This article was originally published on March 1, 2017 and updated on March 8, 2021.
In 2020, Fortune reported that the number of women running America’s largest corporations had hit a record high. There are now 37 women CEOs leading Fortune 500 companies, increasing from 33 women CEOs in 2019.
An increase of four women CEOs over the span of a year may seem like a small number, especially when considering that women make up 7.4% of the leaders on the Fortune 500 list and only three of the 37 women CEOs are women of color.
There’s still a lot of work that needs to be done to put talented women of all backgrounds in charge and to keep empowering them with leadership opportunities.
A few years ago, I wrote about why it’s good business sense to have women CEOs. Looking back at that original post then versus now, I am delighted to find even more research has been conducted in recent years that further solidifies the value women in leadership roles bring to the table. Everyone, from the business to its employees to aspiring female leaders, wins when women CEOs are appointed into leadership roles.
Women generally don’t set out to become CEOs — until they receive encouragement
What drives women into corporate leadership? The Korn Ferry Institute took a closer look at the critical traits that put women ahead in their Women CEOs Speak report. This report studies and interviews 57 women who have been CEOs at Fortune 1000-listed companies and privately held businesses of similar size. Common success factors were examined in the report, including experiences, competencies, traits and drivers, that enabled them to become CEOs.
One of the most interesting insights is most women don’t have a set goal of becoming CEOs. Only 12% of the women interviewed said they always knew they wanted to be a CEO. More than half did not consider CEO as a career option. According to the report, 65% of women realized they could be CEO when someone else, like a boss or outside mentor, told them it was possible.
As a female CEO, I can relate to this finding. My career began in law. I was an attorney before I became a business owner. My mother, who was one of my biggest champions, always saw my leadership potential. She steered me towards the path of entrepreneurship and expressing faith that I had what it takes to be a CEO.
The Women CEOs Speak report articulates the importance of this wake-up call for women. The more organizations mentor women and encourage women to take on senior leadership or management roles, the more women become confident that they have the talent necessary to become women CEOs.
There’s an economic incentive for supporting women leaders
Kevin O’Leary, a Canadian businessman who has appeared on “Shark Tank,” has been investing for more than 10 years in businesses. His top-performing investments? All businesses owned or run by women.
Between 2002 and 2014, researchers at Boston-based trading firm Quantopian compared the returns of Fortune 1000 companies led by women CEOs to those of the S&P 500. Returns were 226% higher for companies with female leadership. In 2019, a study from S&P Global Market Intelligence revealed that public companies with women CEOs were also considered to be more profitable and producing stronger stock price performances than companies led by men.
A sense of purpose motivates women CEOs
The women CEOs interviewed in Women CEOs Speak stated that a sense of purpose, not a paycheck, motivates them. Working affords them more opportunities than simply meeting goals within their departments. It gives them the chance to create a positive impact that is reflected throughout the company, affecting everyone from employees to the community.
In 68% of interviews, women CEOs shared detailed descriptions of how they work to create a positive culture and environment in the workplace. This type of positive culture, for 23% of interviews, is viewed as one of their most important accomplishments.
That sense of purpose is attractive to the talent pool of job applicants. According to a study conducted by Berlin Cameron, The Harris Poll, and The Female Quotient, 50% of Americans prefer to work for a female-led company over a male-led company because it is more purpose-driven.
A purpose-driven organization champions values and a mission that matters. This allows employees to feel comfortable being themselves and confident in expressing their opinions in the workplace.
Additionally, this study notes that 71% of men and women enjoy working for a woman CEO because it makes them believe that they can embrace leadership roles.
Women CEOs push for gender-diverse companies
RIP to the good ole boys club. There isn’t room in our world for companies led entirely by men in 2021 — literally. By 2025, women are predicted to account for 60% of all personal wealth.
There is a domino effect of benefits for businesses, employees and customers that come with putting women in charge. Turnover rates decrease as employees become more engaged and productive. Talented individuals of all backgrounds actively apply for roles within the business. The company experiences higher financial returns and a stronger public brand image. There is more diversity in thought and perspective, higher compensation and rewards, growth opportunities for employees, and a culture of care built within the business.
The key now is to keep empowering women to embrace leadership, management and CEO roles. One woman added to a board of directors is not enough. 37 women leading Fortune 500 companies must continue increasing year after year. Keep growing these numbers until it becomes the norm and watch the positive changes that arise as a result.