Many things go into determining an organization’s worth — its performance, its strategic plan, its reputation, and most importantly, its people. Humans lead businesses to benefit other humans, and people are the driving force behind any enterprise’s mission. But did you know that women in leadership power a company’s value?
We’ll discuss why in this article.
Companies benefit in many ways from having women in leadership. Research has shown that female leaders positively impact both a firm’s financials and workplace culture. When women occupy more than 30% of top-level positions within an organization, the company is nearly 50% more likely to do better financially than its peers with less female representation. Plus, firms with 10-30% representation have a better chance of outpacing firms that lag even further behind. The bottom line? Women in leadership are good for the bottom line.
But, beyond the increased monetary value, women in power make organizations better places to work. That’s because women are more likely to push for gender and ethnic equality as well as employee-friendly policies. These efforts translate into increased employee satisfaction and engagement, which boosts retention and saves money on recruitment expenses. Plus, a positive and inclusive company culture makes it easier to attract top talent, which further drives company performance
Women add instant value to an organization through their knowledge and abilities. Then, they build high-performing teams. Finally, they have a positive impact on company culture so that the organization can thrive for years to come. Losing their gifts due to a pandemic (or any other reason) can have a devastating ripple effect on the entire firm. Companies must strive to retain their existing female leaders — and develop new ones.
Let’s review the current state of women in leadership. According to a recent McKinsey & Company study, women currently hold 28% of senior vice president roles and 21% of C-suite positions. While these metrics show women continue to hold the minority of leadership positions, they also reflect steady progress over the last several years. Unfortunately, women of color lag significantly behind other women. Despite this, the needle is slowly moving in the right direction.
Presently, women face two major hurdles: lower rates of promotion to management and the Covid-19 pandemic. Only 38% of managerial positions are held by women. That means there’s a limited female pipeline for higher-level roles as compared to their male counterparts. With the first rung on the company ladder broken, it’s difficult for women to advance in their careers.
Also, current female leaders are really feeling the pandemic's effects — particularly if they have children. In general, these women are under constant pressure to perform — both as a leader and as a mother. But now that the pandemic has most firms operating remotely, women are simultaneously in charge of homeschooling their kids, maintaining their homes, and running their teams. Many of them are deciding that it’s all just too much — and they’re unfortunately leaving their leadership roles.
This alarming trend is terrible news for companies and could undo all of the recent progress women have made. Here’s what to do about it.
Organizations can (and should) take action to support women in leadership. Some measures to implement include, but aren’t limited to:
When women feel that their organization values their well-being, encourages transparency, invests in their development, fully utilizes their talents, and truly has their back, they’ll do amazing things. Companies that have already realized this and have taken the steps above are reaping the benefits. Firms that have not are falling behind.
So, what does this mean for you as an investor? Women in leadership isn’t just some fad. Female leaders are here to stay, and their presence will ultimately continue to grow. That means putting your money into women-led organizations pays — and it will continue to pay indefinitely.
Founded in 1993, the Pax Ellevate Global Women’s Leadership Fund (PXWEX) is the first index to track companies that invest in women’s leadership and diversity. Firms within the index have strong female representation on the board of directors and in the C-suite. Organizations included also do business in a socially and environmentally conscious way.
The fund features companies from the United States and abroad. Top holdings include Microsoft, Amazon, Estee Lauder, Starbucks, Coca-Cola, and Johnson & Johnson. Over a ten-year span, the index has an average annual return of nearly 9%. The current expense ratio is 0.80%, and you can buy in for as little as $1,000. If you’re interested in supporting women in leadership (and you should be!), PXWEX could be a great addition to your portfolio.
Similarly, Unifimoney Board Advisor Max Osbon has selected Women in Leadership as one of his Investment Themes — within the Self-Managed Investing section of the Unifimoney app, you can find 20 companies with women in leadership roles.
Women in leadership are a massive boon for a company and for society in general. They help organizations thrive financially — but they also help them do right by their employees. As workers, we should seriously consider joining a firm with a strong female presence. As investors, we should seriously consider adding women-led firms to our investment mix.
Sources:
"McKinsey & Company — Diversity Wins, How Inclusion Matters May 2020"
The above does NOT constitute an offer, solicitation of an offer, nor advice to buy or sell specific securities. The opinions listed above are not the opinions of Unifimoney Inc. or Unifimoney RIA, Inc. but represent the opinions of independent contributors. These contributors may or may not hold positions in the stocks discussed. Investors should always independently research any stocks listed and form their own opinions, while recognizing that any investments made may lose value, are not bank guaranteed and are not FDIC insured.
