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How gender-balanced management teams can improve company performance

18 November 2019
Women in top management teams boost "psychological safety"
Companies that have gender-balanced top management teams perform better than those dominated by men, particularly when they are dealing with adverse conditions, according to an international team of university researchers.

While diversity in management has long been promoted on the grounds of gender equity, the researchers say their study, conducted in China, shows scientifically that companies with a balance of men and women in senior positions outperform those with a gender imbalance.

The results of the study, conducted by researchers drawn from the University of Sydney Business School, the University of Cambridge's Judge Business School and the Hong Kong Baptist University, have been published in a white paper by the Wo+Men's Leadership Centre at the University of Cambridge called "When does gender diversity matter most?" (pdf, 802kb).

"When people think about females in teams of leadership, they think about equity," said the University of Sydney's Dr Stephen Zhang. "We also found that females carry benefits in terms of psychological safety."

Dr Zhang, who is a senior lecturer in Strategy, Innovation and Entrepreneurship, explained "psychological safety" as an environment in which staff feel relaxed or comfortable enough to speak openly and freely in discussions affecting the company.

"When a company has levels of high psychological safety, the employees feel that they have more freedom and are less concerned about the possible consequences of raising issues and problems in the company," said Dr Zhang.

When females are involved in the running of a company as part of the top management team, the employees are more likely to speak up and this enables the company to address issues and hence improve their performance.
Dr Stephen Zhang

According to the white paper, the study was undertaken in China because of the high level of "gender diversity in hi-tech small to medium-sized enterprises" in the country.

"We did this in China because only in China could we find top management teams with a full spectrum of gender ratios in top management teams," the researchers said. "In contrast, the number of women in top management teams in companies in other parts of the world was too miniscule to see the full effect of gender ratios in top management teams."

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Stephen Zhang
Dr Stephen Zhang
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Dr Stephen Zhang looked at how gender balance on top management teams affects company performance.

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