To many, it seems obvious that having women well-represented in the workplace would be a good thing. After all, they make up more than half the population and, in many cases, they are contributing or sole breadwinners in their families. The qualifications are certainly there, in many fields: Young women are now outpacing their male peers in earning college degrees.
But American workplaces don’t match those realities. Women still earn less than men (though that pay gap is narrowing in younger women). They also are less likely to hold leadership roles, with men outpacing them at every higher level of management. These gaps are worse in some professions than others. For example, women are very unrepresented and underpaid in fields like finance, law, and engineering.
How can we correct that imbalance? We can start by recognizing that gender diversity is a worthwhile goal, with benefits to workplaces and society. Research suggests that companies that have more equitable gender representation, especially in positions of power, have better work cultures, more collaborative work teams, and overall better performance. Many of the benefits apply to men as well as women (most studies don’t include non-binary people in their analyses).
Beyond individual workplaces and the people in them, the evidence to date suggests that gender-diverse workplaces have a positive impact on society, including, for example, less pollution. Here are four key benefits to including more women on your team.
1. Workplaces with more gender diversity have more satisfied employees with greater overall well-being
We spend a lot of time at our workplaces, and job satisfaction is an important part of a happy life. So, it’s good to know that having a gender-diverse workplace means you’re more likely to have high job satisfaction.
In one study, researchers analyzed data collected from several European countries and found that, when there was a balance between men and women within a job category, both women and men (but especially men) reported higher levels of job satisfaction. Interestingly, there was no connection between high job satisfaction and having a male or female as an immediate boss, suggesting that a supervisor of either gender could be good for employee well-being.
Another study that analyzed several studies on the effects of gender diversity at work found that employee well-being was increased in companies where women were included in the workforce. They found that there was less sex discrimination and harassment, as well as fewer mental and physical health risks for women and men.
2. Gender diversity leads to more collaborative, innovative teams
In many workplaces, the ability of employees to collaborate and innovate toward a shared goal is a key to success. Having gender diversity in your work team may be a plus when it comes to success in both areas.
In one study, researchers analyzed results from several studies to see how female representation in science, technology, engineering, and math (STEM) affected employee collaboration—and they found that the presence of women did improve collaboration. This didn’t necessarily translate into better or worse group performance, but researchers suggest that this could be due to gender imbalance (having some women but not enough) on a team, which could be improved by increasing the number of women represented in STEM fields.
In two studies conducted in Spain, researchers found that having more women in managerial roles, in either a hospitality or a family-run manufacturing business, led to several improvements, including greater collaboration and innovation. In another study done in Australia, researchers found that firms in the S&P 500 (a stock market index of the largest companies) with a woman on their board registered more patents than those without women, suggesting another way they help their team succeed.
Though it’s unclear why women make this difference, exactly, it makes sense that companies with gender diversity would have more varied viewpoints, knowledge, and experience to draw from when brainstorming ideas or coming up with solutions to problems. No doubt, more diverse work teams are smarter and more creative, in part because they bring fresh angles to product development.
3. Women increase the performance and value of a work team
You would think that if employees were happier with their jobs and could collaborate and innovate, this might all translate into greater market value for companies with gender-diverse work teams. And you would be right, generally speaking. Though some evidence on the connection between gender diversity and financial performance is mixed, the vast majority shows that having women on board is good for a company’s bottom line.
In one study, researchers pulled data from all tech companies included in the U.S. S&P 500 to see how women on their corporate boards affected their market-based performance and accounting. Women had a positive influence on both measures, though no better level of return on assets than boards with no women. However, the companies with women on their board had a higher price-earnings ratio, which suggests that women might help usher in greater corporate success for those firms who include them on their boards.
Another study found that firms with women in top management positions performed better than those without women, as long as the firm’s focus was on innovation. In fact, a firm with at least one woman manager had superior accounting performance, and economic value that was higher by an average of 1% (or over $40 million).
Yet another study considering how having both women and men in middle management and staff positions affected performance found “gender diversity at [both] levels positively impacts a firm’s economic performance and contributes to its competitiveness. Gender diversity at these levels is a strategic resource that provides a sustainable competitive advantage by creating value and cannot be easily imitated by competitors quickly.”
4. Gender diversity may lead to better corporate behavior, including less pollution
It’s fine for organizations and business to care about their market share, but it’s also important for society that they act ethically and are not just exploitative. While there’s a moral issue to having more women in power positions simply because it’s the right thing to do, there’s also some evidence that having more women involved reduces corporate malfeasance and increases ethical behavior.
When women are on a company board, for example, managers in that company are less likely to use accounting practices that misrepresent their earnings, and shareholders have more trust in the company. An S&P 500 company with a woman CEO also tends to face fewer discrimination lawsuits, suggesting that women leaders help rein in poor conduct and protect a company’s reputation.
Some studies have even found that having more women in the workplace could help mitigate climate change. For example, one study looking at 467 firms in Europe found that those with women on their boards or in executive management positions were less likely to pollute. Another found that having a woman CEO meant a company was more likely to voluntarily disclose their CO2 emissions, thereby bringing more transparency to their practices.
While no doubt there are other factors that might lead a company to be less than ethical, women leaders seem to make an impact on encouraging more social responsibility.
Diversity and inclusion both matter
While all of these benefits are potentially important for organizations to consider, it’s not enough to just put women on your team and expect them to make miracles happen. Increased diversity is a first step, for sure. But it’s also important that women feel welcome, are shown due respect (and not subjected to sexual harassment), and are given rein to use their skills. In other words, it takes a change in attitude to make sure women feel valued and included for what they bring to the table.
That means to really experience the benefits of having women on your team, you need to increase their representation, overall, especially in leadership. In fact, according to a 2020 McKinsey report analyzing data from more than 1,000 large companies from over 15 countries, companies with more than 30% women executives were much more successful than those with less than 10%. While having at least one woman was better than none, according to their analysis, “A substantial differential likelihood of outperformance—48 percent—separates the most from the least gender-diverse companies.”
Overall, these findings make a strong case for gender diversity, whether through affirmative action programs or other supportive initiatives. By bringing more women into business at all levels, companies can improve employee well-being and help make businesses more innovative, profitable, and ethical.
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