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Show Me the Money: The Business Case for Female Leaders

Posted By Theresa Pesch, RN, Children's Minnesota, Wednesday, August 9, 2017
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The TRUST is built on supporting women leaders in health care so it’s no surprise our members know women can be great leaders. A recent study proves the point and makes a strong business case for female leaders.

The study by Robert Naess1 of Nordea Bank AB found companies with a female leader, either as a chief executive or head of the board of directors, beat industry performance benchmarks in all but one year since 2009. The female-led companies had an average annualized return of 25%, double the 11% on the MSCI World Index. This main point bears repeating — organizations with a woman at the top performed significantly better.

Another study by Credit Suisse2 found organizations with at least one woman on the board out-performed those without women. That held true for average growth and return on equity and share price.

There’s much speculation as to why women leaders in these studies were able to get better returns for their companies. Naess has two speculations: 1) women may be more conservative resulting in fewer negative surprises, and 2) perhaps “only the very best women can actually get to the top.”

It is interesting to delve deeper into the reasons why things happen; however, it’s disappointing the same question does not appear to be asked of male leaders. Why do women seem to undergo greater scrutiny? Is it so unbelievable that women can be strong business leaders simply because they are smart and excellent fits within their careers of choice?

I find it refreshing Naess and Nordea are walking the talk regardless of the reasons why. The Nordea Global Stable Equity Fund, featuring a substantial number of female-led companies, has returned 14 percent each year for more than five years. That’s nothing to sneeze at and should be a wake-up call, especially to organizations without female leadership.

A recent New York Times article3 noted a little over 6 percent of women hold chief executive positions within Fortune 500 companies. That’s progress albeit at a snail’s pace. The same article stated the lack of women CEOs isn’t due to a pipeline problem, it’s “about loneliness, competition and deeply rooted barriers.” Interviews with a number of senior women in business showed these women found barriers to their ascent were more pervasive than they believed possible. Most barriers were related to perceptions – conscious and unconscious bias – such as being seen as too dependable, not visionary enough, too assertive, or not vocal enough. These themes were discussed in our July blog.

I’m proud of our TRUST members and their organizations for the shared commitment to advancing and empowering women in health care professions. Yet, there’s much more work to be done to accelerate the pace of change for all women in all professions and industries.

1 Smart Company, 8/4/17 http://bit.ly/2vdPn3B
2 2020WOB.com, http://bit.ly/2o7OreP
3 New York Times, 7/21/17 http://nyti.ms/2uGNMUs

Theresa currently serves as TRUST President, and President, Children’s Minnesota Foundation. Originally trained in nursing, Pesch has 25 years of health care administration experience and is a sought-after presenter for national philanthropy conferences. She was recognized as a Minneapolis/St. Paul Business Journal Women in Business honoree in 2012.

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