NEW YORK, February 8, 2016 / PRNewswire / – New research from the Peterson Institute for International Economics and EY shows that having more women leaders in business can dramatically increase profitability. The report, Is gender diversity profitable? Evidence from a global study, reveals that an organization with 30 percent women leaders could add up to 6 percentage points to its net margin. This new in-depth study analyzes the results of approximately 21,980 global listed companies in 91 countries across a variety of industries and sectors.
“The impact of having more women in senior management on the net margin, when a third of the companies surveyed do not, raises the question of what the global economic impact would be if more women were to move up. rows ? ” noted Stephen R. Howe, Jr., US President of EY and Managing Partner for the Americas. “Research shows that while increasing the number of female directors and CEOs is significant, increasing the percentage of women leaders in senior management would likely benefit the bottom line even more. “
The study found that nearly a third of companies worldwide have no women on boards or senior managers, 60 percent have no female board members, 50 percent one hundred have no female senior executives and less than 5 percent have female CEOs. Yet the positive correlation between women in the C-level ranks and the bottom line is repeatedly demonstrated, and the magnitude of the estimated effects is substantial. Although the study found that there is no statistically observable impact of having a female CEO on the profitability of the organization, and that the impact of having women on the board does not While not statistically robust, the importance of having female leadership and presumably a pipeline of future female leaders is both robust and positive.
“As many companies and governments have rightly placed an emphasis on gender diversity in corporate leadership, the Peterson Institute and EY wanted to explore which key areas in business roles and in societal support for women in these roles, have the greatest return in terms of income and economics. growth, ”said Adam posen, President, The Peterson Institute for International Economics. “We have found that some policy initiatives are more promising than others in delivering benefits while promoting gender equality, and that the focus should be on increasing diversity in business management. At a minimum, the results of our unique global study strongly suggest the positive impact of gender diversity on business performance and identify in which sectors and countries the greatest diversity advancements need to be made. ”
Some observations of the study:
Variations by country
Peterson / EY research shows that although no country has achieved gender parity, there are substantial international variations in the representation of women. National averages for women’s participation in boards of directors range from 4 percent in the case of Mexico at about 40 percent in Norway, with Latvia and Italy next in line at 25 and 24 percent, respectively. Likewise, less than 11% of Mexican managers are women, while women represent more than a third of Latvian and Bulgarian managers.
Variations by sector
Research reveals differences between sectors of industry, finance, healthcare, utilities and telecommunications with the highest rates of female representation in executives and boards, ranging from 16 to 18% for women managers and 12 to 14% for women directors. Basic materials, technology, energy and industry are the sectors with the lowest representation of women in management positions, ranging from 10 to 12% for women managers and 8 to 10% for women directors .
Quotas for women directors
Peterson / EY research explores the impact of quotas for female directors, instituted in some countries, which have raised concerns that forcing change could have a negative impact on company performance, possibly due to ” a shortage of qualified women to sit on boards of directors. The analysis indicates that women who sit on more than one board of directors do not outnumber men. Thirteen percent of male directors sit on two boards, compared to 12 percent of female directors. Three percent of each gender sit on three boards, and the number drops to 1% or less for those serving on four or more boards for both genders. More importantly, there is no support for the idea that such quotas reduce company performance.
Factors impacting women’s leadership
The research addresses other issues that impact the presence of women in business leadership, which is positively correlated with business characteristics such as size, as well as national characteristics, including corporate policies. education of women and family leave. Statistical research results suggest that at the company level, company size and board size are strongly correlated with the presence of women on boards and in leadership positions. (but not as CEO). Promisingly, the results suggest that a set of controllable national characteristics is also strongly correlated with greater gender diversity in management; these include high relative scores between women and men on mathematics assessments, a high relative concentration in management-related degree programs, and the earnings ratio of women and men, all of which could be interpreted as indicators of the institutional openness of an economy and support for women’s success.
Fair policies and benefits
“This research highlights the importance of establishing modern benefits, offering equitable sponsorship opportunities and creating inclusive work environments, so that men and women can have equal access to leadership positions. “, said Karyn’s Twaronite, Global Head of Diversity and Inclusion at EY. “While it is essential for organizations to increase women’s access to leadership roles, they must also develop equitable strategies and programs to ensure that men and women rise to the top and ultimately increase organizational results. ”
The data indicate other policy indicators positively correlated with gender diversity in management, and hence profitability, which are often overlooked, including the importance of paternal (not just maternal) leave and openness to foreign investment , which could be interpreted as a sign of greater tolerance for new ways of doing business. Paternity leave – resources that would allow, and even encourage, fathers to participate more equitably in childcare – is significantly more important in economies where companies are more gender balanced: the top 10 economies had 11 10 times more paternity leave days than stockings 10. Peterson / EY’s research revealed, perhaps surprisingly, that compulsory maternity leave alone does not correlate with the increase in the share of maternity leave. women business leaders, although paternity leave is strongly correlated with the proportion of women on the board of directors.
“If these correlations are interpreted causally, one could argue that countries in which fathers have access to more leave have significantly more women on boards of directors,” according to the study. “It stands to reason that policies that allow child care must be respected but do not explicitly place the burden of care on women, which increases the chances that women can develop business acumen and professional contacts. necessary to qualify for a board of directors. “
To learn more or access the full Peterson / EY research, please visit http://www.iie.com/. The underlying data and calculations may be reproduced and extended, in accordance with the Institute’s research review and disclosure policy.
About the Peterson Institute
The Peterson Institute for International Economics is a private, non-partisan, non-profit institution for rigorous, intellectually open, and in-depth study and discussion of international economic policy. Its objective is to identify and analyze the important issues to make globalization beneficial and sustainable for the populations of United States and the world, then to develop and communicate new practical approaches to deal with it. Its work is funded by a very diverse group of philanthropic foundations, private companies and interested individuals, as well as income from its capital fund. About 35 percent of the Institute’s resources during its last fiscal year were provided by outside contributors United States. A list of all financial supports for the previous four years is posted at http://piie.com/institute/supporters.pdf
EY is a global leader in assurance, tax, transaction and advisory services. The knowledge and quality services we provide help build confidence in capital markets and economies around the world. We develop exceptional leaders who team up to deliver on our promises to all of our stakeholders. In doing so, we play a vital role in building a better working world for our employees, customers and communities.
EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
This press release was issued by Ernst & Young LLP, a member of the global organization EY which provides services to clients in the United States.
Logo – http://photos.prnewswire.com/prnh/20130701/NY40565LOGO-b