Don’t ignore the evidence
More women in the boardroom = better business performance

EY - Don’t ignore the evidence:  More women in the boardroom = better business performance
  • Share

You are reading an article from the Index of women in power and utilities series. To read more, visit the homepage.

The evidence supporting the business case for more women on boards is overwhelming. From McKinsey to Reuters to universities, across industries and in countries all around the world, well-validated research reveals a direct correlation between women in the boardroom and improved financial performance.

Here are some of the highlights:

18%-69% more profitability for companies with the best record of promoting women to high positions (source: “Women in the Executive Suite Correlate to High Profits”, Roy Adler, Harvard Business Review, 2001)

55% average earnings before interest and tax (EBIT) for companies with representation of women in top leadership and executive committee, which is higher than that of companies with no women in leadership (source: Women Matter, McKinsey & Company 2013)

53% return on equity, 42% return on sales, 66% return on invested capital for firms with highest representation of women board directors, outperforming those with the least representation (source: The Bottom Line, Catalyst, 2007).

In our High achievers report, we documented various studies by other organizations into the direct correlation between better gender balance and improvements in:

  • Organizational excellence — In a study of 101 large corporations, companies with three or more women in senior management functions scored higher than companies with no women at the top on nine criteria of organizational excellence, including key factors such as leadership, accountability and innovation. (Source: McKinsey & Company)
  • Quality — Data on the top 1,500 US firms from 1992 to 2006 shows a strong correlation between firm quality as measured by Tobin’s Q (the market value of a company divided by the replacement value of its assets) and female participation in senior management. (Source: Columbia University, University of Maryland)
  • Innovation — A comprehensive study of 1,000 international teams found that innovation was positively correlated with an equal gender ratio within work teams and negatively correlated with an unequal ratio. (Source: London Business School)

Interestingly, we found that all-male boards are less likely to renew and diversify. Our report Diversity drives diversity revealed that only 57% of US boards added a new director between 2011 and 2013, compared to 82% for companies with at least one female director. Only 77% added a new director between 2009 and 2013, versus 94% for companies with at least one female director.

The benefits of gender-balanced boardrooms to P&U are clear: but our Index results suggest the sector is far from achieving it.

Read the full report.


Read related articles from the Index of women in power and utilities.

Can you hear me? Only 4% of board executives of global 100 P&U companies are female The top 20: Duke, Sempra and Eskom head the list for gender diversity P&U is transforming: why yesterday’s business models won’t work anymore Winning the war for talent: tapping into the potential of women
EY - Can you hear me? EY - The top 20 EY - P&U is transforming EY - Winning the war for talent

Top