There are plenty of reasons to strive for gender diversity at your company: customer empathy, taking advantage of all talent (not just half), and basic fairness, to name a few.

New research now proves there's another one, and it's compelling: Having more women at the top means more profits.

The study in question was a collaboration between EY (formerly Ernst & Young) and the Peterson Institute for International Economics, a Washington, DC-based think tank.

First the unsurprising results:

  • Over half of all companies surveyed had no female executives at all
  • Close to 60 percent had zero female board members
  • Fewer than five percent had a woman CEO

Worldwide, most companies are still extremely gender-imbalanced, particularly at the top.

Now the interesting part: First, while some evidence suggested that having more women on the board is correlated to stronger profits, the Peterson Institute's director of studies, Marcus Noland, said, "in statistical terms that evidence is not robust."

The research also showed that women CEOs neither outperform nor under-perform their male colleagues.

So what does make a serious difference?

Two things. First and foremost, having more women in top management positions. The data clearly showed that increasing the percentage of women in top spots from zero to 30 percent is associated with a 15 percent jump in profits.

Thus the truth is, board membership and the CEO position matter far less than having women in top positions elsewhere in the company--and having a lot of them. One in three top executive positions should be filled by women for companies to enjoy increased revenue.

Second, you must make it smooth and easy for women to hold those positions while starting and maintaining families. For example, the research showed that mandated maternity leave did not correlate to increased female leadership, but more robust paternity leave did.

Why? Because it means the responsibilities of child care can be distributed more equally. Think about it: If a company offers 6 months of maternity leave and 3 months paternity leave, a woman executive will be more likely to stay home longer. But if they both have 6 months of leave, she may go back to work after 4 months, knowing her infant is well taken care of.

This is a logical but often overlooked part of the concept of getting women into top spots. In Noland's words, "If you have a supportive set of policies, which would include paternal leave, which allows women to have children while maintaining their careers in a relatively undisruptive manner, you see more women making it to the very top."

The fact is, most of us want to see more women leaders. According to the Pew Research Center, Americans see women as just as qualified to become both business and political leaders. Forty percent believe the leadership gender gap is due to women having to do more to prove themselves.

But this new research suggests that while that may be true, we must also be practical about what it takes for a woman to get into a top spot and stay there. According to Noland, "In the long run, what's more important than achieving diversity by fiat is really policies on education, nondiscrimination, child care, things of that sort."

It's also linked to having a strong pipeline of girls and women to fill leadership positions. For example, countries with more female schoolchildren who do well in math see more women in top management.

It's fairly straightforward, then: train girls, hire young women, promote women into the highest levels, and institute policies that support them there so the funnel doesn't break down. The bigger the pool, the more make it to the top.

And once at the top, women lift the bottom line.

Talk about a win/win.

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"In the future, there will be no female leaders. There will just be leaders." -- Sheryl Sandberg

Published on: May 31, 2017