It’s not just about providing equal opportunity: over the past decade, a number of research papers have shown how hiring women is linked to better corporate financial results. But CEOs and other executives rarely have the time or inclination to pore over lengthy papers, and as a result, much of this research remains known only to the academic world. In a new paper, The Case for Investing in Women, The Anita Borg Institute (ABI) succinctly lays out the most compelling recent research findings on women in business, from organizations like McKinsey & Company, Catalyst, Columbia University, and the London School of business.
ABI has long promoted the role of women in technology and tech-oriented companies, but not all business leaders are receptive to their ideas. “If you look at the kind of work we do, there’s no more common question we get than ‘Why do we care if we have more women?” explains Telle Whitney, CEO and president of ABI.
Here are some of the data points highlighted in ABI’s report (specifics on each of these studies can be found within the report itself):
- Fortune 500 companies with at least three female directors have seen their return on invested capital increase by at least 66%, return on sales increase by 42%, and return on equity increase by at least 53%.
- In a study by Dezsö and Ross of 1,500 U.S. ﬁrms in the S&P, female representation in top management improved ﬁnancial performance for organizations where innovation is a key piece of the business strategy.
- In 2012, a NCWIT analysis of women’s participation in IT patents found that U.S. patents produced by mixed-gender teams were cited 30% to 40% more than other similar patents.
- A study from Professor Anita Woolley, an economist at Carnegie Mellon, revealed that teams with at least one female member have a higher collective IQ than all-male teams.
- Gallup has found that companies with more diverse teams (including more women) have a 22% lower turnover rate. Organizations with more inclusive cultures also have an easier time with recruiting.
Here’s the bottom line: more diverse teams breed more innovative outcomes. “When you form a team tasked with a problem to solve or an opportunity to capitalize on, if you have half a dozen people with the same background in terms of life experience, education, where they grew up–you’ll get a consensus around relatively homogenous solutions,” says Jeanne Hultquist, director of strategic corporate programs and the author of the report. “[With] more diverse team chemistry, you get more perspectives with a larger variety of options to consider, and more chances of having innovative solutions proposed.”
Not every study on women in business has yielded definitively positive outcomes. As the New Yorker points out, it’s possible that studies showing stronger performance for companies with more women on their boards could be the result of financially strong companies being more inclusive (as opposed to more inclusiveness leading to better finances. In one study cited by the New Yorker, researchers found no connection between female board membership and performance in the stock market.
Hultquist believes there’s more research that needs to be done, especially around startups. “I think it would be great if more research was done around entrepreneurial teams–startup organizations that really have the best shot at product innovation,” she says. “I do think there is a dearth of women in startup teams and even fewer in venture-funded startups.”
Nonetheless, the evidence of positive outcomes from having more women represented in companies is already strong enough to take seriously. Check out the full ABI report here.