Appointing more women to leadership (again) found to be seriously profitable for companies

Appointing more women to leadership (again) found to be seriously profitable for companies


I know, it’s only been a few weeks since we last reported on research demonstrating the compelling link between female leadership and profitability, performance and productivity on listed organisations.

And we also know the ‘business case’ for getting more women into leadership is one that’s been studied and addressed many, many times before. It’s also a business case that shouldn’t actually require research, given it’s obvious that including both halves of the population will result in better decision making than the decisions that come when one half is excluded.

But this week new research has emerged from The Pipeline in the UK, which finds that across FTSE 350 companies, those with at least one-third female representation on their executive committees have a net profit margin that is over 10 times that of companies with no women on them.

Unfortunately, the Women Count 2020 report also shows that little progress has been made in the past five years. Indeed, it found there were more FTSE 100 CEOs called “Peter’ than there were women. There are only 13 female CEOs across the FTSE 350.

The new report has put a number — a massive 47 billion pounds — on how much the UK economy and shareholders have missed out on because of those companies that have failed to have women on their executive levels. It does this by calculating how they could have performed at the same net profit margin of those companies with more than 33 per cent female membership on executive committees.

The report features a foreword from former UK Prime Minister Theresa May, who urges businesses to act now on addressing a number of areas including racism, inclusivity for LGBT+ people, female representation in the boardroom, climate action and environmental sustainability. “Very quickly, firms which find themselves on the wrong side of history on this and other social issues will discover that they cannot recruit the talent they need to succeed. This should be a wake up call to them.”

This research follows the Workplace Gender Equality Agency and Bankwest Curtin Economics Centre research released back in June, which has since been shared all over the world.

WGEA found there’s a massive 4.9 per cent increase in company market value for those ASX Listed entities that achieve an increase of 10 percentage points or more in the share of women on their boards. That market value is worth an average $78.5 million. Appointing a female CEO can also be seriously profitable, resulting in an average 5 per cent increase in market value for those ASX-listed companies that have done so, worth an average $79.6 million.

We don’t need this research to prove the need for companies to wake up on getting women into leadership — common sense should prevail. But we’re going to keep sharing such research anyway to remind businesses everywhere that addressing diversity pays;

And while these papers tend to focus on publicly listed entities — all businesses, big and small — should be paying attention, especially as so many will be scrambling to get to the other side of this recession. Especially again as women are largely bearing the brunt of job losses and being slammed with additional unpaid work, and face being overlooked for much-needed leadership appointments and promotions.

Stay Smart! Get Savvy!

Get Women's Agenda in your inbox