Companies with female directors perform better

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Researchers have claimed that organisation that have women on their board consistently outperform those which only have male directors. This suggests that there is a strong business case for gender diversity in the boardroom.

The Credit Suisse Research Institute measured the share price performance of 2,360 companies globally over the past six years and concluded that “it would on average have been better to have invested in corporates with women on their management boards than in those without”.

Companies with at least one woman on their board produced a 16 % return on equity, 4 percentage points higher than firms with no female board members. Whilst companies with all male boards grew on average by 10 % in those six years those with gender diverse boards grew turnover by 14 %.

Researchers weighted the results to make them ‘sector-neutral’, as well as making adjustments to account for differences in market values and differences in returns between global regions.

The study researched into both smaller and larger companies, and while the effect was more marked for larger firms, both sets showed a clear outperformance by the gender-diverse group.

The researchers suggested that greater effort across the board, a better mix of leadership skills, access to a wider pool of talent and better reflection of the consumer were the main reasons why greater gender diversity correlated with stronger corporate performance..

In the report, Professor Katherine Phillips, the Paul Calello Professor of leadership and ethics at Columbia Business School, New York, said:

“Given trends in globalisation, immigration and demographics, the composition of the workforce is likely to look very different in the long run. Greater diversity suggests a change in the working environment to adapt to the needs of different people.

“Companies that can do this better are more likely to attract the best talent, no matter who that talent is and that should be a strategic advantage for that company.”

In the UK the number of female board members stands at 16.7%, up 4.2% from the same time last year.

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