, of his male-run companies, not one has turned a profit this year. Fact.

But why do female led companies do it better? Most of these studies don't ask the question. And of course, even if they did, causality is hard to prove. But there are a few well founded theories to use when making your own case for investment or a role at the top.

Multitasking. Companies, especially small ones, are hard to run. The many moving parts mean you can't just stick to one thing you do well. You have to do it all. Luckily we're wired for it. Women are naturally better at multi-tasking thanks to the better connections between the two halves of our brain. As a result, we're nimble, switching from sales to PR to admin and back again without breaking a sweat.

Risk. We're not fans. Women have less testosterone. That means we tend to be more risk averse than our male counterparts. Less risk means more stable returns. Something investors want and need. A 20% profit in one year is no good if it's followed by a 25% loss the next. What's valuable is a company that grows steadily and surely. Somewhere with it's eye on the prize but without it's head in the clouds. Female CEOs are incredibly good at striking that balance.

Groupthink. We've made huge progress in the last thirty years. But you wouldn't be reading this if there wasn't still a way to go. The corporate world remains dominated by men particularly at the top. That's why female leaders are so powerful. A homogenous group - read older, male bosses - tends to think in a similar way. When someone different comes along, they are able to act as a disrupter. Women, for example, are more likely to think of different ways to sell something or a new market to target, particularly in industries such as tech where they are hugely outnumbered. Our fresh perspective brings big rewards.

Happiness. We don't just impact profits, the studies show diverse leadership teams also make for happier employees. And happier employees perform well. But why? Studies show women make great bosses. We are more collaborative in our approach. We communicate better, are fairer and less impulsive (that pesky testosterone again). These traits combine to make us managers people want to do well for.

Now of course we're not saying men can't do well too. But the figures on female leadership are so clear, the reasons so well founded that if companies want to make money, we know they need us too. So now, armed with your business case, go ahead and nab the top spot.