Having female managers on the board improves a company’s share price, according to new research from Skema business school. So what’s the hold up?
Michael Ferrary’s ‘Observatory on the feminisation of companies’, a nine-year study into the feminisation of business, has exposed that the 15 companies in the French CAC40 with the most women managers have significantly outperformed the 25 other listed companies.
Shares in these firms have risen by 60 per cent from 2006 to 2016, despite the overall benchmark falling by 4.43 per cent in the period.
According to Ferrary, female managers on the board not only lends itself to the firm’s reputation, but also drastically affects its bottom line. By bringing in top female talent, companies are both increasing their intake of professionals and staying ahead of the curve.
“This applies not only at the top levels of business, but across the whole spectrum and around the world. In countries such as the UK, for example, only 2 per cent of CEOs in all its listed companies are female, rising to 4 per cent for senior managers – but this needs to change if businesses are looking to outperform their competition,” he said.
In the UK, women account for 23.5 per cent of board members, beating Australia (20 per cent), the EU (17.5 per cent) and the US (17 per cent). However, with females dropping out of work at middle management levels despite having the skills and experience to deliver, the talent pool for board level executives is shrinking.
“We all know there’s been progress when it comes to female representation on boards, but let’s not pretend it cuts the mustard – there’s still a long way to go. This is no sweeping generalisation. I’m able to say this from a very broad perspective,” Ian Wright, founder of NonExecutiveDirectors.com explained.
Data from his platform reveals that of its 6,000 members, only 18 per cent of women are looking for board positions.
“As an executive head hunter for over 10 years I’ve spoken to hundreds of women at executive level and while it’s obvious they want the top jobs in just the same way as men do, the twist is that they are the ones that see diversity in the board room as a key driver to success and the board’s overall effectiveness.,” Wright added.
According to Wright, women change the dynamic of a board for the better. As well as bringing relevant skills, they also bring cognitive diversity, different brain structures and cultural expectations, offering a diverse approach to business and making for better decisions, performance and representation of the consumer base.
Perception vs. reality
“The gist of the feedback I’m given is that women still have a perception of cronyism and boardroom politics at this level. So we must ask ourselves is ‘is this simply a perception or a reality?’ If it’s real, it has to change,” Wright explained.
Revisiting the research released today by Skema business school, Michael Ferrary highlighted the benefits of a top-down approach in addressing the gender disparity in boards.
“Female board members are likely to increase a company’s reach – or at least effectiveness – due to their influence, yet this is not where their impact stops. Placing inspiring women at the top could motivate other female members of staff, directly enhancing their individual performances,” he said. “With business (being) so competitive, can companies really afford not to be strategically planning their board room gender ratios to maximise their bottom lines?”