Gender Diversity and Corporate Performance

I care a lot about women’s leadership and participation in the corporate arena.  A lot. Having worked at an investment bank for 14 years, and  having been in a senior position, I know that diversity makes a difference.  I have witnessed first hand the outcomes when there is a lack of perspectives at the table and I believe them to be worse in general.  Research has shown that the ‘pop’ from diversity happens when you reach critical mass, that being around 30% representation, and that is why I am part of a coalition that seeks to get women’s representation on corporate boards up to that number.  It is not that it is good for women, although it is,  it is that it makes for good  governance which results in better business and overall economic outcomes.

A new research report was recently released from the Credit Suisse Research Institute on Gender Diversity and Corporate Performance. The report reviewed 2,360 companies globally over the past six years and analysis confirms that it would, on average, have been better to have invested in corporates with women on their management boards than those without. The reports most staggering statistics found that “for large-cap stocks (market capitalization greater than USD 10billion) the companies with women board members outperformed those without women board members by 26% over the past six years.” Click here for the full report, “Gender Diversity and Corporate Performance” The same was found for small to mid cap stocks which out performed non-women boards by 17% in the same time period. The Credit Suisse Report also found the net income growth for companies with women on their boards has averaged 14 percent over the past six years, compared with 10 percent for those with no female director, which was reported by Bloomberg in a article reviewing the report. A report in the Financial Times also examined the new report by Credit Suisse as to why higher female representation is accompanied by better financial and stock market performance.

These statistics come as no surprise to many groups and organizations whose soul purpose is to increase gender diversity on corporate boards. The  30% Coaltion which I have been a supporter of, aims to attain at least 30% of female representation on public company boards by the end 2015. With only 16% of women board members on public companies boards, 30% Coaltion is fighting to move the needle. 30% Coaltion is a group of industry thought leaders, including senior business executives, national women’s organizations, institutional investors, corporate governance experts and board members who believe in the power of collaborative effort to achieve gender diversity in public company boardrooms. Please read more about it an join our efforts.

Even if you are skeptical about the research just think about it for a second.  Think about your own experience.  Do you find the better  group decisions tend to be made from homogenous groups, or heterogeneous groups, assuming all else equal? (all else being intelligence, experience, common sense…) Now you might be say that all else can’t be equal as there may not be enough ‘qualified’ women and there again I respectfully challenge your thinking.  Stacking a board with current CEOs that may have little time for the board, or may be so far removed from the front lines, their perspective might indeed be very limited.  Combining those most senior leaders with a mix of others might very well enhance the collective experience and knowledge of the group.

I will give you a quick example.  I served on the Board of Trustees of my University, The University of British Columbia, for a number of years.  It was a large and diverse board which included business leaders, faculty, staff and students. There were so many situations where had the students not been there, our decisions would have been different and in my view, worse. It took a lot of courage for those students to speak up but they did and talk about an incredible experience for them!  A University is a big business, a billion dollar business, and they get it.  Why does corporate America not?

Striving for  greater women’s representation in leadership is good for everyone.  I really believe that and I hope you do too.