A report from Silicon Valley Bank from Spring 2019 showed that only 28 percent of startup founding teams in the United States had at least one woman. To put this in context, about half of all startup teams had at least one founder from outside of the United States.
Only 53 percent of American startups have at least one female executive and only 37 percent of them have at least one woman on the board. With more women expressing interest in entrepreneurship than ever before, perhaps this will change in the years to come, especially with the advent of hiring tools like Censia.
After all, the lack of diversity among these startup teams can hamper a company’s performance. Some of the key benefits of having female leaders at startups include:
1. Being considered trustworthy.
Inclusivity and diversity are important aspects of leadership—so much so, customers increasingly consider them to be prerequisites for trustworthiness. Being considered trustworthy can help companies obtain better insight on what their potential customers want and how they will use a product or service.
Increasingly, customers are emphasizing trust and mutual understanding in their interactions with companies. The information customers provide as a result of that trust can then be used to identify actionable items and help prioritize the development of features that people consider the most important. This can ultimately translate into better products and higher sales.
2. Being better able to identify with customers.
One of the most important reasons to include women on startup leadership teams is that females will eventually use the end product or service. While the exact number of women who become customers will vary based on the product, there are very few companies that would never have females as customers.
Startups need to consider what women want out of a product or service. Ignoring the female perspective can result in suboptimal sales and customers lost to other companies that paid more attention to what women want and need.
Companies with a large percentage of female customers need to understand their audience when designing and marketing products. The best way to understand how women think is to include a diverse group of women on the team in a variety of roles, leadership included.
3. Improving company performance.
A study looking at Fortune 500 companies found that organizations with at least three female directors increased return on investment by at least 66 percent. Analysts attempted to learn why as part of the Why Diversity Matters study.
This research found that businesses known for gender diversity are significantly more likely to have better financial returns than those with gender-homogenous leadership. Not only that, companies severely lacking in diversity were less likely to have above-average returns.
Credit Suisse Research Institute researchers found that companies with at least one woman on the board outperformed those with no gender diversity by 26 percent. Clearly, having women in leadership roles can lead to stronger performance, likely due to the other benefits on this list.
4. Ensuring a broad range of skills.
Women and men bring a diverse range of lived experiences to their professional lives. When an entire gender is excluded, whether intentionally or inadvertently, companies miss out on the skills these members bring to the table as a result of those experiences. Additionally, having leaders with different skill sets can help fuel discussion leading to better products.
An robust body of research has been conducted on diversity in the tech industry. Diversity is widely acknowledged to contribute to innovation by driving critical thinking.
Unfortunately, the problems associated with lack of gender diversity in the tech industry extend far beyond leadership. Women continue to make up less than 18 percent of the overall workforce at tech startups, which hurts these organizations on multiple levels. Tapping women for leadership roles will have to be part of the solution to this problem.
5. Improving employees’ conflict resolution skills.
Most people have witnessed conflict in the workplace, especially when a difference of opinion becomes apparent. Individuals who have interacted with a greater variety of people are more able to navigate these situations successfully.
What does this have to do with women? Having more women in leadership roles helps ensure the diversity of perspectives necessary to facilitate successful conflict resolution.
Workers who have been exposed to diverse perspectives may be able to identify interpersonal issues and respond appropriately and professionally. Addressing potential miscommunications early can nip later issues in the bud and ultimately help form stronger teams.