Companies with a significant number of women in their executive committees outperformed during the pandemic and are continuing to do so, according to new research.
The Women Count 2021 report, published last week by diversity organisation the Pipeline, found that the persisting gender imbalance in FTSE 350 companies was costing the UK economy more than £100bn per year.
Analysing the performance of firms in the index, it found that in 2021 companies with no females on their executive committees suffered a fall in profits of 17.5%. By contrast, those where more than 50% of the executive committee is female enjoyed profit margins of 21.1%.
It cited the target set by the 2016 Hampton Alexander Review of 33% of women on executive committees and main boards as a key measure of success.
“Using ‘33%’ in the context of levels of profit reveals just how much money is being missed by companies. If all FTSE 350 businesses with less than 33% of women on their executive committee were to achieve the same profit margin as those with 33% and greater, there would be an additional £123 billion in pre-tax profit for the UK economy,” said the report.
Although the 33% target was met in terms of women on boards in the FTSE 350 index as a whole earlier this year, on a company-by-company basis there are still more than 100 in the index that have not met that target.
And The Pipeline argues while the growth in the number of women in non-executive director roles is positive, it’s the executive committee that really matters. Here, overall numbers are well below target, with just 5% of CEO roles and 17% of CFO roles in FTSE 350 companies held by women.
“The data shows how despite numerous initiatives and repeated calls for action over many years, these important PLCs have still to make significant progress on achieving acceptable levels of executive gender diversity. This position belongs to another time, as in today’s world it is recognised that ability is not the preserve of one gender, but equally distributed between men and women.
“Women Count 2021 reveals how far many of the biggest companies have to go in catching up with the times, as in the FTSE 350, women remain second class citizens when it comes to promoting or developing talent,” said the report’s authors.
Commenting on the findings, Nicole Sahin, Founder and CEO of professional employer organisation Globalization Partners, said:
“Time and time again, research shows that organisations that have a high percentage of diversity financially outperform their competitors. However, the reality is that while many women and male allies are championing workplace diversity, only five of the top Financial Times Stock Exchange 100 Index companies are steered by women. And at that current rate of growth, it would take more than 80 years for the number to reach 50%.
“In order to achieve greater balance sooner, management teams must make equality for everyone a priority – from the recruiting process, through professional development and management training. All female leaders need to claim their place at the table.”
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