Diversity benefits business
Research shows that businesses with female board members and senior executives outperform their peers. A widely cited study by the Peterson Institute for International Economics found that where the leadership of an organisation is 30 percent female, this can add up to 6 percentage points to net margins. Similarly, a recent Credit Suisse Research Institute report reaffirmed earlier findings that companies with a higher participation of women in decision-making roles generate higher market returns and better profits.
At the FPM Annual Leadership Talk, Anne referred to the work of a UK Government-backed review group led by Lord Mervyn Davies. This group, in a report published in 2015, recommended that by 2020 a third of the board seats of FTSE 350 companies should be held by women.
More recently, another UK Government-backed review, led by GlaxoSmithKline Chairman Sir Philip Hampton, set a target for FTSE 100 companies to have 33 percent of their executive pipeline positions filled by women by 2020.
As well as improving financial performance and board effectiveness, businesses with female directors and senior management find it easier to attract and retain talent and benefit from improved innovation and enhanced client insight.
Yet, despite the research, representation of women at senior levels in business remains low. Only 12.5 percent of the directors of Irish Stock Exchange listed companies are female and just 7 percent of the Belfast Telegraph Top 100 Northern Ireland Companies 2016 are female-led.
Anne outlined some of the structural reasons why progress on improving diversity is slow and suggested Government could do more to support diversity by investing in formal childcare structures. For example, she believes schools could have a role in the provision of after-school care. Currently, tax and childcare costs substantially diminish the benefits of a second income for working parents.
There are also practical measures that businesses can take to improve female representation at senior levels. These include challenging bias in recruitment and work practices and investing in leadership development training, networking and mentoring. Focusing on these activities not only supports better gender balance, it strengthens business performance.
As we celebrated International Women’s Day this month, we have an opportunity to think about these issues but this should not be a once a year activity. Only by keeping gender balance on the agenda all year round, will businesses reap the benefits of diversity.