Why Women Make Better Business Leaders
There’s no question that women are making large strides in U.S. business and technology fields. Today’s generation of women professionals are more likely than any other to found, lead or advise a major U.S. firm. But while women continue to secure increasingly high-level leadership positions, there are still some glaring imbalances. For one, only twelve Fortune 500 companies are now headed by women. And numbers on the proportion of female tech startup founders are not any more encouraging; many high-profile incubators report that women founders receive less than 5% of their annual grant awards.
But recent research from the Harvard Business Review and others suggests something that most of us already know–firms without women in high-level leadership positions are missing out on some meaningful growth opportunities. According to the research, women that excel in business often prove to have more highly developed communication skills than their male colleagues. Women are also often more likely to take initiative and make changes to the status quo. In fact, the study showed that firms with women on their boards saw 42% higher sales returns, a 66% higher return on invested capital and a 53% higher return on equity over firms that did not.
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A Harvard Business Review study showed that a business group’s collective IQ went up when there were women on the team. And yet, only 12 of the Fortune 500 companies are run by women. So what are the other 488 missing out on?
Firms with more women on their boards have 42% higher sales returns, 66% higher return on invested capital, and 53% higher return on equity. Take Yahoo’s new CEO Marissa Mayer who laid out a strategic outline for the declining company and watched the stock gain 5.7% closing at $16.67, its highest level in over a year. These success rates are often linked to superior communication skills. Studies show while women speak fewer words in a day than men they actually have a better command of the language for getting their point across.
In a study by Harvard Business Review, women in management were rated 11.58 percentile points above their male peers at taking initiative in the workplace. Indra Nooyi, CEO of PepsiCo. forged ahead with a plan to focus on more nutritious drinks despite criticism. It’s a risk that could turn a 10 billion dollar business into 30 billion dollars in just ten years.
Daniel Goleman, author of “The Brain and Emotional Intelligence: New Insights,” states that truly effective leadership is distinguished by a high degree of emotional intelligence. And according to Goleman women on average outdo men when it comes to sensing a person’s feelings in the moment. Meg Whitman, former CEO of ebay and current CEO of HP was featured in Psychology Today for leading with emotional intelligence. Under her eight year reign, ebay was the fastest growing company in history. In her book The Power of Many, she writes: “I believe that being willing and able to actively listen is a vital skill for any leader. Not only is listening the right thing to, an antidote to arrogance, it also leads to all sorts of competitive advantages.”
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