No female representation at FTSE executive level leads to substantially less profit

It has been discovered that FTSE 350 companies that have over a third of females at executive level have a net profit margin 10 times bigger than similar companies that have no women at that level.

This is according to the report ‘Women Count 2020’ funded by a gender diversity business, The Pipeline, which found that companies with no women at an executive level have a net profit of 1.5 per cent, whereas businesses with more than 33 per cent of women at executive level received 15.2 per cent net profit.

If these firms performed the same as companies with more than a third of women on their board, a further £47 billion could have been made in pre-tax profit. This amount of money could adequately fund the NHS for five months.

The report states that at our current rate, businesses will miss another generation of female talent. It also found that in 2020 there are only 13 female CEOs of FTSE 350 companies.

Additionally, the report looked in to individuals who have profit and loss (P&L) responsibility, as this position tends to lead to the CEO level. In FTSE 350 firms, only 10 per cent of P&L positions are held by women. It believes that the future of women leaders in the years to come remains “bleak”.

Theresa May, former Prime Minister and MP for Maidenhead said:

Whenever data reveals a disparity of outcome between groups, the challenge to those in power should be – explain it or change it. There can be no good explanation for the massive underrepresentation of women at the top of British business – so it must change. Every single male CEO who looks around his boardroom table to see nine out of ten male faces staring back at him needs to ask himself what he is doing to make his business one which his daughter or granddaughter can get on in. Act now to change your businesses, to make the most of every talent, and to play your part in making our economy one which works for everyone.

Lord Karan Bilimoria of Chelsea CBE, president of the Confederation of British Industry (CBI), said:

The failure to develop and promote women into CEO or C-Suite roles has serious consequences, not least for profitability, especially for those companies who have yet to place a single woman onto their executive committee. We must do better than this. Dealing with the legacy of Covid-19 will require us to create and sustain an economy that works for and recognises the value of everyone, where we achieve a better Britain by all working together. To see the scale of the challenge ahead and the urgent need to change, I recommend this report as essential reading.

Lorna Fitzsimons, co-founder of The Pipeline, and one of the authors of the report said:

Women Count 2020’ report shows the stark difference in net profit margins of companies that have diverse gender leaderships compared to those who do not. During the most unprecedented economic challenge of our lifetime, the economy can’t afford for businesses to continually miss the opportunity to be more productive. Businesses and governments need to actively address this as an economic imperative if we want to come out of the inevitable recession any time soon. We will then emerge from this crisis together, stronger, and more united than ever in a post Covid-19 world.

Out of all FTSE indexes, it seems the FTSE 250 has the most women sitting at executive committee roles.

It was also found that construction and retail are the two worst performing sectors for gender diversity in senior positions.