Advancing more women leads to competitive advantage

The economic impact of diversity in leadership has become increasingly evident as US businesses expand into new markets, cultures, and workforces across the US and around the world. According to prior Catalyst research,Fortune 500 companies with the highest percentages of women corporate officers yielded, on average, a 35.1 percent higher return on equity and 34.0 percent higher total return to shareholders than those with the lowest percentages of women corporate officers (Catalyst, 2004).

Lang said:

“Companies that proactively and successfully harness all their talent will sustain significant advantages over competitors that don't.”

Catalyst believes that a successful diversity initiative requires clear and consistent communication and implementation throughout all levels of the organization. Strategies for the CEO and top leadership include:

Explain and communicate broadly the business case for diversity and inclusion and set high expectations for the advancement of women. Recognize and curb stereotyping of women by instituting rigorous performance evaluation measures and accountability mechanisms to ensure that women are evaluated on performance and not on perception. Require managers to conduct performance reviews based solely on concrete results, rather than double standards, which can serve to undermine and undervalue women's leadership potential (Catalyst, 2005). Make recruitment and promotion processes transparent so that every qualified employee has an equal chance at open positions. Insist on diverse slates and diverse selection committees that are empowered to demonstrate that senior leadership recognizes and values diversity. State expectations explicitly, and hold everyone accountable for desired change. Measure hard data, use scorecards to track progress and assess setbacks, and tie ambitious diversity goals to significant incentives.

The census study was co-sponsored by Dupont and Heidrick & Struggles. For a full copy of the study and executive summary, please visit www.catalyst.org

Notes

• 1.

  Corporate officers were defined as executives who were board-elected or board-appointed.

• 2.

  According to the study, women executives were more than twice as likely as men to hold staff positions versus line positions. Staff officers are responsible for the auxiliary functioning of the business, while line officers are responsible for a company's profits and losses. According to CEOs interviewed by Catalyst, having line experience is critical for executives to reach the most senior levels in most companies.