Report

The XX Factor:
The Strategic Benefits of Women in Leadership

By Heartbeat

The strategic benefits of women in leadership

It’s 2019, and the call for more women in leadership roles has risen to a roar. Although the number of women leaders has grown steadily since the 1960s, the percentage is still shamefully low—just 5% of CEOs at Fortune 500 companies, for example, are female. That said, many companies are actively looking for more ways to create a diverse and gender fair workplace.

In order to promote gender diversity it is important to develop a more nuanced understanding of why women make great leadership candidates.

With that in mind, this Heartbeat report began with a question:

“How do female-led companies differ from male-led companies?”

To answer that question, a subset of the Heartbeat dataset was pulled for analysis. This data included almost 60,000 employees under 3,000 managers, across 43 countries.

This subset was limited to responses where the gender and seniority of leaders, and the reporting lines beneath them, were all clearly defined. In this report, the companies we consider to be “women-led” are those with greater than 50% female representation in management, and “men-led” are those with less than 50%.

01.

Employees at women-led companies demonstrate greater belief in strategy

Heartbeat is powered by Peakon’s employee engagement platform, which measures 14 core drivers of employee engagement—from intrinsic motivators like Accomplishment, Growth, and Recognition, to extrinsic motivators like Environment, Strategy, and Management Support.

Looking at the data, there’s a notable difference between male- and female-led leadership teams in terms of employees’ perception of Strategy.

Employees at women-led companies demonstrate stronger belief in the strategy set by senior leadership. This finding is based on employee responses (scored on a scale of 0-10) to Peakon’s core Strategy driver question:

“The overall business goals and strategies set by senior leadership are taking [Company Name] in the right direction.”

A clear strategy is a powerful driver of engagement. It provides a sense of direction and meaning for everyone in an organization, from the CEO to front-line staff.

In 1975, organisational psychologists Greg R. Oldham and J. Richard Hackman conducted a study that shed light on the value of strategy and meaning in the workplace. After studying 658 workers in 62 jobs across seven organisations, they found that meaningfulness occurs when we feel we’re contributing to something bigger than ourselves—which could be the team, company, or wider society.

A strong strategy helps us draw a clear line between the work we do, and the positive impact we have on others—which increases our motivation to complete a task or reach for a goal.

02.

Women-led businesses are better perceived in all aspects of Strategy

Not only are women-led companies stronger in Strategy overall, but according to employee responses, they’re perceived as being more effective in two key factors that influence it, Communication and Mission:

Strategy > “Communication” sub-driver question:

“Our organisation does a good job of communicating the goals and strategies set by senior leadership.”

Strategy > “Mission” sub-driver question:

“I’m inspired by the purpose and mission of our organisation.”

The link between Strategy, Communication, and Mission is an important one.

In 2007, Manchester Business School professors Mary Welch and Paul R. Jackson’s “internal communication matrix,” highlighted how an effective internal communication strategy can influence both engagement and strategic outcomes by creating a sense of belonging—which leads to higher engagement and greater devotion to the company’s mission.

But the domino effect doesn’t end there.

03.

Women cultivate belief in their company’s product

Thus far, the data shows that women leaders outshine their male counterparts in Strategy and its sub-drivers. But another interesting finding emerged from the data, outside the realm of Strategy.

Specifically, employees at women-led companies have a deeper conviction about the value of their offering.

Engagement > “Belief” sub-driver question:

“How likely is it you would recommend [Company Name] products or services to friends and family?

What’s the connection between Belief and Strategy? Perhaps it’s story. Ben Horowitz, cofounder and general partner at the influential venture capital firm Andreessen Horowitz, this finding makes sense: “The mistake people make is thinking the story is just about marketing. No, the story is the strategy. If you make your story better, you make the strategy better.”

Telling a better story creates greater belief—which improves Strategy going forward. It’s a symbiotic relationship, one that women leaders may understand more intuitively than men.

Want a better strategy? Invest in female leaders.
Want more female leaders? Invest in strategy

Though the data shows a strong association between female leadership and strong belief in the company strategy, we cannot immediately assume causation. While it could be true that companies exhibit higher Strategy scores because of the effects of female leadership, there may be other factors at play. For example, companies that have a more tangible and inspiring mission may be more likely to promote women into senior positions. Additionally, the best female leaders may naturally select to work for businesses that have a clearer purpose.

Of course, gender diversity is only one aspect of diversity. True diversity involves race, sexuality, socio-economic status, ethnicity, and many other factors—including a definition of gender that extends beyond the binary. This study only scratches the surface.

Although there is much yet to be learned about how people work best together, this report serves as an opening question as we continue to shed light on the benefits of diverse leadership–and its ability to unlock people’s potential to succeed.

Wondering how we got this data?

Find out more about what we measured, why it matters, and how it’s calculated.

About Heartbeat

Brought to you by Peakon, the leading employee engagement platform. Heartbeat provides data-driven insights into the world of work, to help people and companies reach their full potential.
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