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Study: Firms with More Women in the C-Suite Are More Profitable

Source | Harvard Business Review : By Marcus Noland and Tyler Moran

 

While successful female leaders have made headlines in recent years — Marissa Mayer, Sheryl Sandberg, and Indra Nooyi all come to mind — they remain the exception to the rule.

Yet in the U.S. women make up nearly 40% of MBA graduates and 40% of managers. In many countries they make up an equal or greater share of tertiary graduates and the professional and technical labor force. And worldwide they are catching up to men in levels of education and workforce participation. So why do women remain hard to find in the corporate boardroom and the C-suite?

In a new Peterson Institute for International Economics working paper, we present the results of our survey of nearly 22,000 firms globally. We found that in 2014 almost 60% of these firms had no female board members, just over half had no female C-suite executives, and fewer than 5% had a female CEO. But there was considerable variation among countries: Norway, Latvia, Slovenia, and Bulgaria had at least 20% female representation in board members and senior executives; only 2% of Japanese board members and 2.5% of Japanese C-suite executives were women. There was similar, though less dramatic, variation across sectors as well: financial services, health care, utilities, and telecommunications were relatively welcoming to female leadership, while fewer women were found at the top in basic materials, technology, energy, and industrial sectors.

We found that these figures matter to the bottom line. When we examined the profitable firms in our sample (average net margin of 6.4%), we found that going from having no women in corporate leadership (the CEO, the board, and other C-suite positions) to a 30% female share is associated with a one-percentage-point increase in net margin — which translates to a 15% increase in profitability for a typical firm.

 

Read On…

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