All our programmes are based on a holistic understanding of current academic and economic research. A growing body of evidence, most recently from the IMF (2016) and McKinsey (2016), shows the critical importance of gender diversity to business success. Yet recent reports have shown that there is much further to go.
Our research, Women Count 2016, confirms this correlation that diversity improves business outcomes yet the number of women in senior roles remains low.
More women in senior roles leads to better business outcomes
- The IMF found that the more women in senior managerial positions and in corporate boards, the more profitable firms are. Adding one more woman in senior management or on a corporate board, while keeping the size of the board unchanged, is associated with 8 to 13 basis points higher return on assets1.
- McKinsey also identified that companies in the top quartile for gender diversity are 15 percent more likely to have higher financial returns2. Furthermore, the sweet spot, shown in other research by McKinsey, found those with three or more women in senior management had higher firm performance, on average, than teams with no women3.
- Grant Thornton estimates the impact of moving to mixed boards on the FTSE 350 could boost GDP in the UK by around 2.5%4.
- The Pipeline stated in ‘Women Count, 2016’ that 169 FTSE 350 companies who had at least one woman on their Executive Committee have a better return on capital by, on average, a margin of 5.6 percentage points than those with none5.
The number of women in top jobs remains low
The Hampton-Alexander Review set out the following voluntary recommendations:
- FTSE 350 companies should aim for a minimum of 33% women’s representation on their Boards by 2020.
- FTSE 100 companies should aim for a minimum of 33% women’s representation across their Executive Committee and in the Direct Reports to the Executive Committee by 2020.
- FTSE 350 companies should voluntarily publish details of the number of women on the Executive Committee and in the Direct Reports to the Executive Committee on an annual basis.
Latest recommendations for gender balance in FTSE leadership
- The proportion of women board directors has slowed in the last 12 months. The FTSE 250 is at 21.1%, up from 19.6% with the FTSE 100 only marginally up at 26.6%6 (Hampton Alexander Review, 2016). The same review also noted there may be a degree of complacency with the FTSE 100 having reached the 25% target in 2015 (set by Vince Cable in response to Lord Davies of Abersoch’s 2011 report on board diversity) and taking time to gear up to the new 33% target set by Hampton Alexander.
- However, research by The Pipeline into female diversity in FTSE 100 & 350 found that although overall progress has been made in increasing the number of female appointments to boards, particularly NEDs, the number of women Executive Directors is still relatively low at around 17% in FTSE 100s and 16% in FTSE 3507 (Women Count, 2016).
- Progress lagged even further behind when looking at the proportion of women holding profit-and-loss (P&L) roles. P&L jobs have been identified as critical to enhancing progression to Executive and Chief Executive Officer roles8 (McKinsey and Lean In: Women in the Workplace, 2016). Just 6% of women on FTSE 350 Executive Committees held roles classified as having P&L responsibility9 (The Pipeline, Women Count 2016).
Footnotes and useful links
1 IMF: Female Potential in Europe, 2016 https://www.imf.org/external/pubs/cat/longres.aspx?sk=43712.0
2 McKinsey: Diversity Matters, 2015 http://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters
3 McKinsey (various):The Power of Parity, 2015 http://www.mckinsey.com/global-themes/employment-and-growth/how-advancing-womens-equality-can-add-12-trillion-to-global-growth; Women Matter, 2007 http://www.mckinsey.com/global-themes/women-matter; McKinsey: Women Matter, 2016 http://www.mckinsey.com/global-themes/women-matter/reinventing-the-workplace-for-greater-gender-diversity
4 Grant Thornton: Women in Business, 2015 http://www.grantthornton.global/globalassets/wib_value_of_diversity.pdf
5, 7 & 9 The Pipeline: Women Count, 2016 http://www.execpipeline.com/wp-content/uploads/2017/02/WOMEN-COUNT-20162.pdf
6 & 10 Hampton-Alexander Review: FTSE Women Leaders, 2016 http://ftsewomenleaders.com/wp-content/uploads/2016/08/FINAL-HA-Review-Nov-2016.pdf
8 McKinsey and Lean In: Women in the Workplace 2016 https://womenintheworkplace.com/
Selected Further reading
The Cult of the Leader, Professor Chris Bones, 2011, Wiley
The Social Animal, David Brooks, 2012, Random House
The Psychology of Influence, Professor Robert Caldini, 1993, William Morrow
Team of Rivals, Doris Kearns Goodwin, 2005, Simon & Schuster
Thinking Fast and Slow, Daniel Kahneman, 2011, Macmillan
The Psychopath Test, Jon Ronson, 2011, Pan Macmillan
Lean In, Sheryl Sandberg, 2013, Random House