Posted by: ginalazenby | January 25, 2010

women lead the way for a better & more profitable future

There’s extensive research to show that companies that have a high proportion of women on their boards and as senior employees are more profitable.

One study in The Economist reported that research from America, Britain and Scandinavia shows a strong correlation between shareholder return and a higher proportion of women executives. A decades-long study of Fortune 500 companies by the Glass Ceiling Research Center at Pepperdine University showed that the companies with the very best records for promoting women tended to be the most profitable.

Catalyst, a non-profit organization focused on women in the workplace, released a report in 2007 showing that big companies with the greatest number of female board members on average have significantly better financial performance than those with fewer women.   In return on equity, on average, companies with the highest percentages of female board members outperformed those with the least by 53%, the study found.

In return on sales, the companies with more female board directors outperformed by 42% on average and in return on invested capital, by 66%, Catalyst said.  That’s a staggering and significant differential.

So gender balance, accessing a bigger talent pool and diversifying company thinking aside, it makes sound financial sense to accelerate the path of women and put more of them at the top. But ‘market forces’ alone are not making this happen so legislation is stepping in.  Norway made a ground-breaking decision in 2003 to legislate that 40% of board members had to be women on the country’s 600 companies listed on the stock exchange with the threat of closure for non-compliance. There was deep resistance but industry rallied round to find and train women for these new positions. It worked.  The target has now been achieved.  Now the The Times announced this week  that France has set course for a revolution in its old boys’ corporate culture as parliament considers a law to force big companies to appoint women to 40% of their boardroom seats. This will make France the first European country to follow the Norwegian’s initiative.

This is indeed a sea change. The Guardian reported back in December that Nicolas Sarkozy’s centre-right party has put forward legislation that would see women make up half the figures in France’s leading boardrooms by 2015, under a bold plan to impose gender equality on the male-dominated business world.  Jean-François Copé, president of the majority UMP party, said it could give a “much-needed electro-shock” to the French corporate world, long considered a bastion reserved for the male elite in which only 10.5% of board members in CAC 40 (French stock market index) companies are female.

  • Norway now has the highest proportion of women on boards anywhere in the world with 44.2% – up from 6% in 2001.
  • By comparison, in the UK, 12% of FTSE 100 directors are female and one in four boards are exclusively male.
  • Sweden and Finland boast more women at leading companies at 22% and 17% respectively.
  • The proportion of female directors among US Fortune 500 firms is 15.2%.

So within a decade we could see most of Europe’s largest companies being guided and influenced by a strong female leadership.  This gender diversity will not only mean potentially more profitable and successful companies, as evidenced so far, but with women bringing different mindsets, skills and values to the board room, we might seen more creativity and much-needed stronger ethics.   Already academics in the USA  who study ethical decision-making have conducted experiments indicating that women are more likely than men to favor ethical and socially responsible courses of action. A recent survey of business technology purchasers by Hansa|GCR, a marketing research and advisory firm, found that women are more likely than men to favor ecologically sustainable business practices. If this reflects a general tendency, then firms run by women should be run in a more ecologically sustainable fashion.

According to a report in Newsweek magazine, which ranked the largest 500 U.S.firms on the basis of the extent to which they pursue environmentally friendly policies, the preliminary analysis shows that firms that include women among their top managers and directors may exhibit superior social performance compared to those run exclusively by men. The results of this analysis indicated that the incorporation of women in top management and the board was associated with the pursuit of ecologically sustainable policies. Firms that had no women directors or executives had the poorest environmental performance.

Firms that had both women managers and directors had the best environmental performance.  The results indicate that firms that include at least one woman director (but no women executives), at least one women executive (but no women directors), and both women directors and executives all have stronger ecological performance.

I wonder what men think about this? Any of you guys feel threatened by the force of this legislation? And girls, do you think you’ve got what it takes to step forward as Boardmember material?  I’d be interested to know reactions to this wave sweeping through business…..

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