NEW YORK (Thomson Reuters Foundation)—Women workers still earn less than men, but when they’re in charge their companies make significantly more than others in terms of profits and shareholder returns, according to a report in the Sunday Times.
Companies where one-third of the board members are women showed profit margins 42 percent better and shareholder returns an average 53 percent higher than rival firms with fewer women on their boards, according to a report to be released next month by Sodexo, an outsourcing firm specializing in providing a broad range of services for firms in 80 countries.
The Sodexo report falls in line with a growing body of evidence that firms that employ women in top positions fare far better in the marketplace than comparable companies with fewer women in senior posts.
In a comprehensive 2011 study of 7,280 business leaders by Zenger Folkman, Inc., the title said it all: “A Study in Leadership: Women do it Better than Men.”
In that study, the researchers rated leaders on 16 core competencies associated with top executives, including such traits as: takes initiative, displays high integrity and honesty, drives for results, develops others, champions change and solves problems and analyses issues. On 12 of the 16 competencies, females were rated more positively than men by respondents who included managers, peers, direct reports and others.
The researchers said that “The bias of most people is that females would be better at nurturing competencies such as developing others and relationship building. While this is true, the competencies with the largest differences between males and females were taking initiative, practising self –development, integrity/honesty and driving for results.”
A 2010 report by the management consulting firm McKinsey & Co. found that firms with gender-balanced executive committees had a 56 percent higher operating profit than companies with male-only committees. McKinsey also found that firms with three or more women in top positions scored higher than their peers in an index of organizational health.
That number of three or more is key, according to Catalyst, a research organization, and other studies. These studies suggest that firms must appoint at least three female directors before they see an impact on performance. Businesses with three or more female directors typically have a profit margin of 16.8 percent compared with 11.5 percent for the average company, according to Catalyst.
Last week, the Center for Talent Innovation in New York issued a report that found that the most diverse companies are 70 percent more likely to capture new markets and 45 percent more likely to improve their market share.
However, women globally still earn an average 18 percent less than men in the same positions, according to a 2012 report by the International Trade Union Confederation, a figure that hasn’t budged in 10 years.
Despite their impact on companies’ financial performance, women still lag behind men in terms of corporate leadership.
The most recent United Nations report on the status of women in 2010 found that: “In the private sector, women are on most boards of directors of large companies but their number remains low compared to men. Furthermore, the “glass ceiling” has hindered women’s access to leadership positions in private companies. This is especially notable in the largest corporations, which remain male-dominated. Of the 500 largest corporations in the world, only 13 have a female chief executive officer.”
“We know that women have powerful skills and abilities but to shatter the glass ceilings they need more than a ‘can-do’ attitude,” said Gayle Peterson, an associate fellow of the University of Oxford’s Said Business School and co-director of its new “Women Transforming Leadership” programme.
“If we let them, women can transform traditional leadership models and thereby truly change the world,” said Peterson.
Our Standards: The Thomson Reuters Trust Principles.