August 6, 2012

Gender Diversity and Corporate Performance

This week, Credit Suisse (a leading global financial services company based in Zurich, Switzerland) released research that continued to validate the “business case” for including more women in top positions of the corporate world.

“Gender Diversity and Corporate Performance” provided an array of data answering the question: does gender diversity within corporate management improve performance?  The basic answer is that, in comparing the performance of 2,360 companies, those with at least one woman on the board have outperformed stocks with no women on the board by 26 percent over the course of the last 6 years.

Most importantly, most of this difference occurred after the economic calamity of 2008, when the financial environment globally was deteriorating.  Companies with female board members were better at delivering results even in hard times.

Why do women on the board enhance the corporate performance?  The report provides 7 points that may correlate gender diversity with corporate performance:

1.       It signals a “better company”.
Research suggests that placing women on a board is a sign that the company is already doing well, rather than a signal of working to improve.

2.      Diversity of the team results in better performance.
Research from Columbia University has shown that non-diverse groups improve their own performance by broadening diversity - it leads to better average outcomes when the work group is more diverse.

3.       There is a better mix of leadership skills.
McKinsey and NASA have conducted studies on leadership skills that have proven women are specifically good at defining responsibilities clearly, supporting mentoring, and coaching employees.

4.      There is a wider talent pool.
Since 2000, the proportion of college graduates that are female has increased from 51% to 54%, which is projected to continue to increase in the future.  This provides a broad pool of talent for any hiring manager.

5.       This reflects that females are the primary consumer decision-maker.
Because women are responsible for up to 85% of household purchasing decisions, corporations demonstrate a better understanding of consumer preference.

6.      Corporate governance is improved.
                       Academic research concludes that corporations with more women on the board improve 
                       their performance related to both social and corporate governance.

7.       There is more aversion to risk.
A report issued in 2003 noted that men – particularly optimistic men – create investment volatility and cause more significant shifts in value.  For women, there is no difference in investment risk between different temperaments; women generally remain more risk averse overall.

Although there are still barriers to women in leadership (dual roles with household responsibilities, continued stereotypes, and reduced expectations by women), the numbers prove the case.

Our work to ensure girls complete an education and develop a career pathway, and to assist women to step into new and greater responsibilities as leaders, reinforces that Chrysalis “gets it.”  We know that supporting girls and women is just good business.  And good for business.