Study: Female Leaders Enhance Sustainability

By Bill Leonard Dec 12, 2012
Past research has found that companies perform better than competitors when they demonstrate support for gender diversity. New research by the Center for Responsible Business at the University of California concludes that the number of women on corporate boards also correlates with a firm’s sustainability performance.

The report, titled Women Create a Sustainable Future and released in October 2012, was co-authored by Kellie McElhaney, faculty director for the Center for Responsible Business, and Sanaz Mobasseri, a Ph.D. candidate at the University of California’s Haas School of Business.

McElhaney and Mobasseri examined the environmental, social and governance (ESG) performance of Fortune 1500 companies since 1992 using data supplied by MSCI Inc., a New York-based risk analysis firm.

The researchers discovered what previous research has revealed already: “The sweet spot is three female corporate leaders,” McElhaney said in a written statement. “Companies with at least three female board members had a better ESG performance,” she explained, but she noted that very few companies meet this threshold. “There were just three of the 1,500 we studied: Kimberly-Clark, General Motors and Wal-Mart,” she said.

A study released by the Credit Suisse Research Institute in August 2012 reached similar conclusions. Researchers for Credit Suisse discovered that businesses with one or more women serving as board directors tended to outperform other businesses in the stock market and usually achieved higher profit margins.

Women’s Career Paths Still Uncertain

Even with results from studies like these, many businesses still haven’t received the message that women in leadership roles have a positive impact on performance. A report released Nov. 14, 2012, by Catalyst found that most businesses refrain from placing women in the high-visibility and mission-critical jobs that lead to promotions and eventually positions in the upper echelons of an organization.

The Catalyst report, Good Intentions, Imperfect Execution? Women Get Fewer of the Hot Jobs Needed to Advance, concluded that unequal access to so-called “hot jobs” could be an underlying contributor to the persistent lack of gender diversity among senior-level business leaders.

The results of the Catalyst study are similar to other research conducted on the topic. For example, a remuneration analysis released in February 2012 by the HR consulting group Mercer found that women held just 29 percent of executive-level jobs in Europe and less than 15 percent of top management jobs among Fortune 500 companies in the United States.

“Offering critical assignments to high-potential women as part of an intentional strategy can help break through the logjam that blocks advancement for talented women,” stated Ilene H. Lang, president and CEO of Catalyst, in a written statement. “Catalyst studies show that women are just as ambitious as men and use the same career advancement strategies—but they don’t get the same payoff.”

What Women Want from Employers

According to Catalyst, the lack of opportunities and access to high-profile and high-impact jobs remains a top impediment to women advancing into senior-level positions. Women see this as a serious problem.

A study on women’s attitudes on successful career paths released Nov. 13, 2012, by Randstad USA, found that women want their employers to recognize and value their contributions to the organization. Moreover, women want jobs that provide career-growth opportunities. More than 48 percent of the respondents to the Randstad survey said they would consider exploring other options to further their career growth if the economy continued to improve in 2013.

When asked what employers can do to better engage employees, 39 percent of the women surveyed by Randstad suggested promotions and bonuses for high-performing employees. Only 24 percent of the respondents said their companies offered such perks to them.

“Women are taking on leadership roles and advancing to the top levels of organizations faster than ever before. It is therefore critical that companies not lose sight of what it takes to successfully identify, retain and engage high-potential women,” stated Linda Galipeau, Randstad’s CEO for North America, in a news release. “We believe it is crucial for more executives, both men and women, to actively serve as sponsors for the next generation of female leaders.”

The National Association for Female Executives (NAFE) says sponsorships and mentoring opportunities are two of the top methods for identifying and developing high-potential female employees. Every year NAFE compiles a list of the top 50 employers for executive women. Companies like IBM, Hewlett-Packard, American Express and Allstate Insurance consistently make the list because they have strong career development programs that provide not only training, but also job opportunities that offer visibility and chances for recognition. In addition, many of the top 50 employers have programs in place to provide women with sponsors and mentors.

As part of its research efforts, NAFE measures the percentage of women occupying positions with profit-and-loss responsibility from mid-manager to chief executive level. NAFE researchers have found that among businesses not included in the NAFE list, women managed crucial bottom-line functions at only two or three of the largest U.S.-based companies.

“Until women move in greater numbers into these jobs, we won’t see many women running these bigger companies,” said Betty Spence, president of NAFE.

By comparison, women hold at least 30 percent of profit-and-loss jobs at NAFE’s top employers, and 42 percent of critical positions at the top 10 businesses on the list.

Nevertheless, women must take responsibility for their career advancement and not wait for employers to act. In other words, they need to stand up and be recognized, according to Vickie Milazzo, author of the bestselling book Wicked Success Is Inside Every Woman (John Wiley and Sons, 2011).

“No wickedly successful woman ever got anywhere waiting for her big chance to be given to her or for women to suddenly become as valued as men in the workplace,” Milazzo stated in a release. “And that’s not going to change anytime soon.”

“However, it’s also true that a growing appreciation for collaboration, participation, and relationship-building have created a perfect storm for entrepreneurial and enterprising women,” she added. “These qualities are at the very heart of what women do best.”

Bill Leonard is senior writer for SHRM.

Related Articles:

Research Suggests Strategic Approach to Developing Women, SHRM Online Diversity, August 2012

Women Underrepresented in Corporate Leadership, SHRM Online Diversity, March 2012

Report Highlights Mutual Benefits of Sponsorship, SHRM Online Diversity, September 2011

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