Women in Leadership: The Business Edition

As a woman-owned small business, the topic of opportunities for female leadership in business and industry is one that is personal for us.  In this article, as we look back on Women’s History Month, we celebrate progress made and outline steps that we can continue to take to ensure that we keep moving forward towards a more resilient and representative business environment that recognizes and values the talents of all.

“Women belong in all places where decisions are being made.”
– Justice Ruth Bader Ginsburg

From the boardroom to the football field and positions in all levels of government, women are making their presence known. Today, in business, there are more women running Fortune 500 companies than at any other point in history. Women are increasingly represented in board governance as well. According to a 2019 analysis by Diversityjobs.com of S&P 500 companies, gone are the day of all-male boards. Today, more than one-quarter (26%) of S&P 500 company board directors are women (a record high) and women account for nearly half (46%) of all new board directors. Last year, 10% of those board directors were women of color. As reflected in this recent Wall Street Journal story, the future of corporate leadership is increasingly female.

While these accomplishments are heartening and deserving of celebration, we still have a long way to go.  There may be 41 female CEOs of Fortune 500 companies in 2021, but let’s be real: That still only represents 8.2% of companies (So, “Yay! Go 2021!” but also “…yay?!”).  Similarly, the representation of women of color in leadership positions (both in management and governance) lags even further behind.

So, what next? Today’s article seeks to accomplish two things. The first is to outline the specific steps that you, as a decision-maker in your respective role, can take to support women in the workplace and aid in the creation of a more equitable and productive playing field. I will also outline the policy changes available at a national level that will further these aims. The second goal of this article is to illustrate why a commitment to a more equitable, competitive, and representative workplace is good for business. 

Let’s call female-forward leadership an exercise in enlightened self-interest. Allow me to explain.

DIVERSITY IS THE MOTHER OF INNOVATION… AND PROFIT.

Diversity—from gender diversity to culture, age, and race—is shown to foster creativity and innovation. Men and women inevitably have different experiences and backgrounds. These experiences shape our approach to business. And the more diverse workplace teams are along many dimensions—culture, ethnicity, gender, sexuality, age, experience level, educational background, expertise, etc.—the more likely they are to draw inspiration from seemingly unrelated places. These idea combinations lead to more unlikely—and more innovative—ideas. While this all seems to be an obvious observation, it has not always been one that was embraced in the business world.

Companies across industries from PwC, to Coca-Cola to L’Oreal are seeking to prioritize and benefit from a diverse and inclusive work environment. These companies know that diversity is more than just a buzzword—it’s a recipe for corporate success and there is a growing body of empirical evidence to prove it.

For one thing, diversity in the workplace provides employees with a greater sense of belonging, which translates into more trusting and engaged employees, leading to increased productivity and a greater sharing of ideas. A study by The Boston Consulting Group found that “companies that have more diverse management teams have 19% higher revenue due to innovation.”

Research by McKinsey also shows that companies in the top quartile of workplace diversity are 35% more likely to have increased return on investment (ROI). Companies in the bottom quartile are 15% less likely to achieve above-average returns. Diversity in the workplace is a key factor in providing a competitive advantage that shifts market share towards more inclusive companies over time.

If your organization can not afford to diversify in the short term through hiring full-time staff, bringing on a woman-owned business as a project-based contractor to support a critical project can be a potential solution.

WOMEN EXCEL AT THE SOFT SKILLS NEEDED FOR BUSINESS LEADERSHIP

While technical skill and knowledge are fundamental to career success, CEOs consistently cite soft skills—effective communication, empathy, and self-awareness—as the most desirable professional attributes. Although these characteristics are difficult to measure, they are highly valued and can make a real difference to the bottom line. Research has drawn a connection between the strength of character and business performance—with CEOs who rank highly for attributes like compassion and integrity also enjoying a 9.35% return on assets over a two-year period.

Soft skills and emotional intelligence may prove a key competitive advantage for women in business. According to a 2016 study published by the Korn Ferry Hay Group, women outperform men in 11 of 12 key emotional intelligence competencies (i.e., emotional self-awareness, empathy, conflict management, adaptability, and teamwork).

Another study conducted by McKinsey entitled Women Matter 2, found that on average women use five of the nine leadership behaviors that improve organizational performance more often than men especially in three areas: People development, expectations and rewards, and role models. These behaviors strengthen three dimensions of organizational performance—accountability, leadership team, and work environment and values—thus contributing to stronger organizational performance.

As one CEO interviewed in the McKinsey study noted, you cannot harness this advantage by adding just one woman to the leadership team, rather, “it is only when there is a critical mass of women who use those behaviors that are complementary to men’s that performance significantly increases.”

WOMEN REPRESENT HUGE ECONOMIC POWER AND OFFER IMPORTANT CONSUMER INSIGHT

The global female economy was expected to reach $24 trillion annually in 2020, up from $20 trillion in 2018. Over the next five years, it is poised to outpace the economy of some of the biggest nations such as China and India. Women drive 70-80 percent of all consumer purchasing decisions and in some sectors, the influence of women is even greater such as healthcare (90%), food (93%), and OTC pharmaceutical purchases (93%).

WOMEN AND ENTREPRENEURISM – A GROWING BUT STILL UNDERUTILIZED ECONOMIC RESOURCE

According to the 2019 State of Women-Owned Businesses Report, commissioned by American Express, the percentage of businesses in the U.S. owned by women has skyrocketed from  4.6% in 1972 to 42% in 2019. In fact, on average, women-owned businesses are growing two times faster than all businesses nationwide. This is great news for all of us because women-owned businesses continue to fuel the economy and now represent 42% of all businesses—nearly 13 million—employing 9.4 million workers and generating revenue of $1.9 trillion. Authors of the report believe that the “potential of women entrepreneurs for spurring economic growth has not been fully realized.”

A VERY DIRECT EXAMPLE OF “ENLIGHTENED SELF-INTEREST” — TAX INCENTIVES

Working with a women-owned business can get you some well-deserved federal tax benefits. That’s right: the government wants to support diversity and is putting its money where its mouth is. Some states even grant tax incentives for working with women-led companies. What’s more, in many cases tax liabilities are reduced for projects funded with federal or state grants or loans.

It’s important to note that the federal government defines a woman-owned business as one that is at least 51% owned by one or more women, or for publicly traded companies, where at least 51% of the stock is owned by one or more women. In addition, the female majority owner must be a U.S. citizen, the daily management and business operations must be controlled by one or more women, and the business must be “small” in accordance with the Small Business Administration’s (SBA) size standards for its industry.

To make it easier to identify those businesses that qualify as a woman-owned business you can ask if an organization has been certified. While there isn’t one universally accepted certification, businesses can seek certification from the federal government or one of the private sector corporations that offer such certifications.

Having demonstrated the “Return on Investment” for advancing a more diverse, equitable, and (ultimately) competitive workplace and economy, let’s move to what we can do to keep this ball rolling.

WHAT CAN YOU DO? HIRE AND PARTNER WITH WOMEN OWNED BUSINESSES.

In our private capacities and individual roles, we can each make an effort to support women in the workplace. That may mean being more aware of the diversity of your procurement process and ensuring that women-owned and minority-owned companies are represented when you are seeking third-party vendors. This may mean taking a more deliberate or intentional approach when putting out Requests for Proposals (RFPs) or actively seeking out other vendors, but it shouldn’t be difficult to find candidates (for example, women-owned companies represented over 40% of registered businesses worldwide in 2020).

WHAT SHOULD WE ALL DO? POLICY OPPORTUNITIES.

Change can be and should be made at the national level through policies that support paid leave, a higher minimum wage, and affordable childcare, as well as in human resources policies at organizations large and small and in our homes.

The urgency and relevance of policy actions are all the more acute in the context of the COVID-19 pandemic and the stresses that the Public Health Emergency has placed on our social and economic systems.

COVID has had a uniquely negative impact on women in the workforce. It’s been well documented that women typically take on the majority of household and caregiving responsibilities. For women working outside of the home, this has been referred to as working a “double shift” doing their jobs then returning to a home where they are responsible for childcare and housework. In the age of COVID, when the lines between “work” and “home” are increasingly blurred (and everyone is running on empty) women are also disproportionately impacted by the compounded “double double shift” as coined by Sheryl Sandburg, Facebook COO and co-founder of LeanIn.org.

And there is data to prove it. This year’s Women in the Workplace report, conducted by McKinsey & Company and LeanIn.org, shows that women are having a worse experience than men managing work-life balance in a COVID world and this differs across Black women, Latina, Asian women, LGBTQ+ women, and women with disabilities who are all facing challenges distinct to their realities.   

According to the report, over the past six years, there has been no difference in the rates that women and men have left the workforce. But this year’s survey finds that one in four women are considering either downshifting their careers or stepping out of the workforce completely—as compared to one in five men. Such an exodus could take as many as 2 million women out of the workforce; erasing the progress we have made in gender diversity as a society and creating a huge negative impact for years to come.

Women in visible leadership positions, such as Sheryl Sandburg, are calling for companies to take steps to create a more flexible and equitable workplace that will enable women to navigate this difficult period and lay the groundwork for future challenges we face as a country. The past year has been a challenge – a crucible – in so many ways for so many, but it also can be a foundation for a stronger, more equitable, and (I can’t stress this enough) a more competitive, resilient, and innovative future.

Since we are on the topic, Atromitos, LLC is proud to be an SBA-certified woman-owned small business.