I read a very interesting article recently in The Boston Globe called, “The Female Advantage. A New Reason for Businesses to Promote Women: It’s More Profitable.”

http://www.boston.com/bostonglobe/ideas/articles/2009/05/03/the_female_advantage

The premise of the article is that companies with more female leadership in place at the Board and executive level are more profitable. From the article,

Measured as a percent of revenues, profits at Fortune 500 firms that most aggressively promoted women were 34 percent higher by industry means, a 2001 Pepperdine University study showed.

The call for the advancement of women thus far has been primarily focused on gender diversity and fairness. Equal representation. Equal pay. Now there is a new perspective to consider. There is a sound business reason to promote women. It is a proven advantage that companies with more female leadership have greater profits.

Why does the correlation exist between higher profits and female leadership representation? There are several theories presented in the article.

• women have a better understanding of the consumer market
• gender diversity leads to more vigorous discussions
• women have a different leadership style
• women are more risk adverse

Though I believe that all of the above factors contribute to the success of high performing companies, I also think that organizations that are sensitive to gender issues and actively support female managers in the pipeline are more likely to be high performing companies (true meritocracies) to begin with.

As the author states about these companies,

They’re picking the best and the brightest and letting them bloom.

What are your thoughts on this topic?

Why do you think companies with more female leaders are more profitable?

Please send me your comments.