What is Womenomics?

Put simply, Womenomics is proof of how putting women in charge is good for a company’s bottom line. The latest Pepperdine University study spent years tracking the performance of about 200 of the Fortune 500 companies and found the “correlation between high-level female executives and business success has been consistent and revealing.” In fact, the data indicates that the better a company is at promoting women to senior positions, the higher the company ranks in terms of profitability.

But Pepperdine isn’t the only study of note lately. Research from David Gaddis of Columbia University on the 1,500 largest public US companies from 1992 to 2006 finds that companies with one or more women in top management “just below” the CEO level perform better than other companies. While the direction of causality was investigated for better firms naturally promoting more women, the strongest evidence in the study suggests that the presence of women in top management has direct causality to increased firm performance as a result. The firms found to benefit the most from women in top management were those that engaged in research and development activities, where teamwork, intrinsic motivation and creativity are essential.

Catalyst, (a US research organization) and McKinsey & Company pioneered the research in linking gender balance and performance. While research approach differed, the results were the same: having more women in leadership is correlated with stronger financial returns. Catalyst reported that Fortune 500 companies with 3 or more women on the Board gain a significant performance advantage over those with fewer, including 73% return on sales, 83% return on equity and 112% return on invested capital. The McKinsey report showed similar findings of superior growth in equity, operational results and share price. If at least a third of the senior team is made up of women, then companies outperform those with no women on nine criteria of organizational excellence.

Sorry to dump all the data, but the numbers are astonishing. So much so, that you’re likely asking, “So, if women at a senior level are so good for a company’s financial bottom line, why don’t we see more of them there? Why isn’t everyone promoting them?” It’s not as if there is a shortage of qualified choices. After all, over 50% of middle level managers are women, so what’s the deal?

Last month, I had the opportunity to interview a woman who enlightened me. Cindy Tortorici, CEO of the The Link for Women and Director of Girls, Inc NW is no stranger to the highest ranks of corporate America. Cindy is a former marketing executive with long stints at Saks Fifth Avenue and Nike, and a highly respected business consultant, now located in Portland, OR. And while most recently, Cindy has specialized in coaching and developing women—from adolescence to the executive suite, she says she would never have described herself as a “feminist.”

I always thought that I could do anything I wanted and be anything I aspired to be. I just worked hard, and I moved up. But, after working for Saks and then later working eleven years for Nike, I took my ten-year sabbatical and had some time to think. I see women become disadvantaged once they reach the senior ranks. Women do very well up through mid-management, racking up achievements through their ability to be tactical, multi-task, manage people, and just generally get things done. But, when that early career success propels them into the senior positions, the game changes dramatically, and that is where women lack the resources they need to learn how to play well and hold those positions politically.

Cindy says that most of the women she talks to in senior positions feel lonely. There are very few women in the arena to begin with, so finding a mentor, a colleague, a coach, a friend can be difficult. There is no built-in culture because we are new to the game. We just haven’t been here very long yet. So we lack a strong orientation into the rules and expectations, and we lack support. What’s more, with so few women at the top of today’s organizations, there is a lack of succession planning for mentoring and championing younger women to step into those roles.

To address these and other resource problems, Cindy created her program “A Seat at the Table” for her organization The Link for Women. “It’s about sharing that knowledge, getting senior women together, and building a stronger community with better resources,” she explains, “I discovered that my purpose now that I have gained all of this experience and insight is to find ways to ensure that women don’t feel alone in times of transition to those more senior positions.”

I walk away with two lessons: 1) we need to promote more women to leadership positions – if not because it is the right thing to do, then simply because it is the profitable thing to do; and 2) women need support networks – to get their careers going, but even more so once they have “made it.”