Women in Leadership Roles Are Outperforming Men, Raking in $1.8 Trillion More Profits

Women have been severely underrepresented and underappreciated within the corporate world. Not only have women struggled for decades to attain top level positions, but we are often still passed over for them today despite being as qualified as our male contenders. However, studies now reveal that women who hold leadership positions are outperforming men, making their firms more profitable than when their male predecessors previously held the exact positions.

Earlier this week, Bloomberg.com reported that companies looking for greater financial returns should consider hiring a female chief financial officer. According to data gathered by S&P Global Market Intelligence, companies who have appointed a female CFO have seen, on average, a 6% increase in profits as well as an 8% better stock return within their first 24 months on the job. Over the course of their 17-year study period in which S&P Global observed data from companies on the Russell 3000 index, female CFO's generated $1.8 trillion in additional cumulative profits. This data, while serving as a testament to the capabilities of female leaders, certainly does not come as a surprise to businesswomen who have demonstrated exemplary skills and achievements over the course of their careers. As one of the most comprehensive contributions to the topic of gender inequality in the C-suite, S&P Global offers indisputable evidence to support why more women deserve to hold CEO and CFO leadership positions.

When it comes to business and finances, men have always been deemed as the most knowledgeable and experienced. In order to establish a skillset of equal value to their male counterparts when vying for top tier positions at a company, women have been left with no other option but to work twice as hard. "The board of directors may be holding female appointees to a higher standard than male appointees... Being more selective with female appointees, means that the board of directors may pass over a more qualified female in favor of a less qualified male," stated Daniel Sandberg, senior director of quantitative research at S&P Global. Not only are women competing harder for C-suite positions, but have been unable to rely on their skillset and experience to secure the positions they desire.

In order for women to succeed in obtaining CEO and CFO positions and for companies to experience greater profitability, company cultures must become more inclusive. According to Bloomberg, investors such as Blackrock and S&P Global have demanded more gender equality on corporate boards. While women make up merely half of the workforce, they only control a meager 5% of CEO positions at some of the biggest companies. However, throughout the duration of Sandberg's study, the evidence of female's generating excess profits within C-suite positions, further supported the need for female leadership. In the 2-year post appointment, female CEOs drove more value appreciation and increased stock price momentum while female CFOs drove more value appreciation and delivered excess risk-adjusted returns for their companies. This data is economically significant as it demonstrates a greater disparity between the genders ability to earn better profits for their firm.

Sandberg places importance upon company culture becoming more gender inclusive as his study's analysis revealed that "firms with higher earnings quality and lower leverage are firms with a culture conducive to making a female appointment drive these differences." Allowing male and female executives with similar skills and experience to have equal opportunity to hold down top tier leadership roles will equilibrate the system and allow both genders to drive success within the workplace, as opposed to enforcing male biases and favoritism which have not accrued more overall success in raising the profitability of the firm.

Not only does this study substantiate women's longstanding belief and understanding that we are as capable of establishing a profitable company, but having women posted in these positions promote cultural diversity within the workplace which also improves a company's success rate. Bloomberg reported, "Companies that hired a woman as CFO had about twice as many female directors. After hiring a female CEO, the board tended to increase in diversity the two years after that, too." Firm's with higher gender diversity on their boards were proven to be more profitable than those with a little gender diversity.

With concrete evidence to support the need for women in C-suite positions, there is new hope for businesswomen to be granted similar opportunities as their male counterparts, as well as more room for them to take up space within the corporate world. While men are exceptional and skilled leaders, women are equally of value, if not more, and maintain attributes consistent with some of the most successful male executives. Sandberg's study serves not only to relay data in support of women leadership, but affectively dismantles preconceived biases and perceptions as to why women cannot be affective and bold leaders who improve their company's performance and profit, rather than allow their stereotypical "timid" nature to stagger the company's growth.