Companies with more women in leadership roles make more profits: Survey

Companies with more women in leadership roles make more profits: Survey

According to a survey by the Peterson Institute for International Economics, the presence of more female leaders in top positions of corporate management correlates with increased profitability of these companies

Having more women in leadership roles is definitely a sign of the rising gender diversity in a company.

But according to a survey by the Peterson Institute for International Economics, the presence of more female leaders in top positions of corporate management correlates with increased profitability of these companies. It reveals that an organization with 30 percent female leaders could add up to 6 percentage points to its net margin.

The key findings

This in-depth new study analyzes results from approximately 21,980 global publicly traded companies in 91 countries from a variety of industries and sectors.This is the latest and most rigorous data analysis of gender diversity and corporate profitability to date. Here are the key findings of the study:

  • Having women on a board may help—and robust evidence that women in the C-level (as in CEO, CFO and COO of management) is associated with higher profitability.
  • In 2014, nearly a third of companies globally have no women in either board or C-suite positions, 60 percent have no female board members, 50 percent have no female top executives, and fewer than 5 percent have a female CEO.
  • The study found that national averages for women's participation on boards range across countries from 4 percent to roughly 40 percent,
  • There is greater female representation on board and corporate leadership positions in the financial, healthcare, utility, and telecommunications sectors than in sectors such as basic materials, technology, energy, and industry.

"The results strongly suggest the positive impact of gender diversity on firm performance and identify in which sectors and countries the most progress on diversity needs to be made," said Adam S. Posen, president of the Peterson Institute for International Economics.

"The impact of having more women in senior leadership on net margin, when a third of companies studies do not, begs the question of what the global economic impact would be if more women rose in the ranks. The research demonstrates that while increasing the number of women directors and CEOs is important, growing the percentage of female leaders in the C-suite would likely benefit the bottom line even more," said Stephen R. Howe, Jr., EY's US Chairman and Americas Managing Partner.

Boosting gender diversity in companies

The data points to other policy indicators positively correlated with gender diversity in management, and thus profitability, that  are often overlooked, including the importance of paternal (not just maternal) leave.

Paternity leave– resources that would allow, and even encourage, fathers to participate more equitably in taking care of children– is significantly greater in the economies with more gender-balanced corporations: the top 10 economies had 11 times more paternity leave days than did the bottom 10.

Peterson/EY's research found, perhaps surprisingly, that mandated maternity leave alone is not correlated with increased female corporate leadership shares, though paternity leave is strongly correlated with the female share of board seats.

(With inputs from PR Newswire)

If you have any insights or comments about the article, please share them in our Comment box below.

Like us on Facebook and follow us on Google+ and Twitter to stay up-to-date on the latest from theIndusparent.com

app info
get app banner