Tuesday, June 19, 2018

Success comes with getting Women on Board

Credit Suisse

Further research has revealed that having women on the board really does have a positive effect on the share price of companies.

The Credit Suisse Research Institute performed the research looking at over two thousand companies over a period of six years. They concluded that, on average, it would have been better to have invested in a company with women on their management boards as opposed to those without.

The researched showed that over the years having a diverse board led to an increase in return on equity that is four per cent higher than an all-male board. Advantages were also reaped in terms of better than average growth figures. Diverse boards showed an average of fourteen per cent growth compared to ten per cent for male only boards over the last six years. However, the institute did admit that the figures were skewed and that certain industries generally fared better with the mixed boards than others. For example those industries with a consumer related focus performed better with women on their management boards.

The research did, however, take the consumer related industries into account when producing their overall figures and ensured that the results were weighted so as to make them sector neutral. They also took account of differences in market values and the returns available from global regions. The research also considered the difference that having a mixed board had on a company's performance depending on its size. There was more of a difference in larger firms than smaller, but even smaller firms showed a marked difference.

There are differing reasons as to why a mixed board might lead to better performances. Simply having a broader mix of talent will have a positive effect as well as a better mix of leadership skills. There is also going to be access to a wider set of skills as well as better representation of the consumer. A leading academic commentator, Professor Katherine Phillips, suggests that the effects of internationalisation and immigration means that companies have to adapt to the needs of different people, having greater diversity. Even China has made moves towards this diversity increasing the number of boards with female members from 6.5 to fifty per cent last year.

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