Study Finds Companies with More Female Leaders Perform Better, But Tech Sector Lags

    Slide Show

    The Seven Most Common Negotiating Mistakes

    The good news is that a new study has found that companies with a higher percentage of women in leadership roles perform better. The bad news is the study also found that compared to other industries, the technology and telecommunications sector has a lower percentage of women in leadership roles.

    The study, the findings of which were released last week, was conducted by Development Dimensions International (DDI), a global talent management consulting firm based in Bridgeville, Pa., and The Conference Board, a non-profit business research association in New York. I had the opportunity last week to discuss the findings with Evan Sinar, DDI chief scientist, director of the organization’s Center for Analytics and Behavioral Research, and a co-author of the study.

    One of the findings I found particularly interesting was that among organizations that ranked in the top 20 percent in terms of financial performance, 37 percent of the leaders in those organizations are women, and 12 percent are women that the organizations identified as high-potential. I asked Sinar if the fact that these organizations perform better is more attributable to simply having more of whatever it might be that women bring to the table, or to an overall company culture that values fairness and inclusiveness, which would necessarily include equitable opportunities for women. Sinar said he would probably put a little more weight on the latter:

    Companies that take the right steps to identify and develop their leadership talent—putting in place high-quality, well-planned leadership development practices, and have rigorous, entrenched processes to identify leaders, as well as a clearly visible commitment to developing them—those organizations will see a range of benefits for both genders. So there are things that these organizations are doing right, in general, and that’s boosting their diversity in gender, and in other areas, as well.

    I do think there are benefits of a diverse work force, in itself, so even above and beyond these high-quality talent management practices, there are additional benefits of having a range of leader perspectives. When we’ve done research looking at the relative skill levels of leaders by gender, they demonstrate very similar skill levels. But high-quality leadership practices do bring broader benefits to the organization, one of which is a higher level of diversity.

    The study’s industry breakdown grouped technology and telecommunications together, and within that industry, the findings were a little disheartening. Sinar said it has fewer women in leadership positions overall, and fewer women who are identified as high-potential leaders:

    We did find some of the same differentiating factors with financial performance as we saw in the overall research, so those organizations in the technology and telecommunications industry that  had better financial performance did tend to have a higher percentage of female leaders. But that industry also tended to be less likely to have strongly supported initiatives that were specifically focused on female leaders. So there does seem to be a gap there in gender diversity.

    On a positive note, Sinar said there are some things the technology and telecommunications industry is doing well that can help contribute positively to diversity of all types, including gender:

    That industry does tend to do a better job of putting mentoring and coaching programs in place for high-potential leaders, and of measuring the effectiveness of those programs. So once they get high-potential leaders into those pools, they seem to be doing a relatively good job of developing them.

    The problem, Sinar said, is that there are barriers to getting female leaders into those roles:

    Where those organizations are falling short is in being less likely to use validated tests, simulations, and assessment to make decisions about leadership selection and promotion, so subjectivity may be creeping into some of those advancement decisions. The technology and telecommunications industry is also less likely to use a systematic process to identify what is the quality and quantity of leadership talent needed to drive business success. So they’re not coordinating across their business units in how they plan for how their talent will grow and contribute to the organization’s success. And that does have an impact on gender diversity.

    The research found that leaders who had more access to global leadership experiences were more likely to advance within their organization, and that women are less likely than men to have had that global leadership experience. I mentioned to Sinar that my sense is that since women tend to be the primary caretakers on the home front, it’s unlikely, given the travel requirements associated with a global leadership position, that women will ever be able to enjoy parity with men in that regard. So I wondered whether the answer to that disparity is a matter of ensuring that global leadership experience is discounted as a metric that companies should use in awarding career advancement opportunities to company leaders. Sinar said there are several elements of this finding to consider:

    One aspect of it is whether these female leaders are even being asked, or being given the opportunity to decide on whether to take an international assignment. I believe in some cases, they’re not even getting that opportunity, or that choice to make on their own. There may be some assumptions that are made that they may not be as willing to accept international assignments, and that might be influencing whether someone even gets asked about it.

    International assignments are a key source of experience, but they shouldn’t be seen as the only way to gain globally relevant experience. Core success factors for international experience include working with others interculturally, adapting to intercultural environments, and understanding business customs internationally. There are development programs and other experiences that someone can be exposed to, even without being placed in an international assignment, that can help gain some of those skills. So I think if organizations see [international assignments] as the only route to gain skills that are relevant and useful for global leadership, that’s probably too limiting a view.

    Finally, I found it interesting that according to the research, women are more likely than men to have received information on the competencies and skill areas needed to succeed as a leader. Sinar explained the significance of that this way:

    Something we saw is that organizations that tended to have a higher proportion of female leaders did a much better job of clearly defining the competencies and skills required for leader success, rather than relying on assumptions, subjectivity, and false information about what’s truly needed to become a better leader. Of course, those need to be defined before they can be communicated to others, and organizations that do that systematically tend to have a higher percentage of female leaders, because they’re taking some of that subjectivity, and those assumptions, and stereotypes, out of the process. They’re defining what truly differentiates high-quality leaders in a clear and focused way, and communicating that out. So anyone who is receiving that level of clarity, regardless of gender, is going to have an advantage, because they know what’s expected of them, and they have a plan to get there.

    The study also looked at the performance of organizations with higher percentages of millennials in leadership positions, and Sinar shared some fascinating insights in that regard. I’ll cover that in a forthcoming post.

    A contributing writer on IT management and career topics with IT Business Edge since 2009, Don Tennant began his technology journalism career in 1990 in Hong Kong, where he served as editor of the Hong Kong edition of Computerworld. After returning to the U.S. in 2000, he became Editor in Chief of the U.S. edition of Computerworld, and later assumed the editorial directorship of Computerworld and InfoWorld. Don was presented with the 2007 Timothy White Award for Editorial Integrity by American Business Media, and he is a recipient of the Jesse H. Neal National Business Journalism Award for editorial excellence in news coverage. Follow him on Twitter @dontennant.

    Latest Articles