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Shattering the Glass Ceiling Makes Dollars and Sense

Values, CompanyDanielle Robles, Gap Inc. bloggerComment

Having more women in positions of power doesn’t only diversify ideas and perspectives — it can actually earn companies more money.

Companies with three or more female board members, or a female CEO and at least one other female director, earned 36 percent more return on equity than those who didn't, according to a Fortune article. Gender equality in the workplace remains a hot topic — particularly as companies feel the implications of not having it. We see the headlines every day: We're nearing a turning point for women in leadership. Why diversity matters. The trait that makes women great leaders. Equal pay for men and women is crucial. Why are there still few women leaders in tech? There's even an app for consumers to track how companies rank with women in their workplaces.

The data is there, too, as new studies stack numbers against the claims. According to a recent study by market index provider MSCI, companies with women-centric boardrooms or female CEOs generate a 10.1 percent return on equity vs. companies with male-dominated leadership, who produce a 7.4 percent return on equity.

“This study demonstrates the very strong correlation between corporate financial performance and gender diversity," says Ilene H. Lang, former president and CEO of Catalyst, a leading research firm that works to bring more women into business leadership.

"We know that diversity, well-managed, produces better results. And smart companies appreciate that diversifying their boards with women can lead to more independence, innovation and good governance and maximize their company's performance."

The value of a diverse workplace

The study's criteria for "strong female leadership" included having at least three women on its board, a female CEO and at least one other woman on the board — or having a higher-than-national-average representation of female board members.

Recent academic research in management and social psychology, particularly the work conducted by Lu Hong and Scott Page, suggests that because women have been battling for equality for so long, they possess a unique ability to handle pressure at the top.

When speaking to female leaders on the matter in January, Brit Morin, CEO and founder of Brit + Co., shed some light on the topic:

"Women are known to take more calculated risks, identifying data and trends that affect an outcome before making a decision. This tends to lead to smarter and more thoughtful decision-making processes in the boardroom and across the organization," says Morin.

Looking to the future

OK — so the research is there and the numbers cry out for us to pay attention. But what does that mean for the future?

Ideally, it means hiring more women in positions of power.

Companies like Gap Inc., co-founded by a woman, and for which nine of its 11 current executive leaders are women, have set a very simple stage: Employ qualified men and women for the job. Its latest move was appointing apparel industry veteran and Gap Inc. alumna Tracy Gardner to its board.

“I'm honored to join the company's Board of Directors at a time of exciting transformation," said Tracy in a release. “I look forward to contributing to the next phase of Gap Inc.'s growth."

All great news, but it's still a slow-moving road to equal representation. According to the MSCI study, just over 15 percent of the board seats at companies researched worldwide were occupied by women this past year. While women may be slowly making their way to the top, MSCI predicts the global percentage of female board directors is unlikely to hit 30 percent before 2027.

If the cold-hard facts aren't convincing enough, check out these staggering visuals, depicting rooms of powerful women at work after the men are Photoshopped out — pretty lonely, indeed. With women making nearly 70-percent of the purchasing decisions, here's something to think about: Which companies are getting your hard-earned cash?