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Companies with women on the board perform better, report finds

September 29, 2015
Diversity & Inclusion

Study of UK, US and India finds companies suffer large opportunity cost of having male-only executive teams.

Companies perform better when they have at least one female executive on the board, a study of companies in the UK, US and India shows.

Publicly traded companies with male-only executive directors missed out on £430bn of investment returns last year, the accountancy firm Grant Thornton found in its report, Women in business: the value of diversity.

Only one in 10 of the companies surveyed had female board executives. The UK’s share of the forfeited returns was £49bn or about 3% of GDP. In the US the amount was £373bn; in India it was £9bn.

The report sheds further light on the benefits of women in the boardroom as the government prepares a push to get women into top managerial jobs. Previous studies have found that female directors provide a different perspective on subjects ranging from what customers want to risky corporate ventures.

In March, women held 23.5% of board positions at FTSE 100 companies, close to the target set by Lord Mervyn Davies in his 2011 review. Though all FTSE 100 firms have female directors, women only make up 8.6% of executive directorships, up from 5.5% four years ago. The figures show a lag in the number of women running companies rather than overseeing them as non-executives.

Francesca Lagerberg, global leader for tax services at Grant Thornton, said: “There is a large opportunity cost for companies associated with male-only executive boards. Those businesses stuck in the past are not fully unlocking their growth potential. Like a world still addicted to fossil fuels, these companies are suffering now.”

She called on shareholders to pressure boards to promote women into top managerial roles so that companies do not miss out on performance benefits. Governments also need to ensure companies perform to their highest potential to support the economy.

“In an era when productivity puzzles persist and economies trade within globalised markets, facilitating female participation at a decision-making level within companies might just give them a competitive advantage.”

Davies, the former trade minister, last week criticised Hastings and Worldpay, two companies preparing for large flotations, for having no women on their boards. He said he was surprised that the owners of the two companies had not addressed the matter more seriously. Both companies have said they will look for female directors.

Source: The Guardian

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