Board gender diversity pays dividends

While the pace of progress in diversifying corporate boards has lagged behind the aspirations of advocates, the leadership positions that have been filled by women must be celebrated, said Phyllis King, chairwoman of Milwaukee Women inc, and Deborah Fugenschuh, executive director of Professional Dimensions, a regional networking organization for female professionals.

“When you’re looking at a change of this magnitude, you have to look at the progress that we’ve made so far and celebrate it,” Fugenschuh said, referring to the rise of women’s affinity groups and professional development initiatives within companies.

She also cited the number of female chief executive officers leading Fortune 500 companies as a reason for celebration. That number hit 23 in December when Mary Barra was appointed CEO of General Motors.

“So I think the momentum is growing, and we will see significant increases in women on boards and in senior leadership roles in the next five to 10 years,” Fugenschuh said.

Milwaukee-based ManpowerGroup has been contributing to the momentum of increased board gender diversity since the 1980s, when it first appointed a woman to its board of directors.

In addition to heightening collaboration and creativity within the company, diversity among its leadership has impacted its bottom line, said Jeffrey Joerres, chairman and chief executive officer.

“I really think we make more money as a company because we make better decisions, and we make better decisions because we have a diverse decision-making process through a diverse board,” Joerres said.

A 2012 report on gender diversity and corporate performance compiled by global financial services company Credit Suisse points to the financial strength of companies with women on their boards.

“While it is difficult to demonstrate definitive proof, no one can argue that the results in this report are not striking,” the report stated. “In testing the performance of 2,360 companies globally over the last six years, our analysis shows that it would on average have been better to have invested in corporates with women on their management boards than in those without.”

Among the report’s findings related to financial performance:

  • From 2006 to 2012, the average return on equity of companies with at least one woman on the board was 16 percent, while the average ROE of companies with no females on the board was 12 percent.
  • During that same period, net income growth for companies with women on their boards averaged 14 percent, while companies without any female board directors averaged 10 percent.

Why might greater gender diversity result in stronger corporate performance?

Credit Suisse speculates it’s because of a number of factors, including that companies with diverse boards are likely viewed more favorably by the market, have “a better mix of leadership skills,” and better represent the consumer decision-maker.

From Joerres’ perspective, diversifying a board also introduces a level of energy that sets a tone for success.

“It just makes so much sense,” Joerres said. “It makes so much sense to create the right energy with any company and to create the right sort of atmosphere of success.”

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