Culture Jan, 2022

Why Is Gender Diversity In Leadership Roles So Important?

By Michael Bowden | Share:

The benefits of a diverse workforce are now fortunately well documented. More and more companies are understanding and removing potential obstacles that might have once prevented them from attracting and retaining diverse talent; however when it comes to leadership roles in particular, there is still a significant deficit when it comes to gender diversity. Let’s unpack the numbers and explore not only why diversity is essential, but also what the barriers are that prevent women from taking on senior level positions.

A 2021 report published by Cranfield School of Management confirms that in the top 100 companies in the UK, just 8 have female CEOs. This has increased since the previous year but the fact that this is the highest number since this research’s inception in 1999 confirms we have a long way to go to achieving gender parity.

When it comes to examining why gender diversity in leadership roles is a good thing, the UK’s Parliament is a good demonstrator of the implications of a lack of gender diversity. Or what happens when, in the words of Nick Clegg, MPs are ‘too male, pale and stale’.

The statistics here are eye watering. The UK Parliament has hosted more male MPs by the name of John than it has ever had female MPs. This would explain some of the resulting questionable decisions made over the years, like classing tampons as luxury items. Had women been involved in that conversation, the tampon tax wouldn’t have gotten off the ground. Nor would MP Stella Creasy have to lead a campaign calling for MPs to be given maternity leave.

To put it simply, representation shapes policy. So for an organisation to be properly representative, the people making the decisions must reflect the employees and/or customer base they are serving.

The numbers speak for themselves, according to Fundera’s data:

  • Highly gender-diverse executive teams are 21% more likely to outperform on profitability
  • 85% of CEOs with diverse and inclusive cultures notice increased profits
  • Gender-diverse executive Boards are 27% more likely to have superior value creation
  • Meta-analysis comparing male and female leaders identified that female leaders were more transformational. They demonstrated more contingent reward behaviour than the two-dimensional actions (active and passive management) presented by male leadership.

What are the obstacles preventing women from taking on leadership roles?

There are numerous deep-seated social, physical and psychological barriers that prevent women from applying for senior positions and companies from appointing them. These range from unconscious bias of the people responsible for hiring to women experiencing low confidence so they don’t apply in the first place.

According to analysis of the Board Monitor by Executive Search firm Heidrick & Struggles, one of the main issues is the tendency for companies to appoint chairs who already have experience – 69% of those appointed last year had previously served on company boards.

However, there is light at the end of the tunnel. Kit Bingham, Partner at Heidrick & Struggles confirms in Grapevine that one of the few silver linings to the pandemic is that it has helped level the playing field saying that “New CEOs appointed over the past year in the UK differ significantly from CEOs they have replaced. They are more likely than their predecessors to be women, to be non-nationals, to have cross-border experience and to have advanced degrees”.

Even though the number of women holding senior level positions is still pitifully low, the future is positive as gender diversity continues to become increasingly prevalent. And rightly so. Companies’ efforts to cultivate an inclusive working culture will ultimately reap the rewards of a talented, diverse workforce.

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