Gender balanced management generates better results

| March 8, 2018

A new report from management services company Sodexo substantiates the business case for encouraging more women to enter management roles.  However it notes that, despite widespread commitment and positive movement toward gender parity in management, much progress remains to be made. A traditional, male-focused view of leadership continues to dominate the corporate world, to the detriment of financial performance.

In a global McKinsey survey of managers and top executives last year, close to 40% of women felt their communication and leadership styles were incompatible with the prevailing styles in the top management of their companies.

McKinsey data also shows that while most men and women agree women can lead as effectively as men, the men had reservations when asked if they were “strongly convinced.” While 84% of women strongly agreed they could lead as effectively as men at senior management levels, only 43% of the men shared the same conviction.

However, further research from McKinsey has suggested that behaviors more frequently used by women have a positive impact on organizational performance.

For example, women tend to care more about developing other people’s skills, and set expectations and give rewards for meeting them more often. These leadership skills are critical to strengthen the work environment, reinforce values, instill accountability, and drive results, all of which inspire people and organizations to perform better.

Other research supports the importance of gender parity in leadership from a business perspective. For instance, studies conducted by Catalyst have found a correlation between the presence of women in leadership positions and key business performance indicators such as return on equity, stock growth, and improved sustainability.

These findings suggest that having women in leadership is not only the “right thing” to do, but can play a key role in promoting firms’ profitability, reputation, and strategic advantage.

Overall, the movement toward gender parity in companies still falls short at higher leadership levels.  Correcting misconceptions and unconscious biases about women’s ability to serve as effective leaders will be required to make progress, underpinned by figures which prove that gender balance in leadership positions is a matter of sound business sense as much as equality.

The latest figures from Sodexo substantiated this point by discovering that teams managed by a balanced mix of men and women were more successful across a wide range of outcomes. Operating margins, client and employee retention, employee engagement, safety, and other key performance indicators were all higher among teams that had gender-balanced management compared to male dominated teams.

Employee engagement was 14% higher in firms with gender-balanced management, while employee retention was 8% up.  9% more firms with gender balanced management retained 90% or more of their clients, than their unbalanced peers and operating margins were 8% better.  Workplace safety was also improved, with gender balanced management presiding over 12% fewer accidents at work.

These findings reaffirm Sodexo’s previous study of 50,000 managers from 100 entities around the world between 2011-2014. This five-year longitudinal nature of the study also demonstrated that gender-balanced teams deliver sustained and predictable results.

The results showed that gender balance, rather than a preponderance of women, was the most productive mix.  Once the proportion of women in management exceeded 60%, the benefits plateaued, confirming that a mix between 40% and 60% is necessary for optimal performance.

The analysts also found a direct correlation between the percent of women in the total workforce and those in management and vice versa, which indicates that gender-balanced workforces and leadership create an environment supportive of career growth for women.

This lends support to the idea that gender parity in top leadership is closely related to the pipeline of women in the workforce.  Data in the new study was collected and analyzed from over 50,000 managers from 70 entities worldwide. Management teams from a diverse range of functions, ranging from top leadership to site management, were all involved, showing that a depth of gender balanced management is required.