Female execs 'send profits soaring', survey finds

Leading UK companies with women occupying more than one in three executive roles can be up to ten times more profitable than firms with little or no female representation, according to new research.

David Sapsted

27 July 2020

A survey of FTSE 350 companies by gender diversity firm The Pipeline found that companies with no women on their executive committees recorded a net profit margin of 1.5 per cent, while those with at least a third of female executives recorded reached an average margin of 15.2 per cent.Pipeline said that if the companies with no women on their executive committees matched the performance of those with at least a third on their boards, an additional £47 billion could have been made in pre-tax profits.Lorna Fitzsimons, co-founder of Pipeline, said the 'Women Count 2020' report showed that having more women in decision-making positions meant businesses were better able to understand their customers.She said the findings showed "the stark difference in net profit margins of companies that have diverse gender leaderships compared to those who do not". Ms Fitzsimons called on businesses and government to “actively address” the issue as an “economic imperative” as the country battles to recover from the financial impact of the coronavirus pandemic.“During the most unprecedented economic challenge of our lifetime, the economy can’t afford for businesses to continually miss the opportunity to be more productive,” she added. “We will then emerge from this crisis together, stronger, and more united than ever in a post Covid-19 world.”The report found that, among executive committees of FTSE 350 companies, female involvement increased by 2.7 per cent, to 19.8 per cent, between April 2019 to April this year, However, it said there were “worrying signs” that this increase was driven by more women being appointed to 'functional' roles, such as HR, marketing or accounting, rather than decision-making ones.Former Prime Minister Theresa May, who contributed to the report, said there could be no good reason for the massive under-representation of women at the top of UK businesses."Every single male CEO who looks around his boardroom table to see nine out of 10 male faces staring back at him needs to ask himself what he is doing to make his business one which his daughter or granddaughter can get on in," she wrote.Meanwhile, research by law firm Pinsent Masons has found that, in the past year, women made up just one in five employees being put forward for senior roles at financial services firms.A review of more than 4,000 individuals taking up senior roles at financial firms - including banks, insurers, fund managers, hedge funds and private equity funds - found that 3,200 were men and only 830 were women.Elizabeth Budd, a financial services regulatory partner at Pinsent Masons, said: "More and more financial services firms are taking steps to improve gender diversity at top levels but the pace of change is still very slow."Given the attention that gender diversity has been given in recent years, I expect many firms will be disappointed that this is not being reflected in the number of women put forward for senior roles."The coronavirus crisis has upended working practices, organisational and operational structures."As a result, women will be hoping that City employers are going to be much more receptive to flexible working requests and this won't be used as an excuse for the low levels of women at senior levels."