5 Ways Hiring more Women in Senior Leadership Will Positively Impact Your Bottom Line

Last Updated: December 16, 2021

The lack of women in executive and senior-level management positions across Corporate America is the root of more issues than one. Despite being an overall indicator of diversity and inclusion problems, this absence is negatively impacting the bottom line of companies in every industry, writes Sara Katz, Partner and Head of Recruiting, Declare.

Corporate America has a problem. Women make up only ​27 percentOpens a new window ​ of executive and senior-level management in S&P 500 companies. 

I began my career at firms where nine times out of ten, I was the only woman in the room. There has been some progress made, but we’re not yet where we should be.

This problem won’t work itself out. It needs commitment and buy-in from the top down. As executives, one of the most challenging aspects of our role is prioritization. The opportunities are countless, but capacity is capped. How do we know which merit additional resources? At this point, it’s imperative that industry leaders make the conscious decision to add additional resources toward achieving gender balance.

The business case is this: if organizations are not going all-in on a goal of achieving gender parity at the leadership level, then they’re leaving money on the table. 

Here are five ways that hiring and retaining women in senior positions will positively impact the bottom line:

More Capable Leadership Teams

Women foster highly productive work environments and engaged teams. 

Generally, they ​tend to adopt​ what’s called a “transformational” approach to leadership, as opposed to one based on “control and command”.

Transformational leaders are creative problem solvers who tend to be effective in communicating their vision and empowering their subordinates. It’s a democratic leadership style that’s highly aligned with the expectations and demands of today’s workforce​. 

Women are also an asset to any leadership team in the way they approach decision-making. Clinical studies have found that men under stress become more eager to take risks, even if the reward has a small chance of materializing, while women take time to weigh contingencies and tend to gravitate towards smaller but more certain rewards. 

Both of these approaches can add value, so equal representation makes decision-making teams stronger.

Expanded and Retained Talent

In corporate America today, quality companies are fighting the war for talent. Unemployment rates have been tremendously low in ​recent years​, and with declining immigration, corporate leaders​ can expect the war will only escalate.

To outpace the competition and hire the best people, firms must engage 100 percent of the talent pool with enticing practices and culture. In order to hire talented women, companies need to have environments in place where ​everyone​ can succeed. 

Oftentimes, that starts by introducing more inclusive recruitment practices. Instead of hosting networking events over evening cocktails, that might be difficult for women with families to attend, switching to breakfast receptions might open the door to that pool of top talent. 

During the interview process, firms should always make sure women are part of the hiring team – women tend to evaluate candidates differently than men, which again brings a holistic balance to internal recruitment. Top talent begets top talent. When junior- and mid-level women see role models in leadership, they recognize opportunities for growth. Hiring women into leadership is a virtuous cycle. 

Finally, retaining talent requires ongoing dedication. As much as inclusive culture makes female employees want to stay at a company, ​mentorship, training, and development opportunities are also essential to provide.

Improved Reputation

Of the world’s 500 largest companies, those with a higher representation of women in senior management were named to the Fortune “Most Admired” list ​twice as often​ as those with fewer women in leadership (17 percent vs. eight percent, respectively). 

Having women in leadership can improve a company’s reputation not only by demonstrating that it values gender diversity, but because women executives positively influence company operations and performance.

Several studies​ have shown that when corporate boards included multiple women, the firm enjoyed a better reputation among stakeholders. When women were part of the board, the company demonstrated greater corporate governance– ​in other words, leadership was more likely to operate with accountability, fairness, and transparency.

Learn More: 5 Tips for Recruiting and Retaining Women in TechOpens a new window

Better Customer Understanding  

Companies with women leaders are better able to understand their customers. Considering that women control 70-80​ percent of consumer spending and have a significant and growing influence in B2B buying, having women at the decision-making table becomes critical. 

Better Returns

The data doesn’t lie. There is overwhelming evidence that when women are well-represented in senior leadership, companies outperform. 

A ​Peterson Institute for EconomicsOpens a new window study of 20 thousand global firms found that a move from no female leaders to 30 percent representation correlated with a 15 percent increase in firm profitability. Catalyst ​found that companies with a higher representation of women enjoy a 35 percent increase in Return on Equity and a 34 percent increase in Total Return to Shareholders (TRS). One ​MIT studyOpens a new window ​ suggested that an even gender-split may have contributed to a 41 percent increase in firm revenue. 

As with any shift, real change takes time. Committing to gender equity is a process and one that takes resources to implement correctly and thoughtfully. While some companies feel that the cost outweighs the benefit, the result is proven: at the end of the day, hiring more women into leadership roles boosts the bottom line.

Learn More: A Case for Caution for AI in Talent Acquisition and Our Fight for Diversity and InclusionOpens a new window

Sara Katz
Sara Katz

Partner, Declare

Sara Katz is a Partner at Declare and leads the Recruiting Practice. Sara has been a leader in the executive recruiting industry for fifteen years, building and operating financial services practices at top recruiting firms, and founding her own successful recruiting firm focused on top talent for hedge funds, asset managers, private equity firms, investment banks and family offices. Sara began her career in the equity division at Goldman Sachs and later served in senior roles at leading hedge funds and asset management firms. Sara graduated top of her class from The University of Texas at Austin with a double major in Finance and Business Honors. She currently sits on a University of Texas at Austin Advisory Board and is actively involved in 37 Angels, the Lupus Foundation of America and the Female Founders Collective.   
Take me to Community
Do you still have questions? Head over to the Spiceworks Community to find answers.