Women in Leadership Roles and Their Impact on Company Performance - Literature review Example

Women in Leadership Roles and Their Impact on Company Performance: Literature Review This literature review is based on the subject of women in leadership roles in Australian companies and their impact on the performance of the companies in general. The purpose of the review is to present a concise analysis of findings of studies about the subject of women in leadership roles and how this affects the performance of companies as published in different academic works. Therefore, the review seeks to answer three important questions which are related to the topic. The first question is the state of women inclusion in senior corporate leadership positions in Australia. The second question about the factors that contribute to the state of women in leadership positions within companies in Australia. The third question is about the different ways in which inclusion of women in leadership positions within companies affects the performance of the companies. Many studies indicate that there is an intention to increase the percentage of women who hold leadership positions within Australian companies (du Plessis, Saenger &Foster, 2012; Renee & Ferreira, 2008; Stary, 2016). There is evidence to show that the percentage of women who hold senior leadership positions in Australian companies has been increasing over the course of time. For example, According to the Equal Opportunity for Women in the Workplace Agency (EOWA) (2012, p. 6), the percentage of women who hold leadership positions in Australian firms has been increasing over the last five years. Similarly, figures from the Australian Bureau of Statistics (ABS) (2012) indicate that the percentage of women who hold the Chief Executive Officer position or sit on company boards in the 200 top companies that make up the Australian Securities Exchange has been increasing steadily (ABS, 2012). It is indicated that back in 2002, less than 2% of the CEO positions in the companies were held by women (ABS, 2012). However, by 2012, it is reported that the percentage had risen to about 4% (2012). About women who sit on the company boards of management, it is indicated that the percentage has risen from 8% back in 2002 to 13% by 2012 (ABS, 2012). In this case, women in corporate leadership positions are considered those who hold formal executive or board positions. The report by EOWA (2012, p. 7) defines women in leadership in terms of the number of women who hold executive management positions within the companies. Further, it is indicated that the number of women who hold Chief Executive Officer positions or who are company directors or who sit on the boards of management has been rising steadily since 2010 (EOWA, 2012, p. 6). In an earlier study, Renee and Ferreira (2008, p. 3) indicate that in Australia, as it is in many other countries across the world, the percentage of women who hold leadership roles within companies remains relatively low. It is argued that whereas women and men start their careers having obtained identical qualifications, women tend to lag behind their male counterparts when ascending to leadership roles (2008, p. 4). A report by the Business Council of Australia (2015, p. 2) shows that management boards of companies in Australia are concerned with increasing the number of women who sit on them. Several factors are identified as the key drivers for this trend. However, the need for social justice and the desire to improve performance are some of the most important factors that are said to be driving the actions of management boards in many Australian companies to include women in leadership positions within the companies (Business Council of Australia, 2015, p. 2). From the preceding, it can be seen that although the percentage of women who hold executive positions within companies in Australia and sit on the managing boards of companies has been increasing over the years, the trend has remained slow. Therefore, studies indicate that women are still underrepresented in corporate leadership roles in Australia, regardless of the increase in the percentage of women who hold leadership positions within companies. The second issue is about the factors that make it difficult for women to rise to and occupy to leadership positions in companies. One of the factors that hinder the progress of women in the corporate world is gender stereotyping (Kabacoff, 2012, p. 5; Schwanke, 2013, n.pag). Schwanke (2013, n.pag) states that gender stereotyping takes many forms, the most common one being the form of discrimination that women face. Further, according to Schwanke (2013), due to social and cultural values, women cannot compete with their male counterparts equally. Kabacoff (2012, p. 5) also examines the issue of gender stereotyping and how it limits the chances of women to successfully ascend to corporate leadership positions. It is stated that the society has specific expectations for male and female managers and that these expectations are based on gender stereotypes (Kabacoff, 2012, p. 5). Whereas men are expected to be tough managers and good decision makers, women are expected to be considerate and less controversial (Schwanke, 2013, n.pag). Therefore, women who rise to leadership positions within companies face the challenge of having to behave in ways that the society expects corporate leaders to behave, which is associated with masculinity (Kabacoff, 2012, p. 5). Further, it is commonly held that the nature of how boards and other decision-making bodies within companies, make decisions on who gets promoted discriminates against women to create what is commonly called the glass ceiling (Noland, Moran & Kotschwar, 2016, p. 6). Therefore, women are disadvantaged when it gets to competing with their male counterparts for leadership positions within companies. Hence, it can be seen that studies indicate that gender stereotyping and societal and corporate values are the main factors that hinder the progress of women and, by extension, contribute to the relatively small percentage of women who play leadership roles. The third issue is related to whether the inclusion of women in leadership roles improves the performance of companies. On one hand, it has been argued that in general, including more women in leadership positions helps to improve the performance of companies (Noland, Moran & Kotschwar, 2016, p. 5). Importantly, studies have sought to explain how gender diversity in corporate leadership positions improves corporate performance. For example, du Plessis et al. (2012, p. 214) note that including women in leadership positions improves the overall manner in which companies are managed because women bring a different set of leadership skills and approaches to the board. Similarly, du Plessis (2012, p. 4) notes that there is evidence to show that businesses that include women in their leadership positions tend to perform better than those which do not. Improvement in performance as a result of including women in senior management positions is attributed to many factors. However, one of the reasons as why gender inclusion in corporate boards improves the performance of firms is that companies that have diverse boards and executive management teams tend to address the different needs of their stakeholders better (Noland, Moran & Kotschwar, 2016, p. 5). In a separate study, Stary (2016, p. 6) examines the developments in gender diversity in corporate leadership within Australia and concludes that Australian companies can successfully increase the percentage of women in leadership positions without necessarily being obliged to do so as a regulatory requirement. On the other hand, it has been argued that including women in leadership positions may not necessarily lead to a positive firm performance since the need to attain gender balance in boards may affect the manner in which company management boards operate. For example, Watson (2014, p. 3) observes that whereas companies in Australia understand the need for incorporating women into leadership positions, there is, in general, lack of clear understanding of how the objective of including women into leadership positions should be achieved. It is argued that businesses need to be driven by commercial needs when attempting to include women in leadership positions rather than only attempting to achieve gender balance as a way of meeting social demands (Watson, 2014, p. 5). What this implies is that when organisations fail to understand that the inclusion of women in leadership positions should be done as a way of helping the organisations achieve their objectives rather than as an obligation, they may not achieve the benefits associated with the approach. Three things can be concluded from this review. The first one is that Australia has constantly been making progress about increasing the number of women who hold leadership positions among Australian firms. Regardless of the progress, there remains a huge gender gap in corporate leadership positions in the country, with women being underrepresented. The second issue is that several factors make it difficult for women to successfully compete with their male counterparts and get to top leadership positions. One of the major factors is the existence of gender stereotyping arising from societal and corporate values. Gender stereotyping hinders the progress of women within the corporate circles. Lastly, studies indicate that companies may benefit from including women in leadership roles if they use the most appropriate approach of focusing on business needs rather than only seeking to comply with regulations. References Australian Bureau of Statistics (ABS). (2012). Women in leadership. Retrieved from http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features30Dec+2012 Business Council of Australia. (2013). Increasing the number of women in senior executive positions: The role of the board. Retrieved from https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&uact=8&ved=0ahUKEwiipeXD2_rOAhVHbRQKHYZODzYQFghFMAU&url=http%3A%2F%2Fwww.bca.com.au%2Fdocs%2F7dab6016-8fd4-494a-b54f-d89c17279534%2FIncreasing_Number_Women_Senior_Exec_Positions_checklists_FINAL_5.11.2013.pdf&usg=AFQjCNEsNc0aE204c7tzd1jBDaYG2sRteQ&sig2=4VmmxisTff2-afu6wUDzwg du Plessis, J. (2012). Board diversity: Australian and German perspectives. Retrieved from, http://docs.business.auckland.ac.nz/Doc/Jean-du-Plessis-Auckland-Board-Diversity-Gemany-and-Australia-9-February-2012.pdf du Plessis, J., Saenger, I., & Foster, R. (2012). Board diversity or gender diversity? Perspectives from Europe, Australia and South Africa. Deakin Law Review, 17(2), 207-249. Equal Opportunity for Women in the Workplace Agency (EOWA) (2012). Australian census of women in leadership. Retrieved from https://www.wgea.gov.au/sites/default/files/2012_CENSUS%20REPORT.pdf Kabacoff, R. (2012). The glass ceiling revisited: Gender and perceptions of competency. Retrieved from http://www.mrg.com/uploads/PDFs/Glass_Ceiling_Revisited_2012.pdf Noland, M., Moran, T., & Kotschwar, B. (2016). Is gender diversity profitable? Evidence from a global survey. Retrieved from https://piie.com/publications/wp/wp16-3.pdf Renee, A., B. & Ferreira, D. (2008). Women in the boardroom and their impact on governance and performance. Retrieved from https://www.responsible-investor.com/images/uploads/Women_in_the_boardroom.pdf Stary, K. (2016). Gender diversity quotas on Australian boards: Is it in the best interests of the company? Retrieved from http://law.unimelb.edu.au/__data/assets/pdf_file/0004/1709500/2-KateStary-CorporateGovernanceandDirectorsDutiesPaper2.pdf Schwanke, D., A. (2013). Barriers for women to positions of power: How societal and corporate structures, perceptions of leadership and discrimination restrict women’s advancement to authority. Earth Common Journal, 3(2), Retrieved from http://www.inquiriesjournal.com/articles/864/2/barriers-for-women-to-positions-of-power-how-societal-and-corporate-structures-perceptions-of-leadership-and-discrimination-restrict-womens-advancement-to-authority Watson, K. (2014). Gender diversity in corporate boards. Journal of the Australasian Law Teachers Association, 1-7. Retrieved from http://www.austlii.edu.au/au/journals/JlALawTA/2014/2.pdf Read More