Leadership Trends and Realities: The Business Case for Gender Balanced Leadership

Dana Theus, President,
InPower Consulting

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!

This post originally appeared on SmartBlog on Leadership. For more insights on business leadership, sign up for SmartBrief on Leadership.

Dana is a research-based advocate for talent innovation and women’s leadership change initiatives that produce business results. As a leadership and management consultant she helps companies establish leadership teams capable of tapping into their full range of inner resources – individually InPowered and gender-partnered as a group. She also designs culture-shaping initiatives to integrate leader’s personal styles, corporate brand identity and innovation strategies. The result is improved productivity, profitability and meaning. Certified as a facilitator and trainer in The PRIMES methodologies, and as champion in Lean Six Sigma, she brings a full suite of leadership development tools and insights to every engagement. Dana is President & CEO of InPower Consulting (www.inpowerconsultinginc.com)

3 Comments

Dana, you've really nailed how I've felt all these years. Even as we train up new women leaders, they see very few valid reasons to allow themselves to be held back by "Good 'ol boy Networks".

Your statement, "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,” is exactly why I turned down leadership positions for Fortune 500 companies.

Not only would those companies not allow me to "shine my own light" to help make their organization out perform their competition, I would have had to work too hard to prove myself. On my own, I could prove my worth to myself. When I succeed, I reap the rewards. When my efforts fall short, I reap those consequences as well. As women, we have natural instincts, that when allowed to flourish, help guide us through the landmines of business and business relationships.

I applaud you for your efforts on behalf of women and what I would categorize as organizational health. For companies to success in the years to come will take the best of all their employees - - men and women. In my lifetime, I hope to see a workforce that allows all leaders to flourish!

Posted by: Jonena Relth | June 11, 2012 at 10:44 AM