The Power of Women in Leadership
Organizations led by women create 20% more coherent organizations, and thus perform better

Why Organizations Led By Women Perform Better!

In 2013, Innovisor found some surprising results, when researching its data on gender and collaboration. While both genders had an equal number of people they collaborated with, who they collaborated with was different. Men were more likely to collaborate with men, and women were more likely to collaborate with women.

Men were more likely to collaborate with men, and women were more likely to collaborate with women.

This research was quoted in the Wall Street Journal article ‘At Work‘, and later cited in Sheryl Sandberg’s prominent book ‘Lean In‘.

Organizations led by Women Are More Profitable

A study conducted by the Peterson Institute for International Economics and EY in 2016 showed that organizations led by women are more profitable. The study analyzed 21,980 global, publicly, traded companies in 91 countries from various industries and sectors. Their result was clear: if you have at least 30% of women in leadership positions or the “C-suite,” it adds 6% to the net profit margin.

Why Do Organizations Led by Women Perform Better?

The new study puzzled Innovisor. Why do organizations led by women perform better?

Since we already established that the women on an individual level were not collaborating more than men, we decided to look somewhere else in our data.
Also because Innovisor had previously established that there was a correlation between organizational coherence and performance.

We decided to look into if organizations led by women were more coherent.

And they were!

Women-Led Organizations Are More Coherent

Women create organizations that are more coherent. Organizations, where the conditions for walking “in the same direction” and alignment are much better.

Where there – to a lesser extent – are no conflicting priorities, and where the leadership and the employees are more likely to act as ONE. It is in this type of coherent organizations that high performance materialize.

The employees are more likely to act as ONE when led by a Woman

The diagram below documents the impact of women as top leaders. It shows how the difference between men and women as leaders in creating coherent organizations increases as organizations grow.

In the diagram, the X-axis indicates the size of the organization and the y-axis indicates average distance

(NB! Average distance is a metric that shows, how many people you on average have to “go through” to reach all other individuals in the organization. The lower the number the more coherent the organization. The higher the number the more fragmented the organization. This has also been popularized by what is known as “The Six Degrees of Separation”. The six degrees of separation works with weak ties, whereas Innovisor work with strong collaboration ties.)

The Impact of Women Increase With Organizational Size

As depicted in the diagram organizations with 100 employees led by females are 22% more coherent, whereas organizations with 500 employees led by females are 35% more coherent. Hence, the larger the organization the larger impact the gender of the top leader has on its coherence.

The data used for the research is collaboration diagnostics conducted by Innovisor on 2,500,000 million collaborative relations and +150 organizations.

What Does This Mean for Leadership?

We know that organizations that are more coherent perform better – and we also know that organizations lead by women are more coherent.

Can we assume that organizations led by women perform better because they are more coherent? – Yes, I believe, we can!

Three Tricks to Learn from Women on Making Organizations More Coherent

I also believe the men can learn quite a few leadership tricks from women, so they can also create coherent and high-performing organizations:

  • It is not about you! Drop your alpha male / know it all attitude, and understand it is about your people, your team
  • Help your people connect. Leadership is about ensuring that all your team members know they are contributing and appreciated.
  • Be transparent. Share what you know, so everybody has access to the same information. Also, make sure to state what you don’t know!